News of the Week

• Former Senator Olympia Snowe (D-ME) retired as planned at the end of her term, and Senator Jay Rockefeller (D-WV) announced plans to retire at the end of 2014 when his current term expires. Both Snowe and Rockefeller were the major supporters of the E-rate provisions in the Telecommunications Act of 1996.

• The FCC sent a letter to USAC approving a number of cost savings proposals to modify certain “exception” procedures and to further streamline review procedures on smaller Priority 1 applications. Results of the latter changes were seen later in the spring when a number of small FY 2013 applications were approved in the first few funding waves without first requiring inquiries to applicants.
• The SLD announced that it was beginning a process to update its information technology systems “to improve operational efficiencies and to enhance the customer experience.”  As a part of this process, the SLD formally requested comments from both applicants and service providers.

• The FCC took the first step in revising all E-rate forms by requesting comments on draft versions of Form 472 (“BEAR”), Form 473 (“SPAC”), Form 474 (“SPI”), and their associated instructions.
• FCC Chairman Julius Genachowski and Commissioner Robert M. McDowell both announced their resignations from the Commission.

• USAC announced that the FCC had instructed it to begin issuing automatic invoice deadline extensions, effective for FY 2012 FRNs. Normally invoice deadlines are set 120 days after the last date to receive service, typically June 30th for recurring services and September 30th for non-recurring services. Thus the normal invoice deadline for FY 2012 recurring services is October 28, 2013. For non-recurring services, the deadline is January 28, 2014. Under the new procedure, applicants or service providers missing these invoice deadlines will be automatically granted a full one-year extension to October 28th or January 28th, respectively, of the following year.
• The FCC released a Public Notice (DA 13-592) seeking comments on the eligibility of bundled components, specifically mobile devices bundled with cellular service and telephone handsets bundled with managed VoIP service. As of the current date, the FCC has not ruled further on this issue — presumably meaning that free or heavily discounted devices may be bundled into otherwise eligible service packages without cost allocation, at least through FY 2014.
• USAC released its preliminary estimate of FY 2013 demand showing an overall decrease from FY 2012 of 5%, but an increase of 17% in the total demand for Priority 1 and at the 90% level for Priority 2. By our estimates, full funding of Priority 2 applications at the 90% level would require roll-over funds of $1.5–1.6 billion.

• Based on USAC’s Federal Universal Service Support Mechanisms Fund Size Projections for Third Quarter 2013, the FCC announced (DA 13-1119) the carry-forward of $450 million of funds into FY 2013. As of now, no funding has been made available in FY 2013 for Priority 2 at any discount level.
• President Obama nominated Tom Wheeler to be the next Chairman of the FCC, replacing Julius Genachowski. Mr. Wheeler’s nomination was not confirmed until November.
• Funding Waves 1 and 2 for FY 2013 were released on May 29th, over a month ahead of FY 2012’s delayed first wave.

• President Obama outlined his new ConnectED initiative. According to a fact sheet released by the White House, the key objectives of the initiative are:
  • Upgraded connectivity to serve 99 percent of America’s students with at least 100 Mbps within five years.
  • Level the playing field for rural students.
  • Training teachers.
• Former Representative Edward Markey (D-MA) was elected to the Senate to replace former Senator John Kerry, now Secretary of State. While in the House, now Senator Markey had been the primary proponent of the E-rate program. His election will provide ongoing Senate E-rate support when Senator Jay Rockefeller (D, WV) resigns at the end of this term.

• The FCC released a draft of the proposed Eligible Services List (“ESL”) for FY 2014 (DA 13-1513) containing only a few clarifications.
• The FCC released a major Notice of Proposed Rulemaking — dubbed the E-Rate 2.0 NPRM (FCC 13-100) — to modernize the E-rate program. The initiative deals with increased broadband capacity, cost-effective purchasing, streamlined program administration, and other outstanding issues. See, in particular, our newsletters of August 5th, August 12th, August 19th and September 2nd.
• A new version of the Form 472 (or BEAR Form) became effective July 21st, but initially could be filed only on paper. The new online BEAR, which required significant system changes, became available later in August.

• The initial round of comments on the E-Rate 2.0 NPRM was due September 16th. Over 800 comments were filed, including almost 200 that were over two pages in length. Links to some of the more important comments were included in our newsletters of September 16th and September 23rd.
• The SLD began its annual fall applicant training workshops, focusing on the revised set of E-rate forms. Two issues arising during discussion, and clarified later in October (see our newsletter of October 21st), included a broader definition of “RFP” for Form 470 purposes and the ineligibility of the receipt of similar services from two or more providers.

• USAC, for which funding is not affected by tax appropriations, remained open during the government shutdown, but the FCC was closed for the duration.

• The deadline for reply comments on the E-Rate 2.0 NPRM, initially due in October, was rescheduled to November 8th. Over 450 additional comments and reply comments were filed by that date.
• The Senate confirmed the nominations of Thomas Wheeler as the new Chairman of the FCC and of Michael O’Rielly as the fifth Commissioner.

• The revised version of the Form 470 became effective late in the afternoon of December 19th. The major change was the combining of Telecommunications and Internet Access services into a single Priority 1 services category.
• The SLD announced that the FY 2014 application window would open on January 9, 2014, and will close on March 26, 2014. Applications must be submitted on the revised Form 471.
• Three other E-rate form revisions — Form 479, Form 486, and Form 500 (see below) became effective December 30th.

This is a special form used by consortium members to certify CIPA compliance to their consortium leader. As such — and unlike any other E-rate form — it is filed with the consortium leader, not with USAC. By collecting Form 479s from its members, the consortium leader is then able to file a Form 486 with USAC certifying CIPA compliance on behalf of all its members.

Except for some minor clarifications in the CIPA certifications, the revised version of the Form 479 is unchanged from the earlier “April 2007” version. Older versions of Form 479s, signed and dated before December 30th, will presumably not have to be resubmitted; newly signed and submitted Form 479s must use the new version.

The earlier “April 2007” version of the Form 500 was used to cancel or reduce funding for selected FRNs, change service start dates, or notify USAC of contract extensions. The new “December 2013” version retains those functions but adds the following two functions (both of which previously required special letters):

• Requesting extensions of the deadline for the delivery and installation of non-recurring services; and
• Notifying USAC of E-rate purchased equipment transfers from closed entities to other eligible entities within three years of the date of purchase.