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E-Rate Central News for the Week
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| USAC Budgets 2008-2009 ($ in thousands) |
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| Schools and Libraries Program | 2Q09 | Last 4 Qtrs. 2008-2009 |
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| Compensation & Benefits | 724.80 | 2,750.80 | ||
| Personnel Expenses | 90.50 | 191.43 | ||
| Travel | 159.80 | 442.22 | ||
| Printing, Supplies, Equipment, Repairs, and Miscellaneous | 3.00 | 3.20 | ||
| Program Operations (outside contractor) | 12,374.40 | 58,680.90 | ||
| External Relations/ Professional Fees (incl. site visits) | 16.00 | 1,832.40 | ||
| Audits | 19,936.60 | 59,634.90 | ||
| Information Systems | - | 85.00 | ||
| USAC Support - Allocation of Common Budget | 5,425.10 | 19,520.10 | ||
| Totals | 38,730.20 | 143,140.95 | ||
Please note: These are budgeted expenses, not actual expenditures. Final reported expenses may differ, but should be of the same approximate magnitude.
Since Round 3 audits are in full swing, it is not surprising that the projected audit costs are higher than average in the current quarter. But we find it stunning that audit costs are now higher than program operation costs — both much higher for the quarter and marginally higher for the full twelve months. Program operations, after all, include all the PIA application and invoice review in New Jersey, the CSB helpline services in Kansas, and the contract support for the IT systems. This is quite a milestone. It means that USAC is now budgeting to spend more dollars auditing a small number of E-rate applicants after the fact than it spends approving E-rate funding for the entire universe of applicants at the outset. Somehow, this seems backwards.
FCC Development of a National Broadband Plan
The American Recovery and Reinvestment Act of 2009 ("ARRA") provides $7.2 billion in stimulus funds to expand broadband deployment and use nationwide. Grants and loans under this initiative will be the responsibility of the Department of Agriculture's Rural Utilities Service and the Department of Commerce's National Telecommunications and Information Administration ("NTIA"). The FCC, however, has been charged with the creation of a national broadband plan. This plan is to be delivered to Congress by February 17, 2010.
As a preliminary step in this process, the FCC released a Notice of Inquiry (http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-09-31A1.pdf) seeking comments on the following broad topics:
- The most effective and efficient ways to ensure broadband access for all Americans
- Strategies for achieving affordability and maximum utilization of broadband infrastructure and services
- Evaluation of the status of broadband deployment, including the progress of related grant programs
- How to use broadband to advance consumer welfare, civic participation, public safety and homeland security, community development, health care delivery, energy independence and efficiency, education, worker training, private sector investment, entrepreneurial activity, job creation and economic growth, and other national purposes.
Although E-rate applicants may wish to comment generally on the broader issues of broadband deployment, the FCC requests specific comments on the educational aspects of the proposed plan. In particular, Para. 92 states and asks:
The Commission's E-rate program helps schools and libraries obtain affordable telecommunications, Internet access and internal connections by providing discounts on eligible equipment and services. We seek comment on how this program fits into a national broadband plan. Does the Commission need additional data on the broadband needs of schools and libraries or on the services currently being supported in order to best determine how E-rate would fit into a national plan? If so, how should these data be collected?
At a minimum, one expected outcome is likely to be a more methodical approach to collecting broadband deployment data from E-rate applicants. More broadly, we can envision use of broadband stimulus funds to leverage E-rate funding for new or higher capacity state educational networks or equivalent projects.
Comments to the FCC's Notice of Inquiry are due June 8, 2009; reply comments are due July 7, 2009.
E-Rate Updates and Reminders
XYZ SPIN Contact Designations:
New search result language has been added to the SLD's SPIN Contact Search online database. The three most important changes are as follows:
- The column in the SPIN contact table, that used to be labeled "Eligible Telecomm Provider," now reads "Form 499 Filer." Traditionally, a "Y" in this field meant that the company was an eligible telecommunications provider ("ETP"). Originally, for E-rate purposes, only an ETP could provide E-rate-eligible telecommunications services. The ETP status became out-of-date when the FCC began requiring that Internet companies providing VoIP services had to register with the FCC by filing a Form 499 and had to contribute to the Universal Service Fund. The "Y" now indicates either a telecommunications provider of eligible Telecommunications Services or an Internet provider of eligible Interconnected Voice over Internet Protocol ("VoIP") Services.
