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In This Week's Issue
» Funding Status Update
» E-Rate 2.0 – NPRM Challenges
» E-Rate Updates and Reminders
» Schools and Libraries News Brief for September 6 – End of Summer Contact Period

E-Rate Central News for the Week
September 9, 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 17 for FY 2013 will be released on Wednesday, September 11, 2013, for $44.5 million.  Funding is currently being provided for Priority 1 services only.  Cumulative funding for FY 2013 will be $553 million.

Wave 58 for FY 2012 will be released on Thursday, September 12, 2013, for $9.04 million.  Priority 2 funding is being provided at 90%, and is being denied at 89% and below.  Cumulative funding for FY 2012 will be $2.75 billion.

E-Rate 2.0 – NPRM Challenges

This is the seventh in a series of articles discussing the FCC’s Notice of Proposed Rulemaking for Modernizing the E-rate Program for Schools and Libraries (FCC 13-100), the “E‑Rate 2.0 NPRM,” which was formally released on July 23rd.  This article discusses a number of challenges implicit in the NPRM.  Our earlier articles on the NPRM are collected in the E-Rate Central Summary of the E-Rate 2.0 NPRM available on the E-Rate Central website.

Scope of NPRM:

The first challenge faced by anyone seeking to file comprehensive comments on the E-Rate 2.0 NPRM is its scale and scope.  The entire document is 175 pages long including 96 pages of specific requests for comments, questions, and proposals.  Almost every one of the 329 paragraphs contains one or more issues subject to comment.  Since it’s easier to raise an issue than to address it fully, a filing commenting on every issue could easily be longer than the NPRM itself.

Based on draft comments we’ve seen to date, we expect most responses to comment in detail on just a few selected issues, or more generally on the broader range of issues.  A third filing strategy, focusing only on actual proposals, is discussed in the final subsection.

Funding vs. Demand:

One overriding problem faced currently by the E-rate program is a lack of funding.  The demand for Priority 1 service now exceeds the annual E-rate funding cap.  Although no final decision has been made, it appears that FY 2013 will be the first year in which no Priority 2 funding will be available for applicants, even at the 90% discount level.  Without program changes, this problem will get worse, even to the extent of adversely affecting Priority 1 funding within the next few years.  This could become an even worse problem for other services if additional funds are to be funneled to broadband.  Ideas for solving this problem include: (a) making less services eligible (or available only at lower discount rates); (b) lowering discount rate levels (or capping funding for individual applicants); and/or (c) providing more funding.  Because these ideas appear in different sections of the NPRM, there is a risk that they will be addressed in isolation, rather than in the context of an integrated solution.  Further, ideas in the (a) and (b) categories are not win-win solutions for everyone, and are likely to create political issues for the FCC.

Conflicting Objectives:

Section V of the NPRM addresses one of the FCC’s three most important objectives in this process, streamlining the administration of the E-rate program.  Ideas presented include better electronic filing, speeding the review, invoicing, and disbursement processes, permitting the approval of multi-year contracts, and streamlining the appeals process — all good ideas, at least at the conceptual level.

Unfortunately, ideas in other areas would, if adopted, make E-rate more complex for both applicants and USAC alike.  The most complicated ideas are found in the applicant transparency and competitive bidding parts of Section IV, dealing with the goal of maximizing the cost effectiveness of E-rate funds, and the waste, fraud, and abuse part of Section VI.  Ideas in these sections include additional data requirements, disclosure of all bids and contracts, extended record retention periods, and third-party independent audits.

Ideas vs. Proposals:

In large part, the E-Rate 2.0 NPRM represents a collection of ideas developed over the years for changing or “fixing” the E-rate program, rather than a set of concrete proposals.  In competitive bidding terms, it’s more akin to an RFI than an RFP.  As with most regulatory ideas, the devil is in the details of implementation.  Although we expect that the FCC is loathe to admit it, the major outcome of the current NPRM effort may be the development of more detailed proposals to be put forth in a subsequent NPRM.

As discussed in our first NPRM article in this series, however, there are some actual proposals in the E-Rate 2.0 NPRM.  Generally, proposals are in a more advanced stage of development, perhaps to the point that the FCC is prepared to adopt them as rules, absent any convincing arguments to the contrary.  In the case of this NPRM, at least one of the “proposals,” dealing with funds distribution, is little more than a decision to adopt one of six alternative ideas.

The presence of some proposals suggests a third strategy for responding to the NPRM by commenting in more detail on the specific proposals, i.e., those more likely to be adopted or rejected in a near term FCC order.  In our view, some of those proposals would be beneficial and could be implemented quickly; others will hopefully be rejected.

E-Rate Updates and Reminders

FCC Public Comment 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

Filed comments on the E-Rate 2.0 NPRM are available on the FCC website, accessible through the ECFS Search screen.  Simply enter “13-184” in the Proceeding Number field, and push “Enter.”  As of last Friday, most of the comments filed have been one-pagers simply asking the FCC to retain the eligibility of webhosting services.  More substantive comments are expected to be filed over the next week.  For completeness, it may also be useful to search for filed comments under Proceeding Number “02-6,” the traditional filing number for E-rate comments and appeals.

Schools and Libraries News Brief Dated September 6 – End of Summer Contact Period

The SLD News Brief for September 6, 2013, 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.

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.