News of the Week

FY 2019:

The Form 471 application window is open.  It will close at 11:59 p.m. EDT on Wednesday, March 27th.  To help resolve applicant issues during the final days of the application window, USAC’s Client Service Bureau (“CSB”) will be open over the preceding weekend for extended hours the last three days.  In particular:

FY 2018:

USAC issued Wave 49 for FY 2018 on Friday, March 15th, for only $8.09 million.  Cumulative funding as of Wave 48 is $2.18 billion.

Responding to a request for clarification in a letter from the Schools, Health & Libraries Broadband Coalition (“SHLB”) the FCC confirmed the rolling five-year nature of the current Category 2 budget cycle.  Five-year budget cycles were first established as a two-year trial in the First E-rate Modernization Order (FCC 14-99).  The FCC subsequently extended the trial to five years in the Second E‑rate Modernization Order (FCC 14-189).  The implementing language in the First Order appeared to clearly indicate that an applicant’s five-year budget would begin the first year an applicant was funded and extend over the next four years.  On the other hand, the Orders indicated that the Category 2 budget trial would expire after FY 2019.  This suggested that all “five-year” budgets, begun after FY 2015 might be truncated as of FY 2019.  Recognizing that the FCC was planning to address Category 2 budgets in a new order to take effect in FY 2020, USAC has studiously avoided requests to clarify the post-FY 2019 status of budgets initiated in or after FY 2016.

The FCC’s response to SHLB’s request for a definitive clarification, albeit verbally, confirms that a five-year budget with an initial commitment in FY 2016 extends through FY 2020.  More generally:
 

This is a welcome clarification, but one that does not fully establish Category 2 funding rules post-FY 2019.  For that we must await a new FCC order, hopefully issued before July 2019, perhaps preceded by an NPRM (public comment period).  What we do know from an interim report (DA 19-71) released last month (see our newsletter of February 18th) is that the FCC staff is recommending a continuation of the Category 2 budgeting process, possibly with “targeted changes.”

What we believe this means for applicants with existing Category 2 budgets extending into FY 2020 or beyond— including those with first commitments in FY 2019 — is that new rules will leave them no worse off for the remainder of their existing budget cycles.  We would also hope that any improvement to the Category 2 budget rules would, at least as an option, accrue to all applicants.

Upcoming E-Rate Dates:

Legislation Reintroduced to Support WiFi on School Buses:

Senators Tom Udall (D-NM), Cory Gardner (R-CO), Catherine Cortez Masto (D-NV), and Sheldon Whitehouse (D-RI) have introduced a bipartisan bill to provide E-rate funding to support WiFi equipment and services on school buses.  The measure is designed to help close the “Homework Gap” by providing Internet services to students facing long bus rides to and from school or on school trips.  The proposed legislation closely tracks a similar bill sponsored last year by Senators Udall and Gardner and a parallel House bill sponsored by Congressmen Ben Ray Luja (D-NM) and Peter Welch (D-VT).

The one — and somewhat technical — change in the proposed legislation for 2019 is the additional “not withstanding” language in section (b) directing the FCC to commence a rulemaking on school bus WiFi eligibility.  According to Cynthia Schultz of the Broadband Law Group, the addition is meant to clarify that, even if the bill’s language is deemed to differ from that of the Communication Act of 1934 (as amended with the introduction of E-rate in the Telecommunications Act of 1996), the bill’s rulemaking mandate would still apply.

The eligibility of WiFi on buses has wide support within the educational community, but has been deemed outside the scope of the FCC’s annual Eligible Services List proceedings.  Establishing a separate FCC rulemaking would greatly enhance the likelihood of enabling E-rate funding.

2Q19 Proposed USF Contribution Factor:

The FCC announced (DA 19-178) the proposed Universal Service Fund (“USF”) contribution percentage for the second quarter of calendar 2019 (corresponding to the fourth funding quarter of E-rate’s FY 2018).  After two consecutive quarters at or above the potentially politically-sensitive 20% level, next quarter’s factor dropped to 18.8%.  The reduction reflects lower expenses, down slightly over 5%, in all four USF programs.

The following table shows the changes in USF contribution percentages over the past two and a half years:

The reduction in the contribution percentage is particularly welcome because of the prospects of increased E‑rate demand in FY 2019, combined with the prospects for lower roll-over funding, putting upward pressure on the USF contribution factor.

PIA Telephone Trivia:

Our March 11th newsletter included a brief note on the 5-digit extension numbers provided to contact PIA reviewers on their general toll-free number (833) 205-1185 and how to navigate to the PIA voicemail system if no extension number is provided.  Here’s a little interesting trivia on the telephone system being used by the Maximus PIA reviewers.

Maximus, USAC’s new Business Process Outsourcing (“BPO”) contractor, is conducting PIA reviews from two locations, Brownsville TX and Baltimore MD.  Calls to the single toll-free number are routed to the appropriate reviewer based on the extension number.  Should you ever want to have a friendly chat with your PIA reviewer about the local weather or sports teams, you can use the first two digits on the reviewer’s five-digit extension to determine where the review is located.  Reviewers with extensions beginning “58” are in Texas and  “72” are in Maryland.

Interestingly — or in case PIA’s toll-free number is out of commission — the 5-digit extension numbers are the last five digits of the reviewers’ direct-dial numbers.  For example, a Texas PIA reviewer with an extension 58xxx can be dialed directly at (956) 435-8xxx.  Similarly, a Maryland PIA reviewer with an extension 72xxx can be dialed directly at (401) 907-2xxx.

USAC’s Schools and Libraries News Brief of March 15, 2019 reminds applicants that contract details must be entered into the contract records of their entity profiles to be referenced in their Form 471s.  The section discusses how to create records for pre-existing contracts and how to handle state master contracts.

The News Brief also reviews Category 2 licenses, modules, and transceivers that have been added as separate drop-down options in the FY 2019 version of the Form 471.