News of the Week

Wave 40 for FY 2014 will be released on Wednesday, February 11th. Funding for FY 2014 is available for Priority 1 services only. Priority 2 funding is being denied at all discount levels. Cumulative funding for FY 2014 is $2.12 billion.

Wave 81 for FY 2013 will be released on Thursday, January 12th. Funding for FY 2013 is available for Priority 1 services only. Priority 2 funding is being denied at all discount levels. Cumulative funding for FY 2013 is $2.13 billion.

The FCC Form 471 application filing window for FY 2015 opened on Wednesday, January 14, 2015. It will close at 11:59 pm EDT on Thursday, March 26, 2015.

Warning: As of the release of last Friday’s Schools and Libraries News Brief (see below), only 1,721 Form 471s had been filed for FY 2015. This is half the number of FY 2014 applications that had been filed last year at roughly the same point in the filing window. The comparative number of Form 470s filed is also down (see further discussion below).

Although the deadline for filing FY 2015 applications is a month and a half away, the lower number of applications filed to date is worrisome. Ironically, it is the larger applicants and/or their consultants, who have been hard at work on their applications, who are the most concerned. Many who have not started their application(s) remain blithely unaware of the challenges and obstacles they may face, particularly if they wait until the last week of the filing window.

Here are some of the issues:

1. There have been major changes to the Eligible Services List. In particular:
   1. Certain small telephone service components are now ineligible. Charges for these services are often buried within large telephone company bills.
   2. Voice services are subject to a 20% point decrease in discount rates; these charges must also be broken out of broader telecommunications services and filed separately. Cellular services are particularly difficult because only the voice portion (not text, data, nor allocations for devices) are eligible.
   3. There is a new eligible service category for Managed Internal Broadband Services that has not been rigorously defined.
2. Many states have been holding off releasing statewide statistics on NSLP student eligibility awaiting USAC guidance on the recommended reporting format for FY 2015. The format is important this year because of the new discount rate treatment for schools using the Community Eligibility Provision (“CEP”). USAC indicates that it will release this guidance shortly.
3. Printing a Form 471, either prior to submission for internal review, or in the display mode after submission, is problematic. Individual sections, often shown in condensed summary form, need to be expanded (and do not always show all data even when expanded). The “Expand All” command in the Display mode does not expand sub-sectional data, requiring multiple additional expansions. With certain browsers, form data that appears correctly on the screen, appears as gibberish if sent to a printer (sometimes solved by creating a PDF copy first).
4. Detailed Item 21 data is now required within the Form 471 application itself. Each service or product needs to be listed separately and associated with specific entities. Currently, the Block 5 template, if used, does not support this level of detail. Each line item must be manually correlated to the specific recipients of service that must be selected from the list of entities on the Block 4.  For larger applications, particularly for Category 2, this can be a daunting task.
5. USAC is working hard to update its online system to correct known bugs and to clarify online instructions. As a practical matter, most major system updates cannot be made within the filing window and won’t be fixed until FY 2016.
6. Many questions about the new E-rate modernization Order remain unanswered awaiting USAC and/or FCC guidance. The questions involve, not only the application process itself, but related follow-on procedures for application review, funding commitments, and invoicing. In some cases, these questions have been outstanding for several months — so much so that we have begun to refer to them as Frequently Unanswered Questions (or “FUAQs” — please do not pronounce this acronym aloud). Examples include:
   1. How should the eligible voice costs of bundled cellular be allocated?  Various cellular carriers have provided some guidance, but much of this is state- and plan-specific that is difficult to apply in multi-user situations.
   2. How should applicants apply for Category 2 funding if eligible costs exceed individual school Category 2 budgets?  USAC has suggested that applicants would be better off applying only for budgeted amounts, but that eliminates the flexibility to use the other eligible products and services should USAC find ineligible items in the application or subsequent invoices. (See our newsletter of November 17, 2014.)
   3. How will Basic Maintenance of Internal Connections (“BMIC”) funding be administered post-commitment if estimated annual costs are specifically allocated across different items of equipment and/or different locations?  (See our newsletter of January 26, 2015.)
   4. How should an ESA’s discount rate be calculated?  And how should that ESA be listed in the Block 4 of a consortium application of which the ESA is a member?  The E-rate modernization Order suggests that an ESA’s discount rate calculation should reflect the NSLP eligibility of all the district schools in that ESA’s region. In an ESA/district consortium application, however, listing any district school under both the ESA and the district generates a “duplicate entity” error. This issue appears to revolve around the definition of “central authority” in Paragraph 220 of the order that has not yet been clarified.
   5. Should charter schools be included in the Block 4 discount rate calculation of the public school district in which they are located, and, on the flip side, should charter schools’ discount rates be based on all the public and charter schools in that district?  Again, the answer appears to hinge on the definition of “central authority” and may vary from one locale to another.

Given the new E-rate rules and procedures, and the added complexity of the FY 2015 Form 471 and the online filing system, this is going to be a challenging year. We urge all applicants to begin their online FY 2015 applications as early as possible, if only to become familiar with the new system and to focus on the new data requirements.

FY 2015 Form 470 Deadline:

As noted briefly above, the number of Form 470s filed for FY 2015 is also less than the number filed at this point in the FY 2014 application cycle last year. With the greatly expanded availability of funding that the FCC approved in December, presumably making Category 2 funding possible for a wide range applicants (if not all), we would have expected a surge of new Form 470s. As of last week, however, the comparable number of Form 470s filed was down 1,800 from the same point last year.

Technically, as noted in last week’s Schools and Libraries News Brief discussed below, this year’s deadline for filing a valid FY 2015 Form 470 and/or RFP is February 26. Waiting until the deadline, however, leaves no room for error. Because a Form 470 must be posted for 28 days, a February 26th filing would mean that on the Form 471 application deadline, March 26th, the applicant would have to:

• Select vendors
• Sign contracts, if required
• File a Form 471

As we warned in the article above, this is not the year to procrastinate. Applicants who have not already filed their Form 470s for FY 2015 are already behind the eight-ball.

FY 2015 Receipt Acknowledgement Letters:

USAC has indicated that it is in the final stages of testing FY 2015 Receipt Acknowledgement Letters (“RALs”). Once completed, RALs for completed applications will be released daily. Given the difficulties with printing a completed Form 471, it will be interesting to see how much Form 471 detail will be shown in the associated RAL.

USAC Form 471 Filing Tips:

USAC has recently begun publishing short Form 471 filing tips daily. As published, the tips are being compiled in the Latest News section of the SLD website. We suggest reviewing these tips, at least periodically. Some are quite general (e.g., browsers supported), but others provide important details on navigating the online Form 471 that are not intuitive.

The S&L News Brief of February 6, 2015, provides a number of tips for filing a Form 470 for FY 2015, including:

• Review the FY 2015 Eligible Services List (“ESL”).
• Don’t mail a paper Form 470 to USAC (new Form 470s must be filed online).
• Provide sufficient detail on your Form 470 (and/or RFP) for bidders to submit responsive bids.
• Carefully consider what you want to get bids on before limiting your description of services.
• Respond to good faith requests for information from potential bidders.
• Don’t limit your requests to make and model numbers from a specific manufacturer.

Last week’s News Brief also provides guidance to libraries with outlets/branches in more than one school district on how to determine which district is associated with its central/main administrative branch.