News of the Week

FY 2016:

USAC released Wave 5, totaling $34.5 million, on Saturday, July 23rd. Cumulative national funding through Wave 5 is $112 million. Although USAC funding for FY 2016 is beginning to pick up, this year’s cumulative funding still trails last year pace which had totaled $358 million by Wave 5 (or $834 million at this point in July).

The extended Form 471 application filing window for libraries and consortia closed last Thursday, July 21st. The FY 2016 application marathon is finally over. Halleluiah! 

FY 2015:

USAC will release Wave 58 for FY 2015 on Tuesday, July 26th. Cumulative funding through Wave 57 is $3.31 billion.

PIA Response Issues:

Applicants responding to PIA inquires have recently reported two types of problems, one hopefully transient in nature.

1. As USAC acknowledges, “some” applicants are receiving the following error message when trying to open links to PIA inquiries:
   
   
   
   USAC expects to have this problem resolved “sometime” this week. In the interim, if a PIA response deadline is looming, USAC suggests applying for an extension through EPC. Better yet, or in addition, we recommend calling or emailing the PIA reviewer to report the problem.
2. USAC’s previous News Brief of July 15, 2016, noted that the PIA system had been updated to require an applicant to complete all fields in an inquiry before submitting their responses. The objective was to have applicants address all questions at once rather than in stages. The problem, however, is that many questions have subparts, some of which do not apply after other subparts are completed. For example:
   1. The initial question may require a Yes or No answer.
   2. Subpart “a” may begin “If Yes…”
   3. And Subpart “b” may begin “If No…”
   As implemented, the PIA system requires entries in all blank fields — including, in this example, answers to both the Yes and No subparts. Clearly, this makes no sense. What the system should be doing is requiring answers to each applicable question and/or subpart. Until USAC fixes this — a programming problem that requires considerably more logic than simply identifying any blank field — we advise the following:
   1. Treat the problem with a sense of humor.
   2. Enter something in the inapplicable blank fields. USAC suggests that “N/A” will work for a text field. For a numeric field, try zero.
   3. As with problem #1, call or email the PIA reviewer to report the problem.

Service Provider Frustrations:

Six large telecom carriers sent a letter last week to Chris Henderson, CEO of USAC, with a copy to the FCC, outlining the problems that service providers were having receiving electronic notification files from the EPC system. The root cause of these problems is that many of the larger E-rate service providers have built systems to receive and process files from USAC’s legacy system(s), but are now receiving EPC files in different, and currently unusable, formats. The carriers had previously warned USAC of these problems in an April 20th letter and in a subsequent May 4th meeting — both occurring before the first wave was issued for FY 2016.

Now, with funding waves having started, the problems are real. Without changing their own IT systems, the carriers do not have access to their customers’ Receipt Aknowledgement Letters (“RALs”), Funding Commitment Decision Letters (“FCDLs”), and Form 486 Notification Letters. Until they have that information, they cannot process Service Provider Invoices (“SPIs”) to provide discounted bills. Applicants would have to rely on BEAR reimbursements. As a solution to this problem, USAC is working to return electronic notifications to the earlier legacy formats. The carriers note that USAC has acknowledged this effort “but offered no concrete timeframe nor assurances of when they will be resolved.” 

One disturbing aspect of the carriers’ letter is a recommendation to “Hold all release of additional FCDL Waves until all IT issues are resolved and files and formats have been tested and proven to be readable…”  We do not expect this outcome.

ESL Reply Comments Support Suspension of Voice Phase-Down:

The FCC received at least seven reply comments on its draft Eligible Services List (“ESL”) for FY 2017 (DA 16-615), all supporting initial comments by Funds For Learning to suspend the phase-out of discounts on voice services (currently down 40%). The three strongest arguments supporting this position are:

1. The phase-out of voice discounts is adversely affecting the applicant’s technology budgets.
2. Voice is a critical service, particularly in emergency situations. Reducing voice discounts runs counter to the FCC’s own rules to support services that are essential to education, public health, or public safety. (Note the FCC waiver decision discussed below explicitly rejecting this argument.)
3. Recognizing that the FCC’s request for ESL comments does not provide a forum for revisiting the voice phase-out provisions of the E-rate Modernization Order, that Order does require an evaluation of the phase-out after two years. Suspension of the phase-out for FY 2017 is appropriate until that evaluation is completed.

USAC Guidance on Library CIPA Compliance:

USAC issued a Special Edition News Brief last Thursday providing guidance for libraries on the Children’s Internet Protection Act (“CIPA”). The guidance reviewed the three basic requirements — an Internet safety policy, a “technology protection measure” (e.g., filter), and public notice and meeting — as well as FAQs on the following topics:

1. Who certifies compliance with CIPA?
2. When does a library need to be complaint with CIPA?
3. Can CIPA issues be corrected?
4. What documentation must the library maintain to document CIPA compliance?

Although USAC’s guidance is specifically addressed to libraries, the same CIPA requirements apply to schools as well — with one additional element. Schools are also charged with providing age appropriate training to students regarding Internet safety, appropriate online behavior, and cyberbullying.

E-Rate Central, which provides its own CIPA Primer, strongly recommends that all applicants review USAC’s CIPA guidance for libraries. Being able to document CIPA compliance is extremely important.

FCC Decision Watch:

The FCC released three E-rate decisions last week. Two (DA 16-821 and DA 16-822) resolved longstanding issues filed in 2009 and 2010, and one (DA 16-823) involving recent filings by 17 schools and districts. In particular:

1. DA 16-821 granted an appeal involving a credit for the trade-in of equipment to be considered as a component of the applicant’s payment of its non-discounted share of new funding. The appeal, dating to FY 1999, preceded USAC’s 2004 advice to applicants that the valuation of trade-in equipment for this purpose “must be the fair market value or acquisition cost of the equipment, whichever is lower.”
2. DA 16-822 granted a waiver of the equipment transfer rules in a very special case involving Hurricane Katrina in 2005. The FCC cautioned “that the extreme facts presented in this case” will not likely serve as precedent for future appeals.
3. DA 16-823 denied requests for waivers for schools seeking discounts for cellular data plans to provide emergency backup for more robust and cost-effective in-school WiFi systems. In part, the appellants argued that such emergency use was justified by the same FCC education and public safety rules as cited by proponents of the voice phase-out suspension (see ESL reply comment article above).    In this decision, the FCC rejects this argument stating “while the Communications Act identifies public safety as one of the factors to weigh in designating supported services, it does not require that the fund support all services that could further public safety without taking other factors and program goals into account.”

Form 486 Deadlines for July/August:

The Form 486 deadline for certifying the start of service (and CIPA compliance, if applicable) is 120 days from the later of the FCDL approval date or the start of service date. The deadlines for approved FY 2015 applications for August and the remainder of July (adjusted for weekends and holidays) are:

                      Wave 43                07/29/2016
                      Wave 44                08/05/2016
                      Wave 45                08/12/2016
                      Wave 46                08/19/2016
                      Wave 47                08/26/2016

The first Form 486 deadline for FY 2016 (Wave 1) will be October 31, 2016.

The S&L News Brief of July 22, 2016, discusses the following:

1. Ongoing EPC issues; USAC’s acknowledgement of the electronic notification problems encountered by service providers (see more complete article above).
2. Commitments for FY 2016 and FY 2015: See Funding Status above.
3. Next steps related to the close of the FY 2016 library/consortium filing window: Similar to the steps discussed following the close of the school and district filing window last May.
4. Reminder on incomplete responses to PIA questions (see more complete article above).

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