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In This Week's Issue
» Funding Status Update
» FCC Releases E-Rate 2.0 NPRM
» E-Rate Updates and Reminders
» Schools and Libraries News Brief for July 26 – Online Invoicing Status

E-Rate Central News for the Week
July 29, 2013

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 (516-801-7814), or through our Contact Us Web form. Additional E-rate information is located on the E-Rate Central Web site.

Funding Status

Wave 11 for FY 2013 will be released on Tuesday, July 30, 2013, for $35.9 million.  Funding is currently being provided for Priority 1 services only.  Cumulative funding for FY 2013 will be $299 million.

On Friday, July 26th, USAC issued just over 290 Out-of-Window letters to applicants who had filed Form 471 applications after March 14th and/or had not certified online applications by the extended May 15th certification deadline.  Applicants receiving these letters may file waiver requests with the FCC.

Wave 53 for FY 2012 will be released on Thursday, August 1, 2013, for $13.0 million.  Priority 2 funding is being provided at 90%, and is being denied at 89% and below.  Cumulative funding for FY 2012 will be $2.68 billion.

FCC Releases E-Rate 2.0 NPRM

The FCC’s extensive Notice of Proposed Rulemaking for Modernizing the E-rate Program for Schools and Libraries (FCC 13-100), or what we’ll call the “E-Rate 2.0 NPRM,” was formally released for comment on July 23rd.

As indicated in the outline below, the breadth of E-rate issues addressed by the E-Rate 2.0 NPRM is striking.  So too is the FCC’s approach to these issues.  Aside from the relatively few actual proposals (discussed further below), the NPRM is more in the nature of a notice of inquiry.  It suggests many issues that need to be examined — asking 616 questions and seeking 350 comments.  This suggests that after the FCC receives and digests all these comments, a second NPRM may be needed to address more specific proposals.

Somewhat surprisingly — and a disappointment to many — one issue discussed, but hardly stressed, in the E‑Rate 2.0 NPRM is an increase in the annual funding cap.  Paragraphs 173-176 seek comments on whether a temporary increase in the E-rate cap is necessary to achieve the broadband connectivity goals (much as suggested in the President’s ConnectED initiative), or whether a permanent increase is warranted.

The following outline of topics covered is drawn from the NPRM’s Table of Contents.  The first three major topics are related to the three fundamental goals of the E-rate modernization project as discussed in our previous newsletter.

I.   ENSURING AFFORDABLE ACCESS TO 21st CENTURY BROADBAND

  1. Focusing E-rate Funds on Supporting Broadband to and within Schools and Libraries
    1. Funding for Broadband Connections
    2. Phasing Down Support for Certain Services
  2. Ensuring Equitable Access to Limited E-rate Funds
    1. Modifying the Discount Matrix
    2. Support Based on District-Wide Eligibility and Application by School District
    3. More Equitable Funding for Rural Schools and Libraries
    4. Setting Budgets or Limits
    5. More Equitable Access to Funding for Internal Broadband Connections
    6. Simplified Allocation of Funds to All Schools and Libraries
  3. Lowering New Build Costs and Identifying Additional Funding to Support Broadband

II.  MAXIMIZING THE COST EFFECTIVENESS OF E-RATE FUNDS

  •  Increasing Consortium Purchasing
  •  Encouraging Other Types of Bulk Buying Opportunities
  •  Increasing Transparency
  •  Improving the Competitive Bidding Process
  •  Efficient Use of Funding
  •  Broadband Planning and Use
  •  Innovative Approaches to Encouraging Maximum Efficiency

III.  STREAMLINING THE ADMINISTRATION OF THE E-RATE PROGRAM

  •  Electronic Filing of FCC Forms and Correspondence
  •  Increasing the Transparency of USAC’s Processes
  •  Speeding Review of Applications, Commitment Decisions, and Funding Disbursement
  •  Simplifying the Eligible Services List
  •  Funding Recovery Considerations
  •  Effective Disbursement of Unused Funding
  •  Invoicing and Disbursement Process
  •  Streamlining E-rate Appeal Process

IV.  OTHER OUTSTANDING ISSUES

  •  The Children’s Internet Protection Act
  •  Identifying Rural Schools and Libraries
  •  Addressing Changes to the National School Lunch Program
  •  Additional Measures to Prevent Waste, Fraud and Abuse
  •  Extending the E-rate Document Retention Requirements
  •  Documentation of Competitive Bidding
  •  E-rate FCC Form Certification Requirements
  •  Post-Commitment Compliance and Enforcement
  •  Wireless Community Hotspots
  •  Procedures for National Emergencies

Over the next few newsletters we plan to address many of these issues in greater detail.  As a starting point, however, it will be useful to outline the actual proposals contained in the NPRM.  Such proposals suggest that the FCC has preliminarily decided to make these changes and, absent strong comments to the contrary, are likely to be adopted earlier in the E-rate modernization process.  These proposals, together with NPRM paragraph references, are discussed below.

