E-Rate Central News for the Week
October 4, 2010
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 (516-801-7810), or through our Contact Us Web form. Additional E-rate information is located on the E-Rate Central Web site.
Funding Status
Wave 20 for FY 2010 will be released on Thursday, October 6th, for $95.7 million,. As of this wave, the Priority 2 funding threshold is available at 85% and above (down from 90% in earlier waves). Cumulative funding for FY 2010 will be $1.42 billion.
Wave 69 for FY 2009 will also be released on Thursday, October 6th. The final threshold for Priority 2 funding is 77% and above.
FCC Releases New E-Rate Order
The FCC's Sixth Report and Order (FCC 10-175), approved in the FCC's open meeting the week before, was released last Tuesday. An excellent summary of the key changes to the E-rate program is provided in the most recent SLD News Brief (see link below).
It is important to note that some of the details of these changes will require further clarification by the FCC and/or USAC. Although many of the broader implications of the changes will be discussed separately in future newsletters, six initial comments are provided below.
- Applicants will have the option of leasing fiber optic transmission services from any provider, including non-profit and government agencies, and utility companies, as long as it is the most cost-effective solution. Both lit and dark fiber are eligible.
Comment: The significant aspect of this change is the availability of telecommunications facilities from providers who are not the traditional eligible telecommunications providers. Dark fiber may be less advantageous than initially considered because of the requirement that it be used immediately and because special construction costs (from the provider's network to an applicant's property line) are not eligible.
- Funding will be available for limited pilot programs providing off-campus wireless connectivity for students.
Comment: This will be a competitive grant-like program with a $10 million set-aside for FY 2011. Grantees will be determined by the FCC, but funding will require separate E-rate applications. Given the short lead time for FY 2011 selection, first year funding will be primarily for existing or "shovel-ready" programs.
- Technology plans will no longer be required for Priority 1 services, but will still be required for Priority 2 services.
Comment: At a minimum, applicants with discount rates above 60% — either on average or for individual entities — should continue to have approved plans. Those with plans expiring June 30, 2011, must still be able to document the creation of an updated plan covering FY 2011 before filing their Form 470s for Priority 2 services.
- The FCC has codified its requirements for open and fair bidding processes. In particular, E-rate gift rules parallel those of federal agencies.
Comment: Although the SLD News Brief highlights some of these gift rules, a more complete summary of federal rules for Gifts from Outside Sources, plus links to the complete set of federal regulations is available online. The safest course of action is to accept no gifts at all from potential E-rate suppliers, regardless of minor federal, state, or local exceptions.
- The Eligible Services List for 2011 indicates that "Unbundled warranties" are ineligible.
Comment: The underlying concept is that E-rate will not pay retainer-type charges (regardless of actual work done). Eligible services must reflect actual maintenance performed. Unbundled warranties include both separately-priced manufacturer warranties and any type of fixed price maintenance contracts. Applicants with existing multi-year, fixed price warranties and contracts will presumably need to renegotiate term structures to maintain eligibility in FY 2011.
- The criteria for post-commitment SPIN changes has become much stricter.
Comment: The new order treats the stricter criteria as a clarification, rather than a new rule. Approval conditions for future SPIN changes — hopefully not applied retroactively — will take effect as soon as USAC updates its procedures and will likely affect service provider changes for FY 2010 and earlier. Applicants knowing they need to make SPIN changes, perhaps to cover FY 2009 invoices or FY 2010 services, should probably initiate change requests now.
There are two other sets of changes, not covered in the Sixth Report and Order, that are forthcoming and that will affect FY 2011 applications. Specifically:
- New forms:
- A new and simpler version of the Form 470 is expected to be available, probably in November. The current version of the Form 470 can be filed now. Once the new version is made available it must be used. The transition from the current version to the new version will be a flash cut (i.e., there will be no period in which both version will be accepted). An applicant, who has completed the old version online, but has not certified it when the new version becomes effective, will likely have to re-file.
- A new version of the Form 471 will be available, and must be used, when the application window for FY 2011 is opened. This will be no sooner than November 29, 2010.
- A new version of the Form 486 is expected in 2011, including new certifications on technology plans and CIPA compliance.
- Revised CIPA requirements:
- CIPA regulations are expected to be updated before the end of the calendar year to include the requirements of the Protecting Children in the 21st Century Act. This will require Internet Safety Policies to include provisions for educating students about dangerous and inappropriate online activities.
- One slide in the SLD's initial training workshop this year indicates that all applicants applying for Telecommunications services supporting Internet access must be CIPA compliant - even if they do not actually apply for discounts on Internet services. This change would be particularly troublesome for libraries, philosophically opposed to filtering, who have been receiving Telecommunications discounts while forgoing Internet access discounts.
E-Rate Updates and Reminders
October E-Rate Deadlines:
Applicants and service providers should pay careful attention to the following two deadlines in the last week October:
- Recurring service invoices for FY 2009 (October 28)
- Form 486s for FY 2010 (beginning October 29)
For additional information, see the SLD's September 17th News Brief.
2010 E-Rate Training for Applicants:
The SLD conducted the first of its regional fall training workshops last week in Washington, DC. The second workshop will be held in Newark, NJ, this coming Thursday, October 7th. Although all the fall workshops are fully subscribed, copies of the training slides are posted on the SLD's Training Web site.
The SLD has also scheduled two half-day training sessions for service providers (November 4th in Atlanta and November 9th in Albuquerque).
The SLD's October 1st News Brief provides an excellent summary of the new E-rate rules covering the following topics:
- Dark or lit fiber provided by any service providers*
- Community use of schools' E-rated services
- Funding for certain residential facilities
- Indexing the funding cap for inflation (beginning in FY 2010)
- The FY 2011 "E-rate Deployed Ubiquitously" (or "EDU") pilot program to support innovative and interactive off-premise wireless Internet connectivity*
- Technology plans*
- Competitive bidding rules, including:
- List of competitive bidding rule violations
- Gifts*
- SPIN changes*
- Eligible services, including:
- Dark fiber eligibility
- Expanded Web hosting eligibility
- Unbundled warranties ineligibility*
- Disposal of equipment
* Discussed further above.
