News of the Week

FY 2016:

Last Monday’s Wave 14 for FY 2016 totaled $32.4 million. Cumulative national funding through Wave 14 is $612 million.  Wave 15 was scheduled for release today, October 3rd, but may be delayed.

FY 2015:

USAC will release Wave 65 for FY 2015 on Thursday, October 6th. Cumulative funding through Wave 64 is $3.31 billion.

Applicants seeking FY 2016 E-rate support for the special construction of lit fiber, dark fiber, or self-provisioned fiber systems need to understand the strict implementation timing issues involved.  

With limited exceptions, no FY 2016 applications including funding requests for dark (including self-provisioned) fiber systems have been approved by USAC. Part of the delay can be attributed to PIA review problems inherent in the current EPC system, particularly for consortium applications. Post-PIA review, but pre-FCDL approval, of fiber applications by the FCC is also an apparent factor this year. This is a problem in and of itself for applicants awaiting funding approval prior to starting construction.

There is, however, another factor. The project completion rules for dark fiber and self-provisioned fiber are different from the service delivery rules applied to other non-recurring services. Traditionally, the first service delivery deadline for the installation of new equipment or services is September 30th of the subsequent funding year — a deadline that is often extended, either automatically, for example, because of a late FCDL or upon request because of circumstances beyond the service provider’s control.

The September 30th service delivery deadline for new dark fiber and self-provisioned fiber systems still applies, but current FCC rules include a critical June 30th milestone deadline. As per the FCC’s Second Modernization Order (FCC 14-189), “applicants may only receive funding for special construction charges for dark fiber if it is lit within the same funding year.”  For FY 2016 applications, this means that all funded segments of a fiber system must be lit by June 30, 2017.

To provide some relief from this June 30th deadline, the FCC has given USAC the authority to grant applicants “a one-year extension to light fiber if they demonstrate that construction was unavoidably delayed due to weather or other reasons.”  At last week’s USAC training in Washington DC, the FCC indicated that receiving a late FCDL “may” qualify as such a reason. If granted, this would extend the lighting deadline to June 30, 2018 — still not up to a separately extended service delivery deadline for non-recurring services of September 30, 2018.

With fiber funding request approvals delayed, some applicants may begin construction before receiving their FCDLs. Indeed, the FCC’s Second Modernization Order permits invoice payments for construction up to six months before the funding year begins (i.e., January 1, 2016 for FY 2016) if an applicant is willing to “bear the risk that their funding request will not be granted.”  Presumably that risk also includes the failure to light the fiber in time and thus having funding rescinded.

Additional comments;

1. FCC staff appears well-versed in the fiber timing issues, but is somewhat constrained by the explicit June 30th language in the Order. A change in that language would require action by the full Commission. Relief, therefore, may take some time.
2. Dark fiber applicants, even if their applications are approved within the next month or two, may want to consider reapplying for special construction funding for FY 2017. Two advantages of this approach are:
   1. The ability to reevaluate their FY 2016 procurement practices — which may or may not need to be redone — based on experience gained from fiber applications approved or denied this year.
   2. Construction under FY 2017 applications may begin as early as January 1, 2017.

Entity Data for FY 2017 Applications:

With the FY 2017 application window looming, it’s time for schools and school districts to begin thinking about updates to their school entity data. Based on discussions during last week’s USAC training, there are several issues, namely:

1. EPC entity profiles for schools and districts were locked during the second FY 2016 application window (for consortia and libraries), but were unlocked shortly thereafter. Currently, they remain unlocked and can be updated.
2. USAC, however, strongly discourages (but does not prevent) entity updates at this time. The reason for this advice is that USAC is still validating entity data on FY 2016 applications. At some point (late November or early December?) USAC plans to upload validated entity data back into applicants’ EPC profiles. This upload would override any previous updates made by applicants.
3. Sometime later, most likely aligned with the opening of the FY 2017 application window (by early January?) USAC will again lockdown entity data for the remainder of the window (late March?). The objective of this action is to avoid the necessity of a second application window for consortia and libraries as was required last year. USAC appears more concerned with the stability of entity data during the application window than it does that the validated data will be at least a year old.
4. If USAC’s hints at last week’s training and our conjectures are accurate, it means that there will be a very small window of time in which applicants can actually update their entity profiles with current information. In most cases, from a discount rate basis, use of older entity data will have little or no effect. It is not clear, however, what procedures will be put in place to permit applicants with new entities to add them to their EPC profiles to support services to these sites.

Note that the prospective lockdown in entity profile data, if and when it occurs, would effectively become another deadline for schools and districts. Although USAC may permit post-lockdown corrections within the application window, such changes would have to be coordinated with any applications already filed or in progress. Stay tuned for more information.

