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In This Week's Issue
» Funding Status Update
» SECA Files Blanket Item 21 Waiver Request with the FCC
» E-Rate Updates and Reminders
» Schools and Libraries News Brief dated January 20 – Calculating Discounts

E-Rate Central News for the Week
January 23, 2012

Introduction

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 (516-801-7814), or through our Contact Us Web form. Additional E-rate information is located on the E-Rate Central Web site.

Funding Status

The FY 2012 Form 471 application filing window opened on January 9, 2012, and will close at 11:59 pm EDT on Tuesday, March 20, 2012.

Wave 31 for FY 2011 will be released on Tuesday, January 24th, for $43.7 million. Cumulative funding for FY 2011 will be $1.59 billion. Priority 2 funding for FY 2011 is currently being provided only at the 90% level.

Wave 83 for FY 2010 will be released on Wednesday, January 25th, for $14.8 million. Cumulative funding for FY 2010 will be $2.95 billion. Priority 2 funding is being provided at all discount levels.

SECA Files Blanket Item 21 Waiver Request with the FCC

Through Wave 30 for FY 2011, by our count, 78 applicants have received funding denials as a result of failures to submit (or failures to prove submission of) Item 21 attachments. The denials covered 179 FRNs for total funding requests of $1.7 million. We suspect we will see other Item 21 denials of this type in future waves.

Last week, the State E-Rate Coordinators' Alliance ("SECA") filed a Request for Review and Waiver with the FCC seeking to reverse and/or avoid FY 2011 denials for untimely filed Item 21 attachments. SECA specifically noted that:

  • The requirement to submit Item 21 attachments along with Form 471 applications was new for FY 2011. In previous years, Item 21 attachments could be submitted after Form 471s were filed, when requested by PIA. The new requirement was first indicated in mid-November 2010 as a part of an FCC announcement of the availability of revised versions of Form 470, Form 471, and associated instructions. A clarifying order on the Item 21 deadline was not issued until mid-January 2011, after the FY 2011 application window was already open.
  • The FCC's clarifying order instructed USAC to treat missing attachments as it treats missing application certifications, informing applicants of the omissions and giving them 15 days to submit the missing attachments. According to SECA, USAC's implementation of this notification policy was "overly broad and flawed," in large part because USAC could not quickly and easily determine which applicants had or had not submitted timely Item 21 attachments by e-mail, fax, or mail. As a result:
    • On April 27, 2011, USAC issued approximately 15,000 generic Item 21 Attachment Urgent Reminder Letters to applicants who might not have submitted their attachments, giving them until May 17th to do so. Some (but a minority, number of) proactive applicants sought confirmation from USAC that their attachments had in fact been received, but most did not.
    • In Wave 5, released July 19th, USAC denied over $500,000 in funding requests for attachments first thought to be missing, but subsequently found (in which cases, the denials were reversed).

In cases in which USAC ultimately determines that Item 21 attachments were not received by the extended May 17th deadline, SECA asks the FCC to waive the FY 2011 deadline requirement, permitting applicants to submit their attachments as a part of