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In This Week's Issue
» Funding Status Update
» E-Rate and the Government Reopening
» E-Rate Updates and Reminders
» Schools and Libraries News Brief for Dated October 18 – SPIN Changes

E-Rate Central News for the Week
October 21, 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 23 for FY 2013 will be released on Wednesday, October 23, 2013, for $48.9 million.  Funding is currently being provided for Priority 1 services only.  Cumulative funding for FY 2013 will be $1.16 billion.

Wave 65 for FY 2012 will be released on Thursday, October 24, 2013, for $29.1 million.  Priority 2 funding is being provided at 90%, and is being denied at 89% and below.  Cumulative funding for FY 2012 will be $2.79 billion.

Wave 103 for FY 2011 will be released on Friday, October 25.  Priority 2 funding is being provided at 88% and above, and is being denied at 87% and below.  Cumulative funding for FY 2011 is $2.63 billion.

E-Rate and the Government Reopening

With the interim debt deal passed by Congress last week, and quickly signed by President Obama, the FCC and the rest of the federal government reopened on Thursday, October 17th.  We are glad to see the FCC’s E-rate staff back at work.  As discussed below, there’s a lot to be done.

Revised E-Rate 2.0 NPRM  Schedule:

Upon reopening, the FCC moved quickly to revise filing deadlines (DA 13-2025).  Most importantly, reply comments to the FCC’s Notice of Proposed Rulemaking:  Modernizing the E‑rate Program for Schools and Libraries (FCC 13-100), originally due by October 16th, are now due by November 8th.

Initial E-Rate 2.0 NPRM comments, which had been filed prior to the shutdown, but had not been available on the FCC site during the shutdown, are once again available.  These E‑Rate 2.0 NPRM Initial Filings are also available in a more organized manner on the E-Rate Central site.

New NPRM responses — sometimes labeled “COMMENT,” or more appropriately “REPLY TO COMMENTS,” are already being filed.  We are also seeing a number of parties visiting the FCC to advance their positions.  Summaries of these in-person meetings are also available on the FCC site as “NOTICE OF EXPARTE” filings.  All these filing may be accessed by reverse date order through the FCC's ECFS Search screen.  Simply enter “13-184” in the Proceeding Number field, and push “Enter.”

Revised FCC Appeal Deadlines:

E-rate rules require that initial appeals to the FCC be filed within 60 days of the date of the decisions being appealed.  For petitions for reconsideration of previous FCC decisions, there is a 30-day window to file.  FCC appeal deadlines falling during the government shutdown period have also been extended based on the following provisions:

  1. Filings that were originally due October 1-6, are now due this coming Tuesday, October 22nd.
  2. Filings that were originally due October 7-16, are now due 16 days after the original deadline (extended to the following Monday if the new deadline falls on a weekend).

Pending FCC Orders:

Earlier this year, in addition to the E-Rate 2.0 NPRM, the FCC requested comments on four other topics.  Before the end of the year, we would expect FCC orders on the following:

The most immediate impact these orders would have on applicants would be from the release of a revised Form 470.  If the revised Form 470 becomes effective immediately upon release, as was the case earlier this year with the revised Form 472 and Form 474, access to the online Form 470 filing system may be temporarily unavailable as the USAC system is updated.

Form 470s for FY 2014, submitted online or on paper before the revised version becomes effective, should not be affected.  Applicants, who have started current versions of a Form 470 online, but have not completed and submitted them, will have to redo their incomplete forms using the revised Form 470.

SLD Training Clarifications:

As discussed in our October 7th newsletter article on SLD Fall Training Updates, most of the material being presented in this year’s workshops is of a review nature.  Two topics arising during discussion periods, however, indicate that the SLD may have adopted overly strict interpretations of previous FCC appeal decisions.

The first deals with the definition of an “RFP” following a recent FCC appeal decision (see our newsletter for September 30th).  The “Washington” decision (DA 13-1946) upheld a USAC determination that detailed supplementary materials provided by an applicant to potential bidders constituted the equivalent of an RFP, and that the applicant had erred in not noting the availability of that RFP in its Form 470.  The SLD appears to be interpreting this decision to mean that any supplementary material, regardless of detail or when provided (e.g., a network diagram provided in response to a vendor inquiry) is an “RFP,” and must have been so noted in the original Form 470.

The second issue concerns the eligibility of similar services provided by two or more different service providers.  Beginning this year, with regard to web hosting, we have seen the SLD take the position that, since hosting is only eligible for a school’s basic web site, service from only one hosting provider per school would be eligible.  In this fall’s training, however, the SLD expressed the view that the use of more than one supplier for a given service — specifically, the use of two or more cellular carriers within the same geographic region — was prohibited, not because of service ineligibility, but because services obtained from more than one carrier could not all be the “most cost-effective.”

