News of the Week

E-Rate for FY 2024:

Wave 9 for FY 2024 was released on Thursday, June 20th, for $46.7 million.  Total funding is now $1.51 billion. At this point, USAC has funded 78.6% of the originally submitted applications representing 49.4% of the dollars requested.

E-Rate for FY 2023:

Wave 56 for FY 2023 was released on Wednesday, June 19th, for $4.05 million.  Total funding is $2.63 billion.  At this point, USAC has funded 98.4% of the originally submitted applications representing 96.5% of the dollars requested.  With FY 2023 virtually complete, we will no longer report last year’s funding on a regular basis.

The following is a brief summary of three E-rate issues currently or recently being addressed in federal courts and/or the U.S. Supreme Court.

• United States ex rel. Heath v. Wisconsin Bell:  Last week, the Supreme Court agreed to hear this case in its next term beginning in October.  The case has a decade-long history stemming back to allegations initiated by Todd Heath, a telecom auditor, that Wisconsin Bell (an AT&T subsidiary) had overcharged certain school districts in violation of E-rate’s Lowest Corresponding Price (“LCP”) rule.  This rule, for which AT&T has twice unsuccessfully sought additional FCC guidance, is simple in concept.  It requires service providers to charge E-rate applicants the lowest prices that they charge to any other non-residential, “similarly situated,” customers.
  
  Todd Heath, who found significant differences in the prices being charged to various school districts by Wisconsin Bell, is seeking damages under the federal False Claims Act.  The issue now before the Supreme Court is whether the E-rate program is subject to the False Claims Act, a finding that apparently hinges on a determination as to whether or not E-rate payments are considered “federal funds” or the equivalent.
  
  One reason this case is important is that should E-rate payments be formally defined as “federal funds,” applicants nationwide will be subjected to the federal Single Audit Act for entities receiving $750,000 or more of federal financial assistance in any fiscal year.

• Consumer’s Research, et al. v. FCC et al.:  The Supreme Court has just denied a hearing on two appeals, both by the same party, seeking to overturn decisions in two circuit courts that had upheld the constitutionality of the Universal Service Fund (“USF”).  The USF is, of course, the critical funding mechanism for E-rate.
  
  But USF is not yet out of the woods.  Two additional cases are pending on USF constitutionality.  A case in the D.C. Circuit Court of Appeals is projected to uphold USF; the decision on a case in the Fifth Circuit is less predictable.  Should there be a split decision, the Supreme Court would most likely agree to adjudicate.

• Essential Network Technologies LLC and Metcomm.Net LLC v. FCC:  A June decision by the D.C. Circuit Court of Appeals dismissed a petition by two suppliers to require approval and payment by the FCC on E-rate applications that had long been held pending under investigation.  This was the first instance of which we are aware in which E-rate applicants or suppliers had resorted to court action to resolve what are commonly referred to as “black hole” situations in which USAC decisions appear to be withheld for indeterminant periods of time with no discernable action.
  
  Although the Court dismissed the petitioners’ request for a “writ of mandamus,” which would have forced USAC and/or the FCC to act, the dismissal noted that “Respondents represent that [USAC] has completed its investigation of petitioners’ contracts and expects to notify petitioners and the schools they serve of a funding decision stemming from those investigations within a month.”
  
  In a broader sense, although this Court petition was dismissed, we hope that the action will encourage the adoption of more transparent procedures for handling extended reviews.

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