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E-Rate Central News for the Week
December 12, 2016

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 website.

Funding Status – FY 2016

Last Monday’s Wave 24 for FY 2016 totaled $28.1 million.  Cumulative national funding through Wave 24 is $1.17 billion.  Wave 25 is expected to be released this Monday, December 12th.

Updates on USAC’s E-Rate Productivity Center and Legacy System

Recent Fiber Construction Denials:

We always suspected that FY 2016 would be a learning experience for applicants applying for newly eligible dark fiber and self-provisioned fiber construction.  USAC outreach on the topic has stressed the importance of providing comprehensive system requirements and of always comparing the costs of such systems against equivalent lit fiber alternatives.  It is only within the last few funding waves that we’ve begun to see how well applicants have learned these lessons.  There have been some failures.

The most common reason given by USAC for denying fiber requests has been that “The products and services that were requested on your FCC Form 471 (‘Leased Dark Fiber’ or ‘Self-Provisioned Fiber Network’) are substantially different than those requested on your FCC Form 470.”  For example, one denial was for posting a “Dark Fiber Network” on the Form 470, but selecting a “Self-Provisioned Fiber Network” on the Form 471.  Another example was seeking a “Leased Dark Fiber IRU fee,” and instead applying for “Dark Fiber Special Construction.”

A second common basis for denial is the failure to properly evaluate the cost-effectiveness of leased lit fiber against dark or self-provisioned fiber alternatives.  Such comparisons are not trivial if properly accounting for different time frames and for all costs likely to be incurred.

Applicants with fiber applications still pending for FY 2016 may want to review their procurements and funding requests with a more critical eye, and consider whether they should rebid their fiber projects for FY 2017.

Missing “Or Equivalent” Denials:

In its 2011 “Queen of Peace” appeal decision (DA 11-1991), the FCC adopted a rule that an applicant cannot request a specific manufacturer’s make and model on a Form 470 or RFP without appending a phrase such as “or equivalent” to express their willingness to consider bids providing similar functionality.  Adding “or equivalent” to every manufacturer’s name sometimes seems to be little more than a useless rote exercise, but E-rate requires it.  We continue to see funding denials when the phrase is missing from an applicant’s procurement documents.

Our newsletter of December 5th discussed the FCC’s recently released FY 2016 Agency Financial Report.  One section of that report discussed the Commission’s efforts to ensure compliance with E-rate rules.  In particular:

The forms to request bids and seek support for services (FCC Forms 470 and 471) have been redesigned to minimize applicant mistakes and increase automation. For example, the forms contain drop-down menus that require applicants to select from lists of products and services that are eligible. Limiting applicants to selecting only eligible services and products sends a clearer signal to potential bidders (service providers) that the applicant is seeking only eligible services and products.

More specifically, the Form 470 drop-down menus for most products (with the exception of the “Other” category) list manufacturers by name, each followed by the required “or equivalent” phrase.  Unfortunately, we are hearing reports of applicants being denied for failure to also include the same phrase after manufacturers’ names in any associated and less formal RFP attachments.  Applicants facing such denials may wish to appeal based upon compliance with the “or equivalent” requirement in the more formal Form 470 and upon the FCC’s clear intent to provide the drop-down menus to minimize applicant mistakes.

Better yet, at least going forward into FY 2017, applicants should make liberal use of “or equivalent” whenever possible.

Form 486 Review Status:

USAC has indicated that some 800 Form 486s for FY 2016 remain in review because of inconsistent CIPA certifications.  The pending Form 486s may also include filings with no FRNs, a potential EPC system error.

Applicants awaiting Form 486 approvals should check with the Client Service Bureau (“CSB”).  If necessary, CSB can cancel the pending Form 486 allowing it to be correctly refiled.  For additional information, see USAC’s Schools and Libraries News Brief of November 11, 2016.

E-Rate Updates and Reminders

Upcoming 2016 E-Rate Deadlines:

December 12 Form 486 deadline for FY 2016 funding committed in Wave 8.  More generally, the Form 486 deadline is 120 days from the FCDL date or the service start date (often July 1st), whichever is later.  This means that Form 486 deadlines for funding commitments received in later waves will follow at roughly one week intervals, including the remaining December deadlines::

Wave 9                  12/19/2016
Wave 10                12/26/2016

Applicants missing these (or earlier) deadlines should watch carefully for “Form 486 Urgent Reminder Letters” (actually emails directing the applicants to EPC News Feed items).  The Reminders will afford applicants with 15-day extensions from the date of the emails to submit their Form 486s without penalty (see USAC News Brief of November 4th).  The first batch of Reminders is expected to be released soon.

Reply Comments re. Off-Campus Internet Access:

Numerous reply comments on the Boulder Valley and Microsoft petitions regarding off-campus use of existing E-rate supported connectivity (see DA 16-1051 and our newsletter of November 7th) were filed by last week’s deadline.  As was the case with the initial comments, all filers agreed that the lack of off-campus Internet access created serious “homework gap” problems for educators and students alike.  Almost all filers supported the petitioners’ request for a waiver of the current cost-allocation rules, either across-the-board or with limitations.

Setting a positive tone, both Boulder Valley and Microsoft filed their own reply comments.  Other notable comments were filed by the Benton Foundation, the Council of the Great City Schools, Education Networks of America, the National Association of Telecommunications Officers and Advisors.

USAC News Brief Dated December 9 – Appealing USAC Invoice Decisions

USAC’s Schools and Libraries News Brief of December 9, 2016, provides important guidance for any applicant or service provider who had submitted an invoice(s) for FY 2015 recurring services prior to the October 28th invoice deadline, but whose invoice(s) had not been approved by that date.  Normally, if an invoice is rejected or reduced because of an error, the invoice can be corrected and resubmitted.  If resubmission is attempted after an invoice deadline, however, USAC’s system will reject it.

To resolve such a problem, many applicants and service providers have requested waivers of the invoice deadline from the FCC.  Since the fall of 2015, this strategy has not worked.  The FCC has shown no flexibility at all, rejecting all such waiver requests.

Last Friday’s News Brief describes a more successful approach.  Rather than request an FCC waiver, file an appeal of the rejected or reduced invoice with USAC.

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.