The FCC released a Public Notice and draft of the Eligible Services List (“ESL”) for FY 2015 last week (DA 14-1130). Comments on the ESL are due September 3rd; reply comments are due September 18th.
One striking change in next year’s proposed ESL is its length. The current FY 2014 ESL is 48 pages; the draft FY 2015 ESL is only 6 pages. One reason for the shorter ESL, as discussed below, is that fewer services will be eligible for FY 2015. But the FCC also proposes to remove long lists of ineligible services (deeming them potentially confusing), and to eliminate the Special Eligibility Conditions section and the Glossary of terms (relegating this information to the SLD website).
Interestingly, the Public Notice describing the changes to the ESL is also 6 pages long. We recommend reading the Public Notice carefully because the first few pages — including the accompanying footnotes — provide additional insight and guidance not found in the ESL itself.
The following is a brief summary of the proposed ESL for FY 2015:
- Consistent with the new E-rate modernization Order (FCC 14-99), products and services are split between Category 1 and Category 2 rather than the historic Priority 1 and Priority 2.
- A special subsection of Category 1 is devoted to eligible voice services. This is important because the eligibility of these services is being phased down by reducing applicant discount rates by 20 percentage points per year, and such services must be applied for under separate FRNs.
- Because the ESL does not list ineligible services, it does not reference the Telephone Components (e.g., custom calling features) that the Order makes completely ineligible as of FY 2015. That information is a bulleted item in the Public Notice. Similarly, newly ineligible internal connections components are listed only in footnote #7 of the Public Notice.
- The eligibility of a circuit becomes a function of its usage, not its speed. This point is not clearly stated in the ESL. Note that the voice section, in which the eligibility is to be phased out, includes “Circuit capacity dedicated to providing voice services.” On the other hand, the fully eligible data transmission and Internet section includes a list of circuits including “Telephone dial-up.” Presumably, a single “voice-grade” dial-up line is fully eligible if it carries data, but would be phased out if it is used for voice.
- Wireless (e.g., cellular) Internet access and mobile hotspot services are listed as eligible with the provisos that the service is (a) used for educational purposes, (b) cost effective, and (c) used only on-campus. The real catch here is the “cost effective” requirement. As noted in footnote #6 of the Public Notice, “E-rate funding for individual data plans or air cards for individual users is not cost effective when users of those services can already access the Internet through internal wireless broadband networks…”
- Caching is a newly eligible internal connections component (at least for FY 2015 and FY 2016), but is not well-defined in the Order itself. The ESL Public Notice makes clear that the FCC is seeking to define caching and related software and equipment.
- One welcome ESL change, again clarified more explicitly in the Public Notice, is that the eligibility of internal connections equipment and installation will no longer depend upon linking the products and the service under the same contract. It was never clear to us that the FCC had meant to link equipment and installation for both to be eligible, but that is how the earlier ESL language had been interpreted by USAC. Several appeals on this issue are still pending before the FCC. Breaking this link is particularly important because the FCC is considering designating special Preferred Master Contracts for equipment-only Category 2 products. Without this change, applicants utilizing such contracts would not be able to receive discounts for the installation of that equipment.
Parties planning to comment on the FNPRM portion of the E-rate modernization Order should take a close look at the draft ESL. Not only are the two documents entwined, but the comment schedule for the ESL predates the comment schedule of the FNPRM.
Additionally and tangentially related to E-rate, the FCC just released the Tenth Broadband Progress Notice of Inquiry (FCC 14-113) seeking comments primarily on whether the FCC should increase its broadband speed benchmarks. It does, however, “welcome suggestions for other data sources or ways we can improve our data collection and analysis of broadband availability to elementary and secondary schools and classrooms.” The comment and reply deadlines for this Inquiry are each one-day later than the corresponding dates for ESL comments.