The Second E-rate Modernization Order, and USAC guidance throughout 2016 and early 2017, made it clear that “self-provisioned” fiber networks, while eligible for FY 2017, must be fully justified. An applicant applying for self-provisioned fiber must, at a minimum, also have bid for lit fiber, and must have documented the cost-effectiveness of the purchase option.
In March, by which time many applicants exploring new fiber systems were into their procurement cycles, USAC issued new guidance. USAC’s News Brief of March 3rd introduced — later explained as a “clarification” — two new requirements for those seeking self-provisioned fiber networks. Specifically, the News Brief indicated that such applicants must:
- Also seek bids for “Service Provided Over Third-Party Networks (including, but not limited to, leased lit fiber).”
- At a minimum, include “Transport Only – No ISP Service” as a service type option in their Form 470s.
The News Brief further explained that use of the “Transport Only – No ISP Service” designation was a “technology-neutral way” of seeking support for fiber or non-fiber bandwidth. As a practical matter, this meant that applicants must be open to considering bids for wireless networks with more limited bandwidth and less reliability.
Shortly after this new guidance was announced, USAC reached out informally to certain applicants, which had already filed Form 470s and RFPs for self-provisioned fiber without referencing “Transport Only,” strongly suggesting that they file new Form 470s and restart their competitive bidding procedures — or that they request an FCC waiver. Rebidding was clearly problematic for applicants with extended procurement processes, particularly those who had already selected vendors and signed contracts. Not surprisingly, many affected applicants choose not to refile.
The first definitive sign of trouble arose earlier this month when Richland County School District One was advised by the FCC that their Form 470 did not comply with the program rules, “as clarified.” Funds For Learning (“FFL”) quickly filed an FCC waiver on Richland’s behalf. The waiver requested relief from the “requirement” that applicants post for “Transport Only – No ISP Service” on their Form 470. Last week, the State E-Rate Coordinators’ Alliance (“SECA”) jumped into the fray with comments supporting the FFL waiver.
The FFL waiver, while decrying the lateness of the Form 470 guidance, also argued that the FCC’s concept of technical neutrality, requiring applicants to consider non-fiber alternatives, was fundamentally flawed. While noting that the E-rate rules do require the FCC to be technically neutral with regard to eligible services as a whole, the rules have always permitted individual applicants to select the technology best suited for their needs. In other words, the Eligible Services List must be technically neutral, but applicant needs can and should be technically specific. Hopefully, the FCC will reexamine USAC’s “clarified” guidance.