This is an expanded interpretation of the FCC’s 2007 “Macomb” decision (FCC 07-64).  In that case, Macomb ISD selected three different carriers to provide T-3 circuits “to reduce the reliance of the school district on any single provider’s network during an outage — a practice called ‘multihoming’.”  Circuit costs for these circuits ranged from about $76 thousand to $99 thousand per year.  The FCC did not argue that three T-3s were not needed, but did find that the higher prices charged by two of the carriers were not cost-effective and that “in this particular case, Macomb ISD should be entitled to E-rate funding for its Internet connections at a rate associated with the least expensive” provider.  The FCC did not rule that “multihoning” was ineligible, only, that at an additional price of $36 thousand per year, it was not cost-effective.

In these specific cases, the FCC had to make subjective decisions as to: (a) how much supplementary bidding information was being provided before the material was deemed to be an “RFP,” or (b) how much additional cost, if any, was incurred for “multihoning” before the service was deemed to be cost-ineffective.  In neither decision did the FCC indicate that (a) any amount of supplementary bidding material would constitute an “RFP,” or (b) the procurement of any similar services from multiple providers would fail the cost-effectiveness test.  We can understand why the SLD would prefer hard-and-fast prohibitions, rather than having to make subjective “how much” decisions, but fairness often involves a degree of subjectiveness.  Hopefully, the FCC will provide additional guidance on these issues.

Extension of ADA Exemption:

One small footnote to last week’s debt extension, with little actual effect on E-rate, was the included extension of the ADA exemption to January 15, 2014.  “ADA” refers to the federal Anti-Deficiency Act which prohibits a government agency from granting funds that it does not actually have “in the bank.”  In the E-rate case, adherence to ADA means that USAC would have to collect Universal Service Funds from USF contributors before it could issue FCDLs for up to the equivalent amount — despite the fact that USF contributions are coming in quarterly and that most awarded E-rate discounts are not invoiced for a year or so.  It would also prohibit USAC from over-committing funds, knowing full well that all awarded funds have never been fully utilized.

For a number of years, at least on an annual basis, Congress has voted to exempt E-rate from ADA so as to provide additional funding flexibility.  Perhaps, because these are temporary exemptions, the FCC and USAC have not (except during one limited period) taken advantage of the ADA exemption.  The last major extension of the ADA exemptions occurred in December 2011 extending the exemption for two years until December 31, 2013 (see our newsletter of December 26, 2011).  Last week’s debt deal extended this an additional 15 days.

E-Rate Updates and Reminders

October Deadlines:

Technically, the invoicing deadline for recurring FY 2012 services is Monday, October 28, 2013.  Associated SPIN changes, if required, should also be made by this date.  This year, for the first time, the FCC has instructed USAC to issue automatic one-year invoice deadline extensions to any applicant or service provider missing this deadline.  Practically, therefore, the deadline will be one year hence.

The most common Form 486 deadline for early FY 2013 funding waves 1-6, issued before July 1, 2013, is October 29th.  The next few deadlines, based on the requirement to file Form 486s by the later of 120 days from FCDL issuance or the start of service, are:

      Wave 7       10/30/2013
      Wave 8       11/07/2013
      Wave 9       11/13/2013
      Wave 10     11/20/2013

SLD Fall Training:

The SLD is currently conducting 2013 fall training for applicants.  The next workshops will be in St. Louis on Tuesday, October 22nd and in Atlanta on Thursday, October 24th.  The agenda and presentation slides for the workshops are posted on the SLD website.

Schools and Libraries News Brief Dated October 18 – SPIN Changes

The SLD News Brief for October 18, 2013, reviews the two types SPIN changes, “corrective” and “operational.”  The basic difference between the two depends upon whether an applicant is really trying to change from one service provider to another, or not.  If the underlying provider is the same, but the applicant is simply trying to match the FRN to the proper SPIN (either because of a data entry error or the incorrect choice a vendor’s SPIN-specific subsidiary), then only a simple corrective change is required.

An operational SPIN change is required when attempting to transfer funding from a provider, initially selected during the competitive bidding process, to a completely new vendor who was not originally selected.  This is a more complex process limited to new FCC rules applying as of FY 2011.  To preserve to integrity of the competitive bidding process, operational SPIN changes are now allowed only under the following documented conditions:

  • The applicant must have a legitimate reason to change service providers, such as breach of contract or the service provider is unable to perform, AND
  • The newly selected service provider must have received the next highest point value in the original bid evaluation, assuming there was more than one bidder.

Last week’s News Brief also addresses the issue of vendor transition delays.  This is a situation that would arise, for example, when an applicant selects a new vendor to take over from a previous vendor as of July 1st of the new funding year, but the cut-over doesn’t occur until later in the funding year, say September 1st.  In this case, the applicant may request USAC to split the FRN, reducing the funding of the original FRN to cover only ten months of service for the new provider, and creating a new “split” FRN to cover the transitional two months of service from the original provider.

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.