Additional EPC Capability Coming Soon:

USAC indicated last week that it would be adding the capability to file FY 2016 SPIN changes, service substitutions, and Form 500s within EPC. Although it will continue to accept such changes in the traditional manner during the interim, USAC encourages applicants to hold-off such requests, if possible, until they can be made through EPC. The advantage of waiting for the new EPC capability is that such changes can be more seamlessly reflected in EPC, benefitting both applicants and their service providers.

Upcoming 2016 E-Rate Deadlines:

FCC Decision Watch:

The FCC issued its latest monthly set of “streamlined,” precedent-based decisions in Public Notice DA 16-112. In summary, the FCC:

1. Dismissed
   1. Nine Petitions for Reconsideration, including one second petition, not identifying additional reasons or not being submitted within the 30-day filing reconsideration window.
2. Granted
   1. Two requests for review regarding entity eligibility for network circuits traversing non-school locations. The FCC ruled that “…although a transmission route to serve an eligible entity passed through an ineligible entity, the service was eligible because the ineligible entity did not use any of the discounted service.”
   2. One request for review, on a 10-year old appeal, involving the distinction between Priority 1 and Priority 2 equipment located on an applicant’s premises. Note that the FCC’s Eligible Services List for FY 2017 provides much greater clarity on the Category 1 and Category 2 classification of services within a single building or campus (see our newsletter of September 19th).
   3. Two requests for a waiver of the Form 471 filing deadline for applications filed within 14 days of the close of the window.
   4. Three requests for waiver of the Form 471 filing deadline, due to “circumstances beyond the applicant’s control,” filed 15 days or longer after the close of the window. In all three cases, the “circumstances” involved specific, and well-documented problems (including customer service case numbers), with USAC’s EPC system.
   5. One request for review of a signed contract requirement.
   6. One request for waiver of the technology plan rule (no longer in effect).
   7. One request for review of the 28-day competitive bidding rule deemed misapplied as the result of a clerical error on the Form 471.
   8. One request for review, partially granted, regarding the eligibility of a firewall bundle including ineligible anti-virus and anti-spam components. The FCC directed USAC, with the petitioner’s help, to review the funding request, remove the ineligible costs, and process the eligible portion.
3. Denied
   1. Two requests for waiver of the cost-effectiveness analysis required to support wireless data plans or air cards.
   2. One request for review, again on a 10-year old appeal, involving the fine line distinction between eligible and ineligible firewall services.
   3. One request for review of the eligibility of entities providing after-school and summer camp education as a part of a public-private partnership with public schools.
   4. Seven more waiver requests for invoice deadline extensions.
   5. Seven requests for waivers of the Form 471 deadline for applications filed more than 14 days late.
   6. Two requests for review and/or waiver of the 28-day competitive bidding rule.
   7. Two late-filed requests for review or waiver.

USAC Fall Training Schedule:

The locations and dates for USAC’s regional trainings are listed below. For registration information, see Trainings & Outreach.

Slides for the Florida training have been posted on the USAC website.

USAC’s Schools and Libraries News Brief of September 30, 2016, announces and discusses a new Form 498 status tool. The most important points to know about the Form 498 are:

• The Form 498 is a new applicant form.
• As of last July 1st, BEAR reimbursement payments are to be made electronically and directly to applicants. The purpose of the Form 498 is to provide the appropriate bank account information to USAC. BEAR payments will not be made unless there is an approved Form 498 on file.
• The only applicants who do not need to file a Form 498 are those who receive all of their services via discounted invoices from their service providers.
• As indicated above, the first critical invoicing deadline affected by the new Form 498 requirement is October 28, 2016.
• We estimate that, as of last Friday, less than half of the applicants needing to file BEAR forms (or who need to request invoice extensions) in the next four weeks have approved Form 498s. Those with certified, but unapproved, Form 498s need to aggressively pursue approval with USAC. Those without even certified forms — i.e., those who cannot find their BENs in the new Form 498 ID status tool — need to get started now!

Applicants can check the status of their Form 498s in the Search Tools section of the USAC website.

The Search for 498 ID Status link provides an ordered list of Form 498 ID numbers (which takes a few seconds to load) with their associated BENs. The status indicators are “Approved,” “Certified,” “Rejected,” and “Deactivated.”

The tool itself does not provide a search function, but the entire list (although not shown in one screen) is searchable by using a browser’s “Find” function (generally “Ctrl” + “F”) to highlight the appropriate BEN.

The key distinction in status is between “Certified” and “Approved.”  Once a Form 498 is completed within EPC, it is “Certified.”  But before it can be used to file a BEAR reimbursement form, it must be “Approved” by USAC. The approval process for USAC to validate the applicant’s bank account information (most typically by submitting a copy of a voided check) can take two weeks or more.