News of the Week

USAC released Wave 11 for FY 2016, totaling $80.1 million, on Friday, September 2nd. Cumulative national funding through Wave 11 is $484 million.

In late July (see our newsletter of August 1st), the FCC announced its intention to fine and recover funding totaling over $170 thousand from AT&T for what the FCC’s Enforcement Bureau deemed serious violations of E-rate’s Lowest Corresponding Price (“LCP”) requirement. LCP puts the burden on E-rate suppliers to avoid quoting or charging E-rate applicants higher prices than what those suppliers would charge other “similarly-situated” commercial customers. The LCP requirement has been an FCC rule since E-rate began. Though clear in concept, the rule has been the subject of long-standing requests for clarification, particularly by telecom carriers. The FCC’s release of a Notice of Apparent Liability for Forfeiture (“NAL”) against AT&T (FCC 16-98) may finally bring this issue to a head.

AT&T is fighting back hard. Although AT&T’s formal response has apparently not been publicly posted, an AT&T blog entitled “Facts not Fiat” summarizes AT&T’s position. AT&T argues that the FCC is attempting to establish detailed LCP requirements through an enforcement action, rather than through an appropriate rulemaking. AT&T contends that:

1. The FCC incorrectly compared the month-to-month prices it charged two Florida districts with annual contractual prices.
2. The FCC’s annual price comparison was incorrectly based on a special State consortium contract which the two districts chose not to use.
3. The FCC’s NAL relies on an interpretation of LCP competitive bidding rules for which the industry has sought clarification for over six years without an FCC response.
4. The NAL is procedurally deficient with respect to the statute of limitations and the FCC’s jurisdiction regarding intrastate services.

From an applicant’s perspective, it should be noted that the LCP rule applies only to service providers. Although the FCC’s NAL does note an applicant’s “own duty to be cost-effective,” the proposed fine and funds recapture is based solely on AT&T’s actions and on the recovery of the discounted portion of the alleged overcharges. The FCC is making no attempt to recover the non-discounted portion of any extra charges the two districts may have paid.

Regardless of how this battle is ultimately resolved, it will surely further heighten E-rate service providers’ awareness of their LCP responsibilities. Applicants should take advantage of the rule to seek the best possible prices — both pre- and post-discount — during the competitive bidding process by seeking bidder compliance with LCP.

FCC Decision Watch:

The FCC issued its latest monthly set of “streamlined,” precedent-based decisions in Public Notice DA 16-98. In summary, the FCC:

1. Dismissed
   1. Two waivers or appeals on which USAC had already acted as requested.
   2. Four Petitions for Reconsideration not identifying additional reasons or not submitted within the 30-day filing window.
2. Granted
   1. Twenty requests for Form 471 window waivers based on technical filing problems with the EPC system or for late-filed applications submitted within 14 days of the deadline.
   2. One request for review of a signed contract requirement.
   3. One waiver of the 60-day appeal deadline when the appeal was filed within a “reasonable period of time after receiving notice of USAC’s adverse decision.”
3. Denied
   1. Three waivers of the cost-effectiveness analysis required to support wireless data plans or air cards.
   2. One appeal finding that the service providers had assisted in the preparation of the applicant’s Form 470.
   3. Nine more waiver requests for invoice deadline extensions.
   4. Eight requests for Form 471 window waivers for applications filed more than 14 days late.
   5. One late-filed request for a service delivery deadline extension.
   6. Two late-filed appeals.

File Along with Me:

A link to last week’s “File Along with Me” posting is provided below. You can subscribe to the blog by entering your email address on the blog’s home page (under the USAC logo), and confirming the resulting email.

Post No.    Title

59.       Notify USAC that Services Started: Using FCC Form 486.

USAC Fall Training Schedule:

USAC has posted the following locations and dates for its annual fall training series on its Trainings & Outreach site. Note that registration for two of these sessions is already on a waiting list basis.

The S&L News Brief of September 2, 2016, reminded applicants and service providers that BEAR and SPI invoices for recurring FY 2015 services are (with few exceptions) due no later than October 28, 2016. The News Brief discusses the following requirements for:

• Vendors to file their Service Provider Annual Certification (“SPAC” or Form 473) forms for FY 2015. Vendor SPACs are required even if applicants are planning to file BEAR forms for last year’s discounts.
• Applicants to have filed Form 486s for FY 2015 services. For the most part, the due dates on FY 2015 Form 486s have already passed.
• Applicants planning to request BEAR reimbursement have to have filed, and USAC has to have approved, Form 498s to provide electronic banking information.
• Applicants or service providers have to file invoices (BEAR or SPI, respectively) by the October 28th invoice deadline.
• Applicants or service providers, not able to meet the October 28th deadline, have to file invoice deadline extension requests on or before that initial deadline.

As discussed in our newsletter of August 29th, the new requirement, effective as of July 1st, for applicants to file Form 498s before filing online BEARs is going to make the October 28th invoice deadline more challenging. We urge applicants to review our August 29th newsletter and USAC’s September 2nd News Brief.