News of the Week

Funding Status

Wave 26 for FY 2014 will be released on Wednesday, November 5th. 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 $2.06 billion.

Wave 72 for FY 2013 will be released on Thursday, November 6th. 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 $2.12 billion.

E-Rate Modernization – Updates

New FCC orders, formal and informal clarifications from USAC and the FCC, and FCC filings by interested parties continue to make moving targets of some of the E-Rate 2.0 details. This article reports on four such recent developments.

Eligible Services List for FY 2015:

The FCC released a Public Notice (DA 14-1556) last week finalizing the Eligible Services List (“ESL”) for FY 2015. For the most part, the final order adopted the revised and streamlined ESL as initially drafted (see our newsletter of August 11, 2014). The following changes and clarifications should be noted:

1. In response to comments that the ESL should specifically identify products and services previously eligible in FY 2014, but no longer eligible in FY 2015, the FCC added an appendix to the order (not to the ESL itself) briefly listing the newly ineligible items. Note that the list includes all servers (excluding caching servers).
2. The FCC directed USAC to include an ESL Glossary (previously part of the ESL) on its website.
3. The final ESL explicitly clarifies that multi-protocol label switching (“MPLS”) is an eligible Category 1 service.
4. The FCC rejected requests to include distance learning circuits in the ESL itself, but devotes two paragraphs in the accompanying order to explaining that circuits used for distance learning are in fact eligible.
5. The ESL includes a brief definition of caching “as a method that stores recently accessed information.”  More detail is provided in the accompanying order.
6. The ESL clarifies the eligibility of internal connections antennas. Again, more detail is in the order.
7. Importantly, and in response to SECA’s ESL comments, the FCC “clarified” that Category 2 equipment and its installation may be provided separately. Previously the ESL had indicated that equipment and that equipment’s installation services were both eligible only if provided under the same contract.
8. The FCC declined to adopt a suggestion made by SECA and others that, as a simplification, certain telephone components, now ineligible for FY 2015, instead be included with other voice services being phased-out over time. A footnote to the order notes that this suggestion is also included in a Petition for Reconsideration still before the FCC.

One important point to note concerning the FY 2015 ESL is that the FCC has drastically shortened, or “streamlined,” it to 8 pages (compared with 49 pages for FY 2014). One reason for the change, besides the elimination of the Glossary, is that much of the explanatory details regarding the ESL appear in the 10-page Public Notice and Appendix B. We believe that the two documents must be considered together, and we commend USAC for including both as a single “2015 Eligible Services List” document in the ESL portion of its online Reference Area.

OMB Approves Revised Form 470 and Form 471:

The Office of Management and Budget (“OMB”) approved “with change” the revised versions of the Form 470 and Form 471 on October 27th. It is not yet clear what change was required, but the approval came a week before the requested approval date. The early approval suggests that the change was minor. The revised forms, when they become effective, will be available only for online entry.

We are expecting that the revised Form 470 will become effective in early November. Use of the current version is still acceptable but, once started, should be completed and certified quickly so as to avoid having to start again as USAC cuts over to the revised version.

The revised Form 471 will not become effective until the FY 2015 application window opens. The opening is targeted for the first week in January. It is expected that the online version of the revised Form 471 will look significantly different, albeit using the same data fields, than the draft version presented for OMB approval. USAC plans to provide preliminary screenshots of the new online — and online only — Form 471 application prior to the opening of the window.

Urban Cluster Controversy, cont.:

Last week’s E-Rate Central newsletter of October 27, 2014, discussed the growing controversy over the FCC’s new definition of “urban” that includes over 3,000 “urban cluster” areas previously considered “rural” for E-rate discount rate purposes. Two important filings were made with the FCC last week supporting pending petitions for reconsideration previously filed by SECA and others. Both filings urge the FCC to redefine “urban” to exclude “urban clusters” with populations under 25,000.

The most broadly supported filing was a letter to the Commission signed by over twenty school and library organizations. A subsequent ex parte filing by The Rural Broadband Association, following a meeting at the FCC, includes the entire list of urban clusters now considered urban. The list, organized alphabetically by state, indicates the over 2,800 (or 92%) clusters with populations less than 25,000 that would be returned to rural status as proposed. Detailed maps of these areas are available on the U.S. Census Bureau website under “2010 Urban Clusters.”

Prospective E-Rate Order(s):

The FCC is expected to release another E-rate order, if not two, before the end of the year. At least one order is needed to address the issues raised and already commented upon, in the Further Notice of Proposed Rulemaking (“FNPRM”) included in July’s original E-rate modernization Order (see summary of comments in our newsletter of September 22, 2014).

In addition, the FCC has been indicating that it expects to release another broad order focusing on Category 1 connectivity issues (probably for FY 2016). One issue of apparent interest to the FCC is the difficulty of providing and funding fiber optic services to the more rural schools and libraries.

Two recent studies on fiber costs — one by the Consortium for School Networking (“CoSN”) and EducationSuperHighway (“ESH”) and another by the Schools, Health & Libraries Broadband Coalition (“SHLB”) — have been filed with the FCC. Both studies provide pricing models to estimate the cost to build or upgrade WAN networks to meet ConnectEd’s gigabit Internet and connectivity goals. More specifically, both studies stress the need to modify E-rate rules to help make rural fiber services more affordable. Perhaps with an eye to a forthcoming E-Rate 2.1 order from the FCC, the studies suggest:

1. Permitting applicants to construct their own fiber networks when commercial alternatives are not available.
2. Eliminate the differences in the coverage of special construction costs between lit (allowed) and dark (disallowed) fiber networks.
3. Allocating a portion of increased E-rate funding for capital expenditure in rural areas.
4. Providing additional discounts for “remote rural” applicants (and, as discussed above, redefining urban clusters as rural).

Schools and Libraries News Brief Dated October 31 – Entity Numbers

The S&L News Brief for October 31, 2014 discusses entity numbers, including instructions for:

• Locating an entity number
• Requesting an entity number
• Correcting the information on an entity number

As discussed last week, the online Form 471 application process for FY 2015 is expected to automatically insert the urban/rural status for each Block 4 entity number as it is being entered. This would be a good time, therefore, to review the data in the SLD’s Entity Search database to make sure that entity names and addresses are correct (and that physical addresses, not post office boxes, are used).