USAC Update on E-Rate Audits:
The public portion of the USAC Board meeting last week included an update on the status of E-rate audits for 2014-2015 and a preview of the audit plan for 2015-2016. For both E-rate and the three other Universal Service Fund programs, USAC conducts two basic types of audits (or “assessments”). The more extensive audits, usually involving all E-rate activities associated with a given funding year, are conducted under the Beneficiary and Contributor Audit Program (“BCAP”). More targeted audits — although USAC doesn’t like to characterize them as “audits” — focusing on single FRNs are done under the Payment Quality Assurance program (“PQA”).
The Board report indicated that 145 E-rate BCAP audits were planned for 2014-2015 (the period October 1, 2014 to September 30, 2015). Of this total, 82 have been completed or are in progress. The remaining 63 remain to be scheduled, presumably soon. Interestingly, USAC noted that about 70% of the BCAP audits this year were done on a random, as opposed to a targeted, basis. The plan for next year is to flip the focus, targeting a much higher percentage (roughly 80%) of applicants with defined risk factors.
It is unlikely that USAC will publicly disclose how such risk factors are determined, but applicants and service providers should assume that USAC will focus on real, alleged, or perceived violations of the FCC’s competitive bidding rules.
The PQA audit process is driven by the federal requirements of the Improper Payments Elimination and Recovery Act (“IPERA”). It is based on a statistical sampling (i.e., random) of paid E-rate discount invoices. This year’s work is approximately 70% complete and must be completed by October.
New FCC Initiatives in Broadband Deployment:
One recent action and one prospective development emphasize the FCC’s continued commitment to supporting broadband deployment nationwide, including a focus on broadband for schools and libraries.
Just over a week ago, the FCC approved the merger of AT&T and DIRECTV. Conditions of the approval included requirements to:
- Provide (within 4 years) fiber-to-the-premises (“FTTP”) to at least 12.5 million customer locations.
- Offer gigabit service to any E-rate eligible school or library in the areas where the company deploys FTTP service.
- Make “available an affordable, low-price standalone broadband service to low-income consumers in its broadband service area.”
At the Commission’s next Open Meeting on August 6th, the FCC will consider an Eleventh Notice of Inquiry to determine “whether advanced telecommunications capability is being deployed and is available to all Americans, including, in particular, elementary and secondary schools and classrooms, in a reasonable and timely fashion” — and, if not, what steps can be taken to accelerate such deployment.
FCC Appeal Decision Watch:
The FCC issued another monthly set of precedent-based decisions in Public Notice DA 15-875, including:
- Dismissed four petitions for reconsideration on the basis that no additional information or arguments had been provided.
- Dismissed as moot two requests for review for which USAC had already approved the underlying requests.
- Dismissed one request for review that should have been filed initially with USAC.
- Granted requests for review or waivers for:
- Four requests for invoice deadline extensions filed less than 12 months late (see further discussion below).
- Fifteen waivers for late-filed Form 471 applications submitted within 14 days of the close of the window (a standard FCC waiver condition).
- Two additional waivers for late-filed Form 471 applications submitted after the 14-day period, but due to circumstances beyond the applicants’ control (including a serious family surgical emergency).
- Denied requests for review or waivers for:
- One applicant for the failure to consider price as the primary factor in the vendor selection process. In this case, the FCC waived the 60-day appeal deadline, but denied the appeal on the merits.
- Nine applications for one applicant for not meeting their state’s definition of an elementary and/or secondary school.
- Ten requests for invoice deadline extensions filed less than 12 months late.
- Ten additional requests for invoice deadline extensions filed more than 12 months late.
Note the distinction between the FCC’s decision on invoice deadline extension requests approved (4.b above) and these two sets of denials (5.c and 5.d). The FCC makes a clear distinction between requests filed before vs. after the 12 month point, requiring different standards for approval. Within 12 months, the applicant must demonstrate a “reasonable basis” for the delay; after 12 months, the applicant must demonstrate “extraordinary circumstances.”
- Five waivers for late-filed Form 471 applications not submitted within 14 days of the close of the window nor presenting special circumstances justifying waivers.
- One request for the inclusion of additional items in a funding request that the applicant sought to be treated as a ministerial and/or clerical error.
- Two untimely filed requests for review submitted outside of the normal 60-day appeal window.