- Two other designations may also appear in the Form 499 Filer field. "X" means that USAC has determined that the company is not an eligible 499 filer; "Z" means the company's status is under review. The important point to recognize is that an "X", "Y", or "Z" will appear only if USAC has actually researched the company's status. The majority of the Form 499 Filer fields are blank. In the absence of other information, this generally means that the company is not an eligible telecommunications or VoIP provider.
- Just to confuse matters a bit, there is one exception. Certain governmental entities can provide telecommunications services without being required to file Form 499s. While such a provider is eligible to provide E-rate telecommunications services, it won't have a "Y." Currently, the only way to determine the eligibility status of such an entity is to call the SLD's Client Service Bureau (888-203-8100). We have confirmed that CSB does have a list of these special entities, currently consisting of Ohio's regional Information Technology Centers which provide VoIP services.
We expect these changes to the SLD's SPIN Contact Search database to be covered in an upcoming SLD News Brief.
Schools and Libraries News Brief Dated April 10th - Web Hosting
The SLD's latest News Brief of April 10, 2009, announces a change in the SLD's interpretation of Web hosting eligibility. Because the change will be made effective as of FY 2009, applicants who applied for Web hosting services may experience additional PIA questions. Although this process may result in additional funding, it may also delay funding decisions. Some applications, currently showing a quality assurance status, may temporarily move back to Initial Review.
It is important to note that there has been no change to the FCC's Eligible Services List for FY 2009. The Web hosting section of the ESL reads as follows:
A web hosting service that provides a means for a school or library to display content on the Internet is eligible.
Domain name registration necessary for the creation of a school or library website is eligible for discount.
Funding is limited strictly to the following eligible web hosting functions:
- Provision of web site traffic (bandwidth)
- Provision of disk space for storing applicant provided content
- Provision of File Transfer Protocol (FTP) transfer or a Web interface to upload files
Some web hosting services may include ineligible features, such as software applications, end-user file storage and content editing features. Funding will not be provided for such features. Any cost allocation must be based on tangible information that provides a reasonable and appropriate delineation between the eligible and ineligible components.
What has changed is the SLD's definition of "Internet" in the first sentence. Historically, the SLD had interpreted "Internet" Web hosting as excluding any hosting of "Intranet" or other limited access (e.g., password-protected) Web pages. Beginning in FY 2009, all Web hosting — but not applications or end-user file storage — is eligible.
Here are two examples of what this might mean for Web hosting eligibility and funding:
- A school has a Web site containing: (a) fully public Web pages describing the school, the annual calendar, school lunch menus, etc.; and (b) non-public Web pages supporting more proprietary information such as student records. Previously, if the public and private sections of the Web site were of equal size, and the school was paying $300 per month for hosting both, only $150 per month was considered eligible. Now the entire $300 would be eligible.
- A school subscribes to an online student information system for $1,000 per month. The application portion of the service was, and will remain, ineligible. But typically, such a service would also include supporting public or private Web hosting capability. As a result, many of the providers of these services had worked out an allocation formula with the SLD making a percentage of the service eligible. Somewhat surprisingly, this percentage was often as high as 80-90% (or, in this example, making $800-900 per month eligible). Under the SLD's new expanded definition of eligibility, this percentage (and the associated funding) may be modestly higher.
This week's News Brief provides instructions to both service providers and applicants. The SLD will work with providers of Web-based services to either establish or re-calculate new eligibility percentages.
For applicants, the SLD has queried its FY 2009 application database to find Internet Access FRNs that include Web hosting services (as mentioned in Item 21 attachments). The SLD plans to reach out to affected applicants during PIA review to check the accuracy of Web hosting allocations. If anything, that should result in higher funding requests. To expedite the review process, the SLD suggests that applicants inform PIA if they did not apply for discounts on any Intranet services.