Wave 22 for FY 2004 is scheduled for release on Tuesday, June 21, 2005. This wave is comprised of 43 letters totaling $56 million. Total funding now stands at $2.25 billion.

Note that although the current total of $2.25 billion equals the nominal annual program cap, an additional $150 million in previously unused funds was made available by the FCC for FY 2004 funding.

The first wave of funding for FY 2005 has still not yet been issued, and there has been no public announcement concerning the reason for the delay or the prospects for resolution. As discussed in last week's newsletter, the delay is going to create problems for applicants and vendors alike.

Ironically, the FCC's new NPRM (discussed below) explicitly recognizes the problems caused by such delays. This week, instead of editorializing, we will simply quote the following NPRM language:

As noted above, the timing of various parts of the USAC and Commission processes is critical to schools and libraries, many of which operate according to strict State or municipal budget and procurement schedules. When USAC or the Commission cause delay, schools and libraries can be thrown off their mandated budget or procurement schedules. This can have a significant negative impact on schools' adn libraries' ability to achieve connectivity goals.

Last Tuesday, the FCC released a Notice of Proposed Rulemaking ("NPRM") signaling a broad review of, and seeking comments on, E-rate and the other Universal Service Fund ("USF") programs. A copy of the new NPRM is available at FCC 05-124.

Throughout the NPRM, the phrase "we seek comment" appears approximately 170 times in connection with different USF issues. Including alternative language, the FCC is probably seeking input on 200 major issues or sub-issues, more than half of which relate to E-rate or the overall administration of the Fund. The following is a brief discussion of the more important E-rate issues raised:

1. Application complexity. The FCC is clearly concerned with the growing complexity of the program, and is seeking comments on reducing or consolidating forms, and adopting administrative deadlines to provide more certainty for applicants. One tentative conclusion is that a multi-year application process be developed for telecommunications funding requests.
    
2. "Formulaic" funding. One approach apparently favored by the Chairman, but viewed with some skepticism by at least two other Commissioners, is to use a formula based on applicant size to distribute funding, and to permit such funding to be used in a more flexible way.
    
3. Oversight. While seeking, on the one hand to simplify the application process, the FCC remains deeply concerned with waste, fraud, and abuse. Comments are requested on ways to strengthen competitive bidding and debarment procedures, and on the possible establishment of independent audit rules (e.g., to bring E-rate under the Single Audit program).
    
4. Outcome measures. Responding to GAO and OMB concerns regarding the measurement of program effectiveness, the FCC is seeking comments on suitable outcome, connectivity, and efficiency measures.
    
5. Service providers and consultants. Comments are being sought on developing standards of quality or conduct, together with a certification process, for E-rate vendors.
    
6. Administrative structure. A number of comments are being sought on the structure of USAC, on performance measures, and even on the retention of USAC as program administrator.
    
7. Catch all. Finally, the FCC seeks "...comment generally on other measures that would further these goals by deterring the inappropriate use of funds received from the various universal service support mechanisms. Responders to outstanding issues in earlier NPRMs are invited to "refresh" their comments for this NPRM.

Applicants selected for future reviews by BearingPoint, the SLD's contractor for the 1,000 site visit program, should be aware of a new certification step implemented only within the last week or so. In addition to inquiries concerning the equipment or services included with a recent FRN invoice, BearingPoint is asking more general questions regarding possible applicant usage of E-rate funded remote access equipment, VPN data distribution equipment, network file servers, data storage, and wireless access components. Applicants need to recognize that, depending upon usage, some of this equipment is fully or partially ineligible.

While questions on this type of equipment are being asked, BearingPoint is writing down the answers given on a two-page form. The applicant is then being asked to review the answers and sign the form. Essentially, BearingPoint is asking for a real-time certification of the eligibility answers just provided. Our suggestions are as follows:

1. Review the form and the written answers carefully. Pay particular attention if there is a check in any of the five "Yes" boxes. A "Yes" does not necessarily indicate a problem, but it could be a red flag. A "No," on the other hand, means there is no eligibility question.
    
2. If the BearingPoint transcriptions of your answers are incorrect or misleading, request changes (initialed by the reviewer) or clarifications.
    
3. Don't sign anything that you are not sure about. If you're not the expert on the issues in question, find someone who is. As a last resort, realize that failure to sign will probably lead to follow up action, but that a flawed certification is probably worse.

With FY 2005 funding awards hopefully beginning to flow soon, many applicants will shortly begin filing Form 486s. Those using the SLD's online Form 486 will find a new feature. The Block 4, Item 8, certification requires an applicant to list the name of the organization that approved the applicant's technology plan. The online version now includes a state-specific, pull-down list of authorized state approvers.

For the most part, the approvers included in the pull-down list match the approvers listed by state in the Certified Technology Plan Approver Locator on the SLD's Web site (see TPA Locator). This is a nice feature. It saves some typing and it provides a good check that the applicant has listed a certified approver.

Our spot check, however, indicated some differences between the Form 486 list and the SLD's Locator list. The way around this problem, if your plan was approved by an authorized reviewer not included in the Form 486 list, is to select "Other" entry at the end of the list. You will then be prompted to type in the name of your plan's approver.