The FCC’s final rules for the Emergency Connectivity Fund (“ECF”) were released last Tuesday, May 11th. As discussed in last week’s newsletter, an earlier draft of the ECF rules was subject to a number of ex parte comments from interested parties, many of which led to changes in the final Report and Order (FCC 21-58). The most significant aspects of the final order are discussed below.
- Application Periods: The draft rules proposed an initial application window covering retroactive expenditures followed by at least one additional window to cover projected expenditures into the next school year.
The final rules essentially flipped the filing windows. The first 45-day window, which we expect to open in June or July, will cover projected remote learning expenditures for the next fiscal year (July 1, 2021 to June 30, 2022). The FCC has indicated if the first window “appears to be far short of meeting current needs,” a second “prospective” may be needed.
Once prospective needs are largely met, and assuming that 2021-2022 funding does not deplete the $7.1 billion ECF fund, a retroactive expenditure window would be opened to cover expenditures incurred during the March 1, 2020 to June 30, 2021 period.
The most immediate implication of this change is that applicants now undertaking or contemplating remote learning equipment purchases should withhold delivery and invoicing until on or after July 1, 2021.
- Allocation of Limited Funds: The FCC had proposed that if ECF demand exceeds the $7.1 billion program cap, funding would be allocated first to those applicants with the highest discount rate (or even the highest NSLP percentage) much like the old Priority 2 rule.
That provision is still in the final rules but has been slightly modified to provide additional preferences to rural applicants. For ECF purposes only, applicant discount rates will be determined by the following matrix bumping up the rural discounts in each band by 5%:
At the lowest discount band, the extra 5% makes no difference. Rural applicants at 30%, rather than at the normal 25%, would still have priority over the 20% urban applicants. In most bands, however, rural applicants would jump up at least one step in priority as compared to the traditional discount matrix.
It is worth remembering that these discount rates only affect priority in the event of limited funding. Subject to equipment caps, all approved expenses are to be reimbursed at 100% regardless of the order of priority that is based on the discount rate.
- Equipment and Service Eligibility: The ECF eligible services list (see Appendix B of the Order) remains unchanged. What is stressed in the final rules is that funding for the construction of new networks is permitted only if applicants can prove that no commercially available internet access is available. It is not enough to simply show that a self-constructed service is more cost-effective.
- Competitive Bidding: No change. The ECF rules do not require a traditional E-rate competitive bidding process (including a Form 470). But compliance with state and local procurement rules is still mandated.
- Invoicing: The draft rules had indicated that all invoicing would be on a BEAR reimbursement basis, but the FCC clearly heard that this would create problems for applicants unable to frontend payment. To address this issue, the final rules made two changes, namely:
- SPI billing at 100% will be permitted subject to agreement by the service providers as reflected in the Form 471s; and, perhaps more interestingly
- BEAR billing may be done on a “prepayment” basis as long as payments are made to the vendors — and documented — within 30 days.
Publication of the final rules is only the first step in the ECF program. Already the rules are generating many questions that will need to be addressed either by the FCC or USAC. But we expect the first window to open soon. It’s not too early to begin planning for 2021-2022 equipment and services — but stay tuned for further information.