USAC released Wave 5 for FY 2019 on Thursday, May 23rd.  Funding totaled $38.9 million.  Cumulative funding as of Wave 5 is $755 million.

BEAR Notification Letter Addresses:

Applicants are noticing that BEAR Notification Letters are being mailed to the applicants’ Form 471 contact who is not necessarily the same person listed as the contact on the applicants’ BEAR forms.  This can be a source of confusion for applicants awaiting BEAR Notification Letters to close out their invoicing documentation.  However, duplicates of missing BEAR Notification Letters can be easily obtained via email if requested through the Client Service Bureau (“CSB”) at 888-203-8100 or by creating an EPC customer service case.

EPC Deployment News:

Friday’s USAC News Brief, referenced below, outlines three changes recently made to EPC affecting the PIA review process including:

1. Applicants undergoing PIA inquiries are first given 15 days to respond.  Previously, applicants not responding within 7 days have been sent a reminder.  Non-responders will now receive reminders after 7, 12, and 15 days.
2. The subject lines of reminder emails now contain the associated Form 471 numbers and Billed Entity Numbers.
3. Applicants now have an ability to forward PIA and post-commitment review questions to all appropriate users — applicants, service providers, and consultants.

Upcoming E-Rate Dates:

E-Rate Overbuilding Concerns, cont.:

As last reported in our newsletter of April 22nd, there is an ongoing controversy stoked by FCC Commissioner O’Rielly’s concern that E-rate funding is being wastefully used to construct new fiber networks in areas already served by fiber funded via other Universal Service Fund (“USF”) programs.  Commissioner O’Rielly’s position was restated on May 15th in testimonybefore the Congressional Subcommittee on Communications and Technology.  Most specifically, Commissioner O’Rielly indicated that “new E-rate-subsidized fiber networks were overbuilding local USF-funded Texas broadband providers and stealing their anchor customers.”

Last week, three of those providers, small Texas independent telephone companies, filed a Petition for Rulemaking asking the FCC to initiate a proceeding to amend the E-rate rules “to include safeguards which would discourage overbuilding of existing federally supported fiber networks.”  The small carriers were particularly concerned with the issuance of RFPs by “region-based consortia groups” for requirements that could only be met by larger carriers.  The Petition proposed that new special construction projects be subjected to a 60-day public challenge process in which existing fiber providers can demonstrate available service at “reasonable market-based prices.”

Initial indications are that USAC, when challenged, has begun asking a series of overbuilding questions — sometimes a bit apologetically — on both pending and approved applications for new fiber systems.  One example of a recent inquiry is as follows:

Statements made to USAC indicate that [applicant and BEN] is seeking funding to lay new fiber to schools already served with existing fiber which could result in potential overbuilding.  We are sure you understand that USAC, as the Program Administrator, is obligated to address this concern.
How do you respond to these statements?  Please provide documentation to support your response.

An applicant encountering such questions would do well to focus on the two critical aspects of the current E-rate rules highlighted in USAC’s April 1st response to Commissioner O’Rielly’s inquiry last March, namely requirements to demonstrate that:

1. The proposed new fiber construction is the most cost-effective solution; and
2. The bidder was selected based on a fair and open competitive bid process.

For the moment, Michael O’Rielly is the only Commissioner taking a public stand regarding overbuilding, but his position has at least sharpened the USAC review focus on applications for new fiber builds.  We continue to believe that applicants considering long-term leases and self-provisioned fiber networks must spend the necessary time and resources to properly bid and evaluate their options.

FCC Decision Watch:

To deal more quickly with the flood of Requests for Waiver on late-filed applications for FY 2019, the FCC issued a mid-month set of “streamlined” decisions (DA 19-420) on May 20th.  Adhering closely to precedent, the FCC granted waivers to 185 applicants who had filed one or more applications within 14 days of the close of the window and denied waiver requests for 36 applicants who had filed their applications beyond this grace period.  The original appeal and waiver requests can be found online in the FCC’s Search for Filings under Docket 02-6.

USAC’s Schools and Libraries News Brief of May 24, 2019 reminds service providers to file their Form 473, Service Provider Annual Certification (“SPAC”) for FY 2019.  A current funding year SPAC is required before USAC will pay any invoices — SPIs or BEARs — associated with that service provider for that funding year.

With many BEARs about to be filed for FY 2018, we also remind service providers (and their applicants) to confirm that their SPACs for FY 2018 have been filed.  SPAC filings for any given funding year can be confirmed by checking the righthand column on USAC’s SPIN Search Tool.  For a service provider in the program from the beginning, here’s how the SPACs will show:

Last month, as the State E-Rate Coordinator for New York, E-Rate Central sent reminders to 56 NY-based service providers who had not yet filed SPACs for FY 2018.  Not all of these have yet updated their SPACs for the current year.  New York applicants also need to check the SPAC status of their non-NY vendors.

USAC’s latest News Brief also discusses recent EPC changes and 2019 USAC training covered earlier in this newsletter.