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E-Rate Central News for the Week
December 19, 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 25 for FY 2016 totaled $126 million — the first time this year for which funding exceeded $100 million in one wave.  Cumulative national funding through Wave 25 is $1.30 billion.  Wave 26 is expected to be released this Monday, December 19th.

Category 1 in a Category 2 Environment

Two weeks ago, in our newsletter of December 5th, we began a discussion of the confusion that has arisen surrounding the FAQs in the FY 2017 Eligible Services List (DA 16-1023), USAC’s Schools and Libraries News Brief of December 2nd, and the additional questions these “clarifications” raised regarding the definition of a “campus” and the nature of the connections between various buildings and/or campuses.

The current rule is that connections between two campuses are Category 1, but connections within a single campus are Category 2.   On the surface, this sounds fine. E-Rate Central, however, believes that additional advice is needed on dealing with what we used to consider internal connections (Priority 2), particularly within a single building, but which are now potentially considered Category 1.

Let’s review. It used to be pretty easy to determine how a given building or location was treated for E-rate purposes. The “rebuttable presumption,” and the basis for most decisions involving the difference between Priority 1 and Priority 2, was that a public right-of-way constituted a dividing line between two locations. That is no longer the case. Now that applicant-owned WANs are eligible for Category 1 support, the E-rate Modernization Order specificallyeliminated the presumptive public right-of-way distinction.  

Instead, the FY 2017 ESL introduced a new concept of a “geographically contiguous” property. By way of contrast, the ESL referred to buildings “located miles apart” as being non-contiguous. That situation is pretty clear. But how about two sites one mile apart? Or 100 yards apart? Or does contiguous vs. non-contiguous depend on some other factor?  By discarding a public right-of-way as a dividing line, the FCC threw out a reasonably well understood term. And substituted it with — what?

Perhaps realizing that more clarification was needed, USAC issued (presumably with FCC concurrence) its December 2nd News Brief. In our view, this has made the situation worse. At one point, the News Brief seems to suggest that, although a public right-of-way is no longer considered a dividing line, a “major thoroughfare” might be. USAC expands that distinction further when the News Brief indicates that the separation between non-contiguous grounds might be simply “a stream or a road.” 

A “geographically contiguous” property, however, is only part of the definitional problem. The FCC also defines “campus” as one or more buildings of a single school on a geographically contiguous property. This means that if there are multiple schools on a geographically contiguous property, there are multiple campuses. To narrow the focus even more, it also means that multiple schools in a single building would be deemed to be separate campuses.

Consider, for example, a school district with a junior high school and a senior high school in the same building. If the state considers the JHS and the SHS to be separate schools, the building might have two campuses for E-rate connection purposes. We say “might” because the December 2nd News Brief goes on to explain that connections between separate schools in a single building would be eligible for Category 1 support — if the schools do not share any classrooms. If, on the other hand, the schools share classrooms, connections to these rooms would be Category 2 (and the shared costs must be allocated between the budgets of each school).

Ostensibly, the advantage of treating some connections in a multi-school building as Category 1 is that their costs would not be subject to the schools’ Category 2 budget limitations. In our view, such an advantage is far outweighed by the complexities.   Unless the intra-building network has been specifically designed to partition the network into separate zones for each school, identifying the points of connection and the associated costs is likely to be a difficult exercise. Category 1 costs, even if easily identified, may be insignificant — perhaps a few jumper cables.

Another, but generally unrecognized, problem with treating intra-building connections as Category 1 is procurement. Such connections would normally be part of the applicant’s own network. As special construction, under the E-rate Modernization Order, these connections would be “self-provisioned.”  To be eligible for E-rate, such connections would presumably have to be bid and assessed (in the unlikely event there were any bids) against a third-party leased carrier solution.

For Form 470 purposes, our advice to applicants seeking E-rate support for intra-building connections (or even connections between separate, but adjoining, buildings) is to file under both Category 1 and Category 2.   Pending further guidance to the contrary, our recommendation for Form 471 purposes is to treat the entire network as Category 2. If separate schools are involved, allocating the Category 2 costs between the schools should be easier than trying to allocate the costs between Category 1 and Category 2.

