News of the Week

Last Monday’s Wave 26 for FY 2016 totaled $141 million.  Cumulative national funding through Wave 26 is $1.44 billion.  Wave 27 is expected to be released later this week.

Wave 26 was the second wave in a row of over $100 million, and was the largest wave yet.  The log jam in pending applications may finally be breaking up.  Early last week, based on a recent conversation with USAC, the State E-Rate Coordinators’ Alliance (“SECA”) released the following information:

• USAC has acknowledged the concerns and frustrations many applicants have with the slow pace of 2016 funding commitments.
• One of the major causes of the delay has been with the processing of applications in the new EPC system.  USAC is making needed software fixes to help speed the processing of applications.  Additionally, in some situations, PIA reviewers are reaching out to applicants outside of EPC to speed processing.
• Additional good news is that, based on recent increases in the pace of commitments and further benefits expected from upcoming system improvements, USAC expects to process the majority of the remaining applications by the end of January.
• USAC officials indicated that they don’t foresee any major changes to the FY 2017 Form 471.  The FY 2017 Form 471 filing window cannot open before February 2, 2017, and there will be a period prior to the opening, during which time applicants will be able to update their entity, enrollment, and NSLP data in their EPC profiles (see Schools and Libraries News Brief of December 16, 2016).
• USAC will likely be more proactive in the coming weeks and provide more information to applicants on the status of their pending applications.

Two-Step RAL Corrections:

Applicants are reporting some confusion in making RAL corrections, not realizing that it is a two-step process.  Effectively, an applicant must indicate an intention to make a RAL change, then accept a “Task” to make the actual correction.

The first step, starting from the basic application, is to use “Related Actions” and follow the link on the next screen to “Submit Modification Request (RAL).”

What follows is a bit disconcerting.  EPC goes into a “Working” mode for a few seconds, briefly displays an “Action Completed Successfully” message, but then appears to do nothing further.  This is where the confusion arises.

To proceed to the second step, the trick is to wait another 10-15 seconds.  At this point, a new “Task” will appear in the upper blue bar.  Clicking on “Edit Form 471 Application” will allow you to actually make a RAL correction.

Direct Contact to USAC Ombudsman Terminated:

USAC announced (as of last Wednesday) that it was discontinuing the email address for the E-rate Ombudsman.  USAC will continue to provide status updates on E-rate applications and invoices, but will apparently filter those requests through the Client Service Bureau (“CSB”) via the EPC Customer Service process or by phone (888-203-8100).

Direct access to the Ombudsman’s office, although the office was never fully independent, has often provided an effective way for applicants, service providers, and consultants to cut through the red tape of thorny E-rate problems.  While E-Rate Central really appreciates the work CSB and the Ombudsman’s office do on a daily basis, it hates to see another level of review inserted in the process to resolve unique status issues.

Upcoming 2016 E-Rate Deadlines:

Pending E-Rate Gift Rule Appeals:

E-Rate Central has posted an interesting article entitled “USAC Enforces the E-rate Gift Rule,” guest-written by Deborah Krabbendam, Esq., of Conrad O’Brien PC.  The article discusses two sets of appeals recently filed with the FCC involving adverse decisions made by USAC regarding the E-rate gift rules.  In summary, several points are worth noting.

1. As a general measure, pointing to the importance of applicant compliance with the FCC gift rules, the penalties proposed by USAC are well in excess of the value of the alleged gifts.  In one case, USAC is seeking to recover almost $900,000 for a gift worth $150 or less from Robeson County Public Schools.  In the other case, which involves “free” services worth an estimated $17,000, USAC denied, or is seeking repayment of, a total of $840,000 from Lawrence Unified School District.  Clearly, violations of the gift rules can have serious consequences.
2. More specifically, the two pending appeals raise the following issues:
   1. The gift in the Robeson case was made in 2007, well before the gift rules were formally adopted by the FCC in 2010.  Treating the small 2007 gift as a violation would apparently rely more on E-rate’s longstanding competitive bidding rules than on the FCC’s formal 2010 gift “clarifications.”
   2. The free service in the Lawrence case involved home Internet access for certain district school board members and school managers.  The service provider argues that providing such services was consistent with the pricing and promotions afforded other similarly situated commercial customers, and was thus in accordance with E-rate’s Lowest Corresponding Price (“LCP”) rule.  If accepted by the FCC, this argument might imply that, at worst, rather than being treated as a competitive bidding violation, the value of the residential Internet service should be cost-allocated out of the district’s E-rate funding.
3. In the latter case, should the FCC decide that the free residential Internet was a competitive bidding violation, rather than a cost allocation issue, such a decision could have wider implications in the FCC’s treatment of the Boulder Valley and Microsoft petitions to permit off-campus use of school Internet facilities (see our newsletter of September 26th).