News of the Week

The The FY 2015 application window closed April 16, 2015. Application review is well underway. Funding waves for FY 2015 are expected to begin in May. Based on a recommendation to the FCC approved at last week’s meeting of the Schools & Libraries Committee of the USAC Board, early waves should include funding for Category 1 and Category 2 services at all discount levels. In other USAC news, Julie Tritt Schell, the State E-rate Coordinator for Pennsylvania, was appointed Chairman of the Schools & Libraries Committee, the first time that someone deeply involved in the E-rate application process has served in this role.

Important: Last Friday’s S&L News Brief, referenced below, includes an announcement that USAC will be mailing almost 2,790 warning letters this week to applicants who filed timely Form 471s online for FY 2015, but who have not yet certified those applications. Those certifications must be filed on or before May 26, 2015.

Wave 52 for FY 2014 will be released on Wednesday, May 6th. 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 $2.20 billion.

Wave 88 for FY 2013 will be released Thursday, May 7th. 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 $2.15 billion.

Early in April, the FCC issued a Public Notice announcing the filing of four petitions for reconsideration of the E-rate 2.0 rules. The four petitions were filed on behalf of:

• AdTec, Inc. asking the FCC to reconsider (a) the ineligibility of data plans and air cards for mobile devices, and (b) the phase down of all local, long distance and cellular voice services.
• T-Mobile USA requesting the FCC to reconsider its guidance dealing with the cost-effectiveness and/or duplication of services for mobile broadband services.
• Cox Communications, Inc. urging the FCC to adopt additional safeguards on the expanded funding available for new fiber projects, whether leased or owned by applicants.
• WTA – Advocates for Rural Broadband et al. asking the FCC to reconsider the obligation of high-cost support recipients to bid on fixed broadband with yet-to-be-determined, national, reasonable comparability benchmark(s).

Last week, the FCC received a number of comments in support of, or in opposition to, these petitions for reconsideration. Not surprisingly, three carriers and one carrier association — CenturyLink, SouthernLINC, Sprint, and USTA — focused on the need for greater clarification on cost-effectiveness of applicant-owned fiber systems and on the strict restrictions on the eligibility of cellular data plans. On the applicant side, the American Library Association submitted two filings, one in opposition to WTA's concerns on carrier bid requirements, and one in opposition to Cox’s proposed restrictions on applicant-owned fiber. The Schools, Health & Libraries Broadband (“SHLB”) Coalition also opposed the Cox and WTA petitions, but joined others in supporting T-Mobile’s contention that mobile broadband not be considered “presumptively duplicative.”  The E-rate consulting firm Funds For Learning filed a spirited request seeking reconsideration of the FCC’s decision to phase out support for voice services.

As a practical matter, we do not see these petitions for reconsideration leading to significant changes in the FCC’s new E-Rate 2.0 regulations. We can, however, hope that the FCC may respond with additional clarification on the cost-effectiveness issues. In a similar vein, we would like to see the FCC acknowledge, as requested by SouthernLINC, that “the cost-effectiveness showing requirement for mobile broadband applies not earlier than the 2015 funding year.”

10,000 Free e-Books:

As a part of his ConnectEd Initiative, President Obama announced an agreement with the major publishers to give access to 10,000 e-books to low-income students. The arrangement is estimated to be worth $250 million.

FCC Appeal Decision Watch:

The FCC issued another set of precedent-based waiver decisions in Public Notice (DA 15-505), including:

1. Dismissed as moot one request for review; USAC had already approved the underlying funding request.
2. Granted requests for review or waivers for:
   1. One service provider (and applicant) denied funding for an Internet service deemed not to be cost-effective. The interesting part of this remand may be a subsequent decision by USAC on the service provider’s request to approve funding up to a lower level that USAC would deem cost-effective.
   2. One applicant that had purchased, but not installed, Priority 2 equipment in the March–May period immediately preceding the funding year.
   3. One applicant contesting the eligibility of a Priority 1 service.
   4. Nine applicants for late-filed Form 471 applications or Item 21 attachments. Interestingly, eight of the waivers granted were for late-filed FY 2015 applications.
   5. One applicant for ministerial and/or clerical errors.
   6. Three applicants for missing service substitution deadlines.
   7. Two applicants that had legally binding agreements, but not formally signed contracts, in place when filing their Form 471 applications. Both decisions are in line with the new contract signing requirements of E-Rate 2.0.
   8. Three applicants for missing service implementation extension request deadlines.
   9. Two applicants for 1-3 day violations of the 28-day bidding rule.
3. Denied requests for review or waivers for:
   1. Two applicants (and one service provider) missing service implementation extension request deadlines.
   2. One applicant for a greater than 3-day violation of the 28-day bidding rule.
   3. Four applicants for untimely filed requests for waivers or review.

The S&L News Brief of May 1, 2015, provides additional detail on the types of questions often raised during the Program Integrity Assurance (“PIA”) stage of the Form 471 application review process. The topics covered include:

• Eligible products and services
• Conditionally eligible products and services
• Partially eligible products and services
• Ineligible products and services
• Cost of eligible products and services

The News Brief also includes a brief review of the E-rate gift rules. In summary, the News Brief notes that:

In order to provide for a fair and open competitive bidding process, the E-rate rules impose significant restrictions on the direct or indirect solicitation or acceptance of gifts, gratuities, favors, entertainment, loans or any other thing of value by E-rate applicants from service providers or prospective service providers. The rules also significantly restrict the gifts, gratuities, favors, entertainment or any other thing of value that E-rate service providers or prospective service providers can offer or provide E-rate applicants.