• FCC Rulemaking: Internal Connection Funding Priorities
• FCC Rulemaking: Implementation Deadlines
• Funding Status: PY2 - PY4
• CIPA Compliance: Documenting "Undertaking Such Action"

The following is a summary of the E-rate News for the Week of April 30, 2001, prepared by E-Rate Central.  Official SLD news appears in the "What's New!" section of the SLD's Web site. Additional and archived information appears elsewhere on this Web site.

FCC Rulemaking: Internal Connection Funding Priorities

The SLD's revised estimates for PY4 show total demand for Priority One (telecommunications and Internet access) services of $1.73 billion.  Assuming maximum PY4 funding of $2.25 billion, less some reserve for appeals, this leaves $500 million or less for Priority Two (internal connection) services.  The total internal connection demand - just from 90% applicants - is over three times this amount.  The allocation of these remaining funds is at the heart of the SLD's and FCC's problem for PY4.

This week, the FCC issued a Notice of Proposed Rule Making ("NPRM") to address this issue (and the one discussed below).  A copy of the FCC's Notice of Proposed Rule Making is available at their Web site. .  Comments on these proposals are due later this month. 

The FCC proposed two options to allocate scarce internal connection funding.  The first option is to retain the current rules that, this year, would prorate the remaining funds among all 90% applicants.  This could mean that internal connection discounts would be no more than about 30%.  In many cases, this would put internal connection projects out of reach for the financially poorer applicants.

As a second option, the FCC proposed funding internal connections only for applicants that did not receive Priority Two funding in the previous year.  Thus, a90% applicant that received internal connection funding (of any kind) in PY3 would be ineligible for any such funding in PY4 (but would again become eligible in PY5).  The underlying assumption is that this would eliminate the majority of the internal connection demand from high discount applicants (that were funded down to the 82% level in PY3), leaving sufficient excess funds to meet the full discount needs of "new" Priority Two applicants.  On this basis, there might be internal connection funding available for new PY4 applicants even below the 90% level.

Regardless of which option the FCC ultimately chooses, no decision is expected until at least June.  Until then, the SLD will be unable to fund any application involving internal connection requests.

FCC Rulemaking: Implementation Deadlines

The FCC's same NPRM also proposed new rules governing the deadline for using discounts awarded for non-recurring (typically installation) services.  Existing program rules generally require that discounts be used only for services received during the July-June funding year.  In PY1 and PY2, the FCC extended the deadline for non-recurring services to reflect late funding awards and to give applicants additional summer months for installation work.  The current deadline for late PY2 awards, including the most recent out-of-the-window applications, is now September 30, 2001.

In this NPRM (and Order), the FCC does, or proposes to do, the following:

• Order: All PY3 applicants have been given until September 30, 2001, to utilize non-recurring discounts.  This move has been expected for some time, but has now been formalized.  (Note: Applicants may need to extend contract termination dates to take advantage of this grace period and so notify the SLD via Form 500s.)
• Proposal: In future years, extend the non-recurring expense deadline to September 30.  
• Proposal:  If funding is not awarded until after March 1, extend the non-recurring expense deadline to September 30 of the following year.  (Note: If approved, this would presumably make the deadline for PY2 out-of-the-window awards September 30, 2002.)

Funding Status: PY2 - PY4

PY2:  The next wave of awards for out-of-the-window applications is expected some time next week, not this Friday. PY3:  The deadline for the utilization of non-recurring services is now September 30, 2001 (see above). PY4:  Receipt Acknowledgment Letters have been issued on over 30,000 applications. Approximately 2400 manually submitted applications remain to be data entered.  Actual awards for PY4 cannot be issued until the FCC gives the SLD confirmation on the $2.25 billion funding level.  Once this occurs - and it should be shortly - the SLD may be able to begin funding applications that do not include any requests for internal connections.  As discussed above, applications including internal connection requests cannot be funded until the FCC rules on the NPRM options.

CIPA Compliance: Documenting "Undertaking Such Action"

PY4 applicants, receiving funding for anything other than telecommunications services, will be required to certify the status of their compliance with the Children's Internet Protection Act ("CIPA") filtering and policy rules.  The weakest form of the certification will state that the applicant is "undertaking such actions, including necessary procurement procedures, to comply with the requirements of CIPA for the next funding year [PY5], but has not completed all requirements of CIPA for this funding year [PY4]."

The open question is: What does the FCC mean by "undertaking such actions," and what, if anything, should an applicant do to document such actions?  Given that an applicant must "undertake" the actions before discounted services are received (many of which may start July 1, 2001), this is a pressing question.

Pending further SLD or FCC guidance, our current answer is as follows: If Internet service is already being filtered, this should be a sufficient start.  If not, some affirmative action should be taken and documented before July 1.  This might be as simple as attending a workshop on CIPA compliance or initiating a memo to the school principal or superintendent noting the need for Internet safety policies and a filtering mechanism over the next year.