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

Form 486 Urgent Reminders and the Holidays:

For the past few weeks, we have been reminding applicants of Form 486 deadlines for FY 2016 (see below), and that we were expecting USAC to begin issuing “Form 486 Urgent Reminder Letters” via EPC. The purpose of these Reminders is to give applicants a second chance to meet their Form 486 deadlines. Traditionally, these Reminders were actual letters. This year, the practice is expected to be in the form of emails directing applicants to their EPC News Feeds for a digital copy.

Last year, the first large batch of Reminder letters was mailed on December 2. This set the second-chance deadline before most schools started their holiday breaks. This year, no Reminders have yet been issued, perhaps because their release via EPC is still under development.

Our concern — and something to watch for — is that this year’s Reminders could be released shortly with a 15-day response deadline that will fall within the holiday period. Hopefully, at this stage, USAC will hold off sending FY 2016 Reminders until early 2017.

E-Rate Updates and Reminders

Upcoming 2016 E-Rate Deadlines:

December 19 Form 486 deadline for FY 2016 funding committed in Wave 9. 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 January and remaining December deadlines:

Wave 10         12/26/2016
Wave 11         01/02/2017
Wave 12         01/09/2017
Wave 13         01/17/2017
Wave 14         01/24/2017
Wave 15         01/31/2017

FCC Chairman to Resign in January:

FCC Chairman Tom Wheeler announced his intent to leave the Commission on January 20th. The move was expected and is timed to coincide with the ascendency of the Republican Administration.

Six Appointments to the USAC Board:

FCC Chairman Wheeler appointed (or reappointed) six members of USAC’s Board of Directors. The two key reappointments from an E-rate perspective were Robert Bocher (Consultant, Wisconsin Department of Public Instruction), representing the libraries, and Dr. Daniel Domenech (Executive Director, American Association of School Administrators), representing the schools. The two newly appointed directors were Cynthia Kinser (Deputy Attorney General, Office of the Tennessee Attorney General), representing state consumers, and Beth Choroser (Vice President of Regulatory, Comcast Corporation), representing the cable operators.

USAC News Brief Dated December 16 – EPC Profile Updates

USAC’s Schools and Libraries News Brief of December 16, 2016, discusses USAC’s plan to update, or allow applicants to update, EPC entity profiles for school districts, independent schools, and libraries.

School district entity profiles are particularly important because they are used to establish the discount rates of those districts, not only for applications filed by the districts, but for the consortium and library applications that rely on the same NSLP data. This was a major problem during the FY 2016 application cycle because consortia and libraries could not complete their applications until school district entity profiles were complete and “locked down.”  As a result, there were two Form 471 window deadlines, a first one for schools and school districts, and a later one for consortia and libraries.

Ideally, there would be only one application window for FY 2017. One window, however, would require careful control of the EPC entity profiles to avoid last year’s problems. The News Brief discusses such a plan.

Although USAC unlocked entity profiles after the second FY 2016 window closed, the profiles section of EPC is apparently locked again. Prior to this, applicants had been able to make changes to their EPC profiles, updating student counts and entity lists. Changes of a similar nature were and are still being made in USAC’s own Form 471 records as a part of the FY 2016 application review. USAC’s changes, however, have not yet been reflected in the EPC entity profiles. That is expected to change next month as USAC “migrates” data it has validated back into the applicant portals. Doing so may override any updates made by applicants over the past five months while the profiles were unlocked.

Where there appears to be conflicts between applicant and PIA entity changes, USAC plans to reach out to those affected applicants by phone or email to coordinate the changes. Once USAC does its bulk upload of validated entity data — our current best guess is late January — the following will occur:

  • USAC will again unlock the entity profiles. For some period of time — perhaps a month — this will permit applicants to review, and correct if necessary, any changes USAC has made, or may otherwise be needed, in their entity profiles.
  • USAC will then relock the entity profiles, presumably for the duration of the application window. With the school district entity data locked, consortia and libraries will be able to complete their applications in a stable environment.

Applicants should expect additional USAC outreach on this process in January. Note that the “unlocked” period, noted in Step #1 above, will essentially create a new deadline for applicants to update their entity data prior to actually beginning an FY 2017 Form 471 application.

For timing purposes, it now appears that USAC’s announcement last October that the FY 2017 application window will be no earlier than February-March may be optimistic. If the USAC entity data migration takes place in January, and if applicants are given a subsequent month to review and update their data, the application window could easily slip to March-April.

The News Brief also notes that this year’s winter contact period, providing relief on PIA inquiries, runs from December 23, 2016, through January 6, 2017.

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.