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April 19, 2010

Introduction

The E-Rate Central News for the Week is prepared by E-Rate Central. E-Rate Central specializes in providing consulting, compliance, and forms processing services to E-rate applicants. To learn more about our services, please contact us by phone (516-801-7804), fax (516-801-7814), or through our Contact Us web form. Additional E-rate information is located on the E-Rate Central website.

Funding Status

Wave 49 for FY 2009 will be released on April 21st for $11.1 million. Priority 2 funding is still being approved at 80% and above, and denied at 69% and below. Cumulative funding for FY 2009 is currently $2.67 billion.

Wave 80D for FY 2008 — perhaps more accurately designated a "ripple" than a "wave" — will be released on April 19th for $372 thousand. Cumulative funding for FY 2008 is currently $2.51 billion.

USAC is prepared to issue the first funding wave for FY 2010 later this month. The timing of the first wave is dependent upon FCC approval of USAC's application review procedures for FY 2010. The first wave for FY 2009 committed $134 million and the funding commitment decision letters (FCDLs) were issued on April 28, 2009. In order to match a schedule similar to last year's, the first wave needs to run this week to allow time for USAC to print the FCDLs.

National Broadband Plan/E-Rate Update

FCC Chairman Julius Genachowski testified before the Senate Commerce, Science, and Transportation Committee last week on the FCC's National Broadband Plan. The Chairman's prepared remarks focused on the Plan's ambitious goals to provide:

  • Access for every American to robust and affordable broadband service and to the skills to subscribe.
  • Broadband speed of at least 1 gigabit to at least one library, school, or other public anchor institution in every community in the country.
  • Affordable 100 megabits per second to 100 million households.
  • World leading mobile innovation, with the fastest and most extensive wireless networks of any nation.
  • Access for every first-responder to a nationwide, interoperable broadband public safety network.

A substantial portion of the ensuing discussion in the hearing focused on the FCC's possible response to the previous week's Court of Appeals Comcast vs. FCC decision indicating that the FCC had overstepped its authority with a rule requiring companies to give broadband users equal access to all Internet resources. The Chairman expressed confidence that the ruling would not inhibit the FCC from implementing the National Broadband Plan, but ducked specific questions as to the FCC's intent to reclassify Internet service as a telecommunications service - an obviously contentious issue.

Sen. Jay Rockefeller (D-WV), a long-term supporter of the E-rate program, criticized the National Broadband Plan as being long on vision and short on tactics. On the one hand, he is right. The Plan itself, as noted in the Chairman's prepared remarks, provides only the following broad implementation roadmap:

  • It proposes a once-in-a-generation transformation of the Universal Service Fund from yesterday's technology to tomorrow's.
  • It proposes recovering and unleashing licensed and unlicensed spectrum so that we can lead the world in mobile.
  • It proposes ways to cut red tape, lower the cost of private investment, and accelerate deployment of wired and wireless networks.
  • It proposes initiatives to foster vibrant and competitive free markets and empower consumers.
  • It proposes a roadmap to tackle vital inclusion challenges, so that everyone, everywhere can enjoy the benefits of broadband.
  • And it proposes ways in which broadband can be deployed to help solve many of our nation's major challenges: including education, health care, energy, and public safety.

On the other hand, and in fairness to the FCC, implementation details should become much clearer over the next few months as the FCC begins releasing a series of broad Notices of Inquiry ("NOIs") and Notices of Proposed Rulemaking ("NPRMs"). Most immediately, at its next open meeting on April 21st, the Commission is scheduled to consider an NOI and NPRM initiating universal service reforms as outlined in the National Broadband Plan. An NPRM on E-rate is expected to be released later this calendar quarter.

Comments Requested on "Lowest Corresponding Prices"

The FCC has requested public comment on a petition (filed several weeks ago by two industry associations, USTA and CTIA) seeking clarification of a rule requiring vendors to offer their "lowest corresponding price" to E-rate applicants. Current rules define "lowest corresponding price" as "the lowest price that a service provider charges to non-residential customers who are similarly situated to a particular school, library, or library consortium for similar services."

