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News of the Week

In This Week's Issue

Funding Status Update
E-Rate Modernization – ESL Comments
E-Rate Updates and Reminders
Schools and Libraries News Brief Dated September 5 – Categories 1 and 2

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In This Week's Issue

Funding Status Update
E-Rate Modernization – ESL Comments
E-Rate Updates and Reminders
Schools and Libraries News Brief Dated September 5 – Categories 1 and 2

Subscribe to News of the Week

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September 8, 2014

Introduction

The E-Rate Central News for the Week is prepared by E-Rate Central. E-Rate Central specializes in providing consulting, compliance, and forms processing services to E-rate applicants. To learn more about our services, please contact us by phone (516-801-7804), fax (516-801-7810), or through our Contact Us web form. Additional E-rate information is located on the E-Rate Central website.

Funding Status

Wave 18 for FY 2014 will be released on Wednesday, September 10th. Funding for FY 2014 is available for Priority 1 services only. Priority 2 funding is being denied at all discount levels. Cumulative funding for FY 2014 is $1.83 billion.

Wave 6 for FY 2013 will be released on Friday, September 12th. Funding for FY 2013 is available for Priority 1 services only. Priority 2 funding is being denied at all discount levels. Cumulative funding for FY 2013 is $2.11 billion.

E-Rate Modernization – ESL Comments

Initial public comments on the draft Eligible Services List (“ESL”) for FY 2015 (DA 14-1130) were due last Wednesday, September 3rd. Most generally, the comments reflected two themes.

The first theme was the seemingly broad acceptance of the FCC’s structural reform of E-rate product and service eligibility reflected in the recent E-rate modernization Order (FCC 14-99). This Order focuses on broadband services and equipment while eliminating, or phasing out, eligibility for so-called “legacy” services (including email, webhosting, and voice).

A second common theme was support for certain clarifications and/or structural changes to the ESL, namely:

Many comments expressed the view that the FCC had gone too far in condensing the ESL by eliminating lists of ineligible products and services, critical definitional terms, and special eligibility conditions — particularly in a year in which so many changes were being made by eliminating or phasing out eligibility. As SECA noted, some of the important eligibility changes for FY 2015 are noted only in the accompanying Public Notice, not in the ESL itself.
Clarification was sought on the eligibility of a number of specific products and services such as video conferencing services, voice services carried over broadband circuits, firewall services and/or equipment, etc. Some of these issues may become clearer if and when USAC and/or the FCC release FAQs on the E-rate modernization Order.
A number of parties expressed concern with the FCC’s intention of making certain minor “Telephone Components” immediately ineligible. The comments noted that allocating such charges out of large telephone bills would be administratively difficult for both applicants and USAC reviewers. Several comments suggested — and we hope the FCC takes heed — that such charges be included instead with other voice services being phased out over the next few years.

Links to some of the comments that we found most interesting are provided below. To review all filed comments, go online to the search screen of the FCC’s Electronic Comment Filing System, enter “02-6” in the “Proceeding Number” field, and push “Enter.”

EducationSuperHighway
Education Networks of America (“ENA”)
E-Rate Management Professionals Association (“E-mpa”)
E-Rate Provider Services
Funds for Learning (“FFL”)
New York City Department of Education (“NYCDOE”)
State E-Rate Coordinators’ Alliance (“SECA”)
Wisconsin Department of Public Instruction

As noted below, ESL reply comments are due September 18th.

E-Rate Updates and Reminders

E-Rate Modernization Comment Periods:

The following two E-rate-related FCC proceedings are currently out for public comment:

Comments on the Further Notice of Proposed Rulemaking (“FNPRM”), issued as a part of the first E-rate modernization Order (FCC 14-99), are due September 15th; reply comments are due September 30th. (See our newsletter of August 4, 2014.)
Reply comments on the draft Eligible Services List (“ESL”) for FY 2015 (DA 14-1130) are due September 18th. (See discussion above and our newsletter of August 11, 2014.)

FCC Appeal Decision Watch:

The FCC denied (FCC 14-131) an application for review filed by Henrico County Schools seeking to overturn an earlier appeal and petition for reconsideration by the Wireline Competition Bureau. The FCC’s decision apparently brings to a close a six-year effort by Henrico stemming from an FY 2008 funding request denied by USAC for failure to treat price as the most heavily-weighted factor in the bid evaluation process. Not surprisingly, the FCC rejected the district’s contention that the same vendor would have been awarded the contract even if price had been the primary factor. The FCC also disagreed that the district had selected the lowest-cost provider.

What was surprising about this decision was a statement included by Commissioner Pai who, although concurring with the decision, took the opportunity to decry the FCC’s “byzantine rules and precedents.” Specifically, Commissioner Pai pointed out:

The price-is-the-primary-factor rule is case in point. Although the Commission hoped it would ensure that applicants choose the “most cost-effective supplier of access,” in practice the rule does nothing of the sort. The rule does not require applicants to select the lowest-priced offerings that meet their needs. Nor does it, as one might expect, demand that price be the majority factor (i.e., weighted at 51 percent) or even a major factor in selecting a bid. Instead, all the rule requires is that applicants give “price . . . more weight than any other single factor.” So if an applicant considers ten factors, price could be weighted as little as 11 percent.

As a result, the price-is-the-primary-factor rule is nothing more than a paperwork exercise; it elevates form over substance. In Henrico’s case, the evaluation matrix mistakenly gave two factors greater weight than price. But each of these factors themselves contained multiple subfactors according to the bidding sheet, and so, had Henrico been savvy enough to game the system, it could have used effectively the same bidding matrix had it just subdivided these two factors into their constituent parts. Failing to do so technically violated the price-is-the-primary-factor rule, but it did not change the evaluation process one whit.

In our view, the underlying principle embodied in the FCC’s pricing evaluation rule is sound, but we must also agree with Commissioner Pai that the process can be gamed. The best E-rate strategy is to be true to both the spirit and the letter of the rule.

End of Summer Contact Procedures:

The S&L News Brief, referenced below, also notes that last Friday marked the end of the summer period during which the SLD would defer application reviews if it was unable to contact the associated applicants (or their consultants). This is consistent with SLD’s normal summer contact procedures which are in effect beginning the Friday before Memorial Day and ending the Friday after Labor Day.

Schools and Libraries News Brief Dated September 5 – Categories 1 and 2

The S&L News Brief for September 5, 2014, is the first in a series of News Briefs focusing on the E-rate modernization Order and the resulting changes to the E-rate program. This first article simply summarizes the change in product and service categories from Priority 1 to Category 1, and from Priority 2 to Category 2.