Eligible Services:

Para. 90-91: The FCC proposes “to phase out support for a number of specific services, including outdated services currently on the ESL, for components of voice service,” and seeks comments on the phasing out of other services “not used primarily for educational purposes.”  This is the one proposal which could begin as early as FY 2014.  The services targeted to be phased out include paging, wireless text messaging, and the following voice services:

  • Directory assistance
  • Custom calling features
  • Inside wiring maintenance plans
  • Call blocking
  • 800 number services

Para. 248: The FCC proposes “to simplify the ESL and the FCC Form 471 application process by adopting a definition of eligible services that provides funding for eligible services regardless of regulatory classification.”  Specifically, it proposes “to amend section 54.502 and the ESL to remove the regulatory classifications of telecommunications services and Internet access to allow applicants to seek eligible services from any entity.”  Presumably, this would mean that all Telecommunications services, not just fiber optics, could be offered by any type of service provider, not just by eligible carriers (i.e., Form 499 filers).

Para. 71: The FCC proposes to make its “treatment of lit and dark fiber more consistent” by providing Priority 1 support for modulating electronics (e.g. GBICs) and for special construction charges for dark fiber (as it now does for lit fiber).

Funds Distribution:

Para. 116: Most broadly, the FCC is seeking comment on “six options for revising the structure for distributing funds under the E-rate program by: (1) revising the discount matrix to increase certain applicants’ matching requirements; (2) providing support on a district-wide basis; (3) revising our approach to supporting rural schools and libraries; (4) incorporating a per-student or per-building cap on funding into the discount matrix; (5) providing more equitable access to priority two funding; and (6) allocating funds to all eligible schools and libraries up front.”  But within those options, the FCC makes the following concrete proposals:

  • Para. 123:  For any changes it makes to applicant discounts, the FCC proposes “to phase in such changes over some period of time, such as three years.”
  • Para. 129: The FCC proposes to change the way school district discount rates are calculated so as to use a single discount rate percentage for the entire district based on total student NSLP eligibility.  “This single discount percentage rate shall then be applied to the discount matrix to set a discount rate for the supported services purchased by all schools within the school district.”  In other words, a district would have a “matrix” discount (e.g., 20%, 25%, 40%...90%) rather than some intermediate aggregate discount (e.g., 67%).  Note that this would be consistent with the way a library calculates its discount based on total district NSLP data.
  • Para. 130 and 276: The FCC proposes “to change our definition of “rural” for purposes of the E-rate program to ensure greater funding to truly rural areas by using the U.S. Department of Education’s NCES definitions.”

Increased Transparency:

Para. 191: The FCC proposes “to increase the transparency of E-rate spending and…the prices E-rate applicants pay for service.”  More specifically, it plans to provide “options for informing schools and libraries about the prices at which service providers are willing to offer for E-rate supported services.”  This proposal would appear to raise all sorts of red flags about vendor proprietary data and the real role of USAC in the competitive bidding process.  We suspect that this is one “proposal” that will be subject to considerable debate.

Streamlining Program Administration:

Para. 226: The FCC proposes “several options for streamlining the administration of the E-rate program while preserving critical safeguards.  These options include: moving to electronic filing of all FCC forms and correspondence with USAC; increasing transparency throughout the application process; speeding review of applications and issuance of commitment decisions; simplifying the eligible services list (ESL) to focus on the service provided rather than the regulatory classification of the service; recovery considerations when seeking reimbursement of previously disbursed E-rate funding; more effective disbursement of unused funds; improve invoicing and disbursement; and streamlining the E-rate appeals review process.”

Para. 229-230: After first referencing a previous SECA proposal that “all of an applicant’s forms and correspondence with USAC should be available from a centralized portal,” the FCC directs — not merely proposes — “USAC to incorporate into its consideration this proposal as it adopts measures to improve operational efficiencies.”

Multi-Year Contracts:

Para. 241: The FCC proposes, “absent a change in the contract, service provider or recipients of service,” to “allow E-rate applicants with multi-year contracts that are no more than three years in length (including any voluntary extensions) to file a single FCC Form 471 application for the funding year in which the contract commences and go through the full review process just one time for each such multi-year contract.”  Comments were sought “on what additional steps E-rate applicants should have to take in the second and third year of such contracts to confirm their request for E-rate support for the subsequent years.”