The rule, often referred to as a "most favored nation" pricing requirement, is designed to prevent service providers from marking up pre-discount prices on E-rate products and services to E-rate customers who, with discounts, may be somewhat less price sensitive.

Although we are unaware of any service providers being cited for a violation of this rule, USTA/CTIA noted that USAC "recently began testing for lowest corresponding price compliance in some audits." As a result, the petition asks the FCC to clarify five specific aspects of service provider pricing obligations. It suggests that:

  1. The lowest corresponding price obligation applies only to competitive bids submitted by a provider in response to a Form 470. Most importantly, this means that if an applicant independently picks a "non-bidding" provider based on publicly available service offerings (e.g., tariffs, state master contracts, or general retail rates), that the provider should be under no obligation to subsequently prove that service was provided under the lowest corresponding price.
  2. The lowest corresponding price obligation is not a continuing obligation that entitles a school or library to a constantly recalculated lowest corresponding price during the term of a contract.
  3. There are no specific procedures that a service provider must use to ensure compliance with the lowest corresponding price obligation.
  4. In determining whether a service bundle complies with the lowest corresponding price obligation, discrete elements in such bundles need not be individually compared and priced.
  5. In a challenge regarding whether a provider's bid satisfies the lowest corresponding price obligation, the initial burden falls on the challenger (i.e., a school or library) to demonstrate a prima facie case that the bid is not the lowest corresponding price.

Comments on the USTA/CTIA petition are due May 14; reply comments are due June 1.

E-Rate Updates and Reminders

New Billing Option Web Site for Verizon Wireless:

Verizon Wireless is e-mailing instructions (including identifying PIN numbers) to applicants using their services for a new Web site it has developed to collect billing information and discounting preferences. The new online process is designed to replace the paper informational requests previously sent, usually by fax, to its E-rate customers. Verizon Wireless is asking its customers to complete this online form for FY 2010 by May 28, 2010 - regardless of whether they have been funded or not by that time.

Completion of the online form is critical for customers requesting discounted billing. Although BEAR processing is the default option, Verizon Wireless is encouraging all customers to use their Web site to affirmatively choose a billing option and to confirm account billing information.

Community Use of School Internet Facilities:

Reply comments on the FCC's proposal to permanently permit community use of school Internet facilities (FCC 10-33) are due this Monday. The State E-Rate Coordinators' Alliance ("SECA") has already filed reply comments in opposition to earlier comments by the Massachusetts Department of Telecommunications and Cable suggesting that schools be required to notify the FCC of their public access hours of operation. SECA argued that this would be an unproductive and burdensome requirement.

Schools and Libraries News Brief dated April 16 - Corrective SPIN Changes

The SLD's April 16th News Brief is the first of an expected two-part series on SPIN changes. Such changes are required whenever the SPIN associated with an FRN does not match the SPIN currently being used by the vendor actually providing the service. In general, such mismatches occur whenever: (a) the same vendor is being used but is operating under a different SPIN; or (b) the applicant has changed vendors. In the former case, as discussed in last week's News Brief, the applicant must file a "Corrective SPIN Change;" in the latter case, the applicant must file an "Operational SPIN Change." Although the two types of SPIN changes are similar, somewhat more information is required for operational changes.

Corrective SPIN changes should be used in the following situations:

  • The SPIN associated with the FRN is a valid SPIN but it does not identify the correct service provider.
  • Your service provider has more than one SPIN and you entered the wrong one.
  • Your service provider has been involved in a merger or acquisition and the SPIN on the FRN must be changed to reflect this situation.
  • The service provider did not have a SPIN at the time the Form 471 was filed (i.e., the "dummy" SPIN 143666666 had been used).
  • The applicant is using a state replacement contract for all or part of a funding year (i.e., the temporary state replacement SPIN 143999999 had been used).

Additional information on corrective SPIN changes can be found in the Reference section of the SLD's Web site.