The funding threshold for Internal Connections remains at 85%. No Internal Connections funding will be available below 70%. The availability of funding for applicants in the 70-84% range is still uncertain, although funding requests in this range are currently being reviewed by the SLD.

The current version of the online Form 471 — which has not yet been enabled for FY 2004 use — has the most intuitive interface. There is a separate Form 471 button labeled “Continue Incomplete.” No such button exists for the other two forms.

The online version of the Form 470 provides for two types of data entry, either direct entry into a PDF form; or an interview mode (that works something like an online tax preparation program). A user can start entering data in one mode, but complete the form in the other. To complete a Form 470 in interview mode, click the “Form 470 Interview” button. This will bring up a second screen with two options to either “Start New Form 470” or Continue Form 470.” To complete a Form 470 in the PDF mode, click the “Form 470 PDF” button. This will bring up a new PDF version of the Form 470. Note, however, that there is a little gray button about 2 inches from the top right-hand corner labeled “Retrieve.” Clicking this button will bring up a series of two boxes requesting the appropriate ID and security code numbers for the earlier Form 470.

The completion process for the online Form 486 works in a similar manner. In the interview mode, there is a “Continue Form 486” option. In the PDF version, there is a “Retrieve” button on the Form 486 itself.

As a separate issue related to E-rate forms, Consortia members should note that the Form 479 on the SLD Web site is only available in a downloadable PDF format that must be printed out and completed by hand. A computer ready, type-in version of the same PDF form is available in the Forms Rack section of the E-Rate Central Web site that can be filled out online or downloaded to use locally on your own computer.

“Cable modem service provides a high-speed data path over TV coaxial cable. Applicants seeking cable modem service should apply for this service under Internet access, pending a final nonappealable judicial order determining the regulatory status of cable modem service. Brand X Internet Serv. v. Fed. Comm. Comm’n, No. 02-70518, slip op. (9th Cir., Oct. 6, 2003)(per curiam).”

The legal language at the end of this entry reflects a recent decision by the 9th U.S. Circuit Court of Appeals in Seattle. At issue is the obligation of cable companies to provide broadband access to rival Internet companies. Based on an earlier FCC ruling that cable modem service is an “information” service, not a “telecommunications” service, the FCC ruled that cable companies did not have this obligation. The Court determined, however, that cable modem service is an information and telecommunications service, and that the FCC had erred. The FCC has already announced that it will appeal the Court’s decision.

At the very least, the Court’s decision makes for interesting reading. If the Court’s ruling is upheld, the most important E-rate implication may be that applicants can apply for cable modem service under the Telecommunications, rather than the Internet Access, category, presumably with the cable companies being deemed Eligible Telecommunications Carriers. A number of cable companies have started offering Virtual Private Network (“VPN”) services (essentially general purpose WANs). The networks carry Internet as well as other voice, video, and data traffic. Under current E-rate rules, only a portion of the VPN service charges (i.e., that allocated to Internet) is eligible for E-rate discounts. If cable modem service is ultimately determined to be telecommunications, all the VPN charges may become eligible.

For now, however, the FCC is not accepting the Court’s decision. As a result, cable modem service remains in the Internet category. Any applicant that chooses to file for discounts on a cable company’s VPN service for FY 2004, therefore, should assume that only the allocated Internet portion is eligible.

One possible strategy for maximizing FY 2004 discounts in the event the FCC’s position is reversed would be to split a VPN funding request into two FRNs, one for the allocated Internet portion and one for the remaining telecommunications portion (voice, video, and data). If there is no final decision on cable modem service by the time the application is reviewed, the telecommunications portion will be denied, but at least the Internet portion should be funded. As a temporizing measure, the denial of the telecom portion could then be appealed to provide additional time to await a final judicial decision on telecom eligibility.