News of the Week

FY 2016:

Wave 47 for FY 2016 was released last Monday, May 22nd, for a total of $49.8 million.  Cumulative national funding through Wave 47 is $2.67 billion. Wave 48 is scheduled to be released on Friday, June 2nd.

FY 2017:

Based on USAC’s preliminary demand estimate of $3.2 billion, the FCC directed USAC to fully fund all valid Category 1 and Category 2 requests for FY 2017. The FCC’s funding order (DA 17-507) notes that the projected demand is well under the inflation-adjusted cap of $3.99 billion for FY 2017, not to mention an additional $1.2 billion of unused funds from previous years available for roll-over (see our newsletter of May 8th).

Following the FCC’s funding order, USAC released Wave 1 for FY 2017 on Friday, May 26th, for a total of $48.6 million. Wave 2 has not yet been scheduled.

Applicants funded in Wave 1 should note that, as of last weekend, EPC has not yet been configured for the filing of Form 486s for FY 2017. We expect that FY 2017 Form 486 capability will be provided shortly.

The Second E-rate Modernization Order, and USAC guidance throughout 2016 and early 2017, made it clear that “self-provisioned” fiber networks, while eligible for FY 2017, must be fully justified. An applicant applying for self-provisioned fiber must, at a minimum, also have bid for lit fiber, and must have documented the cost-effectiveness of the purchase option.

In March, by which time many applicants exploring new fiber systems were into their procurement cycles, USAC issued new guidance. USAC’s News Brief of March 3rd introduced — later explained as a “clarification” — two new requirements for those seeking self-provisioned fiber networks. Specifically, the News Brief indicated that such applicants must:

1. Also seek bids for “Service Provided Over Third-Party Networks (including, but not limited to, leased lit fiber).”
2. At a minimum, include “Transport Only – No ISP Service” as a service type option in their Form 470s.

The News Brief further explained that use of the “Transport Only – No ISP Service” designation was a “technology-neutral way” of seeking support for fiber or non-fiber bandwidth. As a practical matter, this meant that applicants must be open to considering bids for wireless networks with more limited bandwidth and less reliability.

Shortly after this new guidance was announced, USAC reached out informally to certain applicants, which had already filed Form 470s and RFPs for self-provisioned fiber without referencing “Transport Only,” strongly suggesting that they file new Form 470s and restart their competitive bidding procedures — or that they request an FCC waiver. Rebidding was clearly problematic for applicants with extended procurement processes, particularly those who had already selected vendors and signed contracts. Not surprisingly, many affected applicants choose not to refile.

The first definitive sign of trouble arose earlier this month when Richland County School District One was advised by the FCC that their Form 470 did not comply with the program rules, “as clarified.”  Funds For Learning (“FFL”) quickly filed an FCC waiver on Richland’s behalf. The waiver requested relief from the “requirement” that applicants post for “Transport Only – No ISP Service” on their Form 470. Last week, the State E-Rate Coordinators’ Alliance (“SECA”) jumped into the fray with comments supporting the FFL waiver.

The FFL waiver, while decrying the lateness of the Form 470 guidance, also argued that the FCC’s concept of technical neutrality, requiring applicants to consider non-fiber alternatives, was fundamentally flawed. While noting that the E-rate rules do require the FCC to be technically neutral with regard to eligible services as a whole, the rules have always permitted individual applicants to select the technology best suited for their needs. In other words, the Eligible Services List must be technically neutral, but applicant needs can and should be technically specific. Hopefully, the FCC will reexamine USAC’s “clarified” guidance.

EPC Entity Profile Updates:

Entity profile data within EPC, which USAC had locked during the application window, was unlocked last Monday. Applicants can now update student and eligibility data, add annexes, or otherwise modify existing profiles.

It is important to note that updates to entity profiles do not flow through to any FY 2017 applications. RAL corrections must be used to change any entity data in a pending application.

Form 500 Requests for Special Construction Extensions:

The final paragraph of USAC’s May 19th News Brief, which many may have missed, included an announcement that an applicant wishing to request a one-year extension of the June 30, 2017, deadline for lighting fiber systems can do so by filing a Form 500. This announcement is a return to USAC’s initial advice for filing a Special Construction Deadline Extension Request (“SCDER”). Previously:

• USAC’s early guidance, issued late last year in its December 2nd News Brief, was to file a Form 500, either on paper or, as it became available, through EPC.
• In last month’s April 21st News Brief, USAC gave detailed instructions directing applicants to download and complete SCDER worksheets to be submitted as customer service cases. At the time, EPC was accepting Form 500s online, but was not yet ready to process them. The beauty of the non-Form 500 approach is that USAC could manually — and more quickly — review and approve SCDERs. As discussed in our newsletter of May 15th, we had already begun to see SCDER approvals. With the non-extended 2017 deadline fast approaching, approval speed is important for fiber installation planning.

Now USAC is back to advising applicants to file with Form 500s via EPC. What is not clear is whether applicants can file Form 500s for these extensions, or must file Form 500s. Although USAC can now process Form 500s (as well as SPIN changes and service substitution requests) through EPC, there is a backlog in processing these requests, and USAC is apparently processing them on a first-in, first-out (“FIFO”) basis. This would likely delay SCDER approvals.

Given the rapidly approaching fiber lighting deadline of June 30th, our advice to applicants seeking a quick turnaround on special construction extensions is to consider filing requests both ways, i.e. with Form 500s (adding detailed notes to justify the extensions) and via customer service cases (including completed Special Construction Deadline Extension Request worksheets). Note: USAC may reject the request made via the customer service case and request that the submission be made utilizing the Form 500 in EPC.

New Service Provider Download Tool:

As discussed in USAC’s latest News Brief (referenced below), USAC has developed a new Service Provider Download Tool. The new tool is an alternative to USAC’s Search for SPIN Information tool (still available). The enhanced SPIN tool provides additional service provider information and search capabilities with the ability to download information in spreadsheet form on one or more SPINs.

Upcoming 2017 E-Rate Deadlines:

USAC’s Schools and Libraries News Brief of May 26, 2017, discusses a number of topics including:

1. The unlocking of EPC entity profiles (discussed above).
2. USAC messages to applicants filing out-of-window (i.e., late) Form 471s for FY 2017.
3. The new Service Provider Download Tool (discussed above).
4. The June-August summer webinar schedule covering:
   1. The Form 486 and CIPA.
   2. The Form 470 for FY 2018 (expected to become available July 1st).
   3. A beginner’s introduction to EPC