Invoicing and Disbursement Process:

Para. 259: Finally, after many years of consideration, the FCC proposes “to modify our process to permit schools and libraries to receive disbursements directly from USAC.”  If adopted, BEAR payments could be made to the applicants rather than having to be forwarded through the service providers.  The proposal also adopts “specific invoice deadline and invoice deadline extension rules.”

Document Retention:

Para. 295: The FCC proposes “to extend the E-rate program document retention requirements from five to at least ten years.”  Note that since the current five year requirement is based on the last date to receive service, and many documents subject to retention are created two years or more before that date, this change would require documents to be kept for twelve years or more.

Form Signatures and Certifications:

Para. 300: The FCC proposes “to require that an officer of the service provider sign certain forms submitted to USAC in support of an application for eligible services and any requests for payment,” “to codify the current certifications,” and “require service providers to certify their compliance with the lowest corresponding price rule and with state and local procurement laws.”  Note that the LCP certification was originally included in the draft revision of this year’s Form 473, but was removed from the version as finally approved.

Para. 306: Similarly, the FCC proposes to “require all E-rate forms submitted by E-rate applicants be signed by someone with authority equivalent to that of a corporate officer.”  Such a provision would presumably prevent consultants from signing applicant forms on behalf of their clients.

National Emergency Procedures:

Para. 324-328: The FCC proposes “to adopt rules requiring USAC to follow specific procedures in the aftermath of a natural disaster or other emergency in order to ensure that USAC can efficiently assist affected schools and libraries in obtaining immediate relief.”

E-Rate Updates and Reminders

Forms 479, 486, and 500 Revisions:

The FCC has released draft revisions of the Form 479, Form 486, and Form 500 for public comment (DA 13-1636).  See:
Draft Form 479                       Draft Form 479 Instructions
Draft Form 486                       Draft Form 486 Instructions
Draft Form 500                       Draft Form 500 Instructions

The most significant — and welcome — proposed change is to the Form 500 to allow applicants to seek extensions of the implementation deadline for non-recurring services and to notify USAC when they are transferring equipment.  Currently, such actions require separate letters.

Comments on the proposed new forms are due August 14th; reply comments are due August 28th.

FCC Public Comment Schedule:

The FCC currently has three other notices out for public comment as per the following schedule:

Notice of Proposed Rulemaking: Modernizing the E-rate Program for Schools and Libraries (FCC 13-100) — see article above
  Release Date: 07/23/2013
  Comment Date: 09/16/2013
  Reply Comment Date:   10/16/2013
 
Revisions to FCC Forms 470 and 471 (DA 13-1590)
  Release Date: 07/17/2013
  Comment Date: 08/16/2013
  Reply Comment Date:   08/30/2013
 
Draft Eligible Services List for FY 2014 (DA 13-1513)
  Release Date: 07/03/2013
  Comment Date: 08/02/2013
  Reply Comment Date:   08/19/2013
 

SLD Fall Applicant Training Schedule:

The SLD has scheduled eight one-day applicant training sessions this fall from late September through early November.  Currently the Houston, Los Angeles, and Washington DC sessions are closed, and registrations are being accepted on a waiting list only basis for the remaining sessions in Atlanta, Minneapolis, Newark, Portland, and St. Louis.

Schools and Libraries News Brief Dated July 26 – Online Invoicing Status

As discussed in the SLD’s Special Edition News Brief for July 19, 2013 the previous week, a revised version of the applicant reimbursement BEAR form (Form 472) became effective on Monday, July 22nd.  As of that date, newly filed BEARs must use the revised July 2013 version.  Unfortunately, the revised BEAR form includes new discount rate and remittance information requiring an update to the SLD’s online filing system — a process targeted to be completed sometime after August 7th.

The SLD News Brief for July 26, 2013, discusses how to file invoices in the interim and how to handle online BEARs filed, but not acknowledged, prior to July 22nd.  Until the SLD’s online BEAR system goes back online, the only way to file a new BEAR form is to use the paper version and to submit it by mail, fax, or e-mail.

To facilitate the preparation of a paper BEAR form, a type-in PDF version is available online in E-Rate Central’s Form Rack.  The SLD’s Forms paper version is not in a type-in format (and its “File Online” link currently leads to a Maintenance Notice).

For service providers, type-in versions of Form 473 and Form 474 will also soon be available on the E-Rate Central website.

Note: Applicants are reminded that the remittance information provided on the new BEAR form effectively serves only as a request to the vendors.  Many service providers, particularly early on, may not have systemized their accounts payable systems to collect and utilize the requested remittance name and address information.

Disclaimer: This newsletter may contain unofficial information on prospective E-rate developments and/or may reflect our own interpretations of E-rate practices and regulations. Such information is provided for planning and guidance purposes only. It is not meant, in any way, to supplant official announcements and instructions provided by either the SLD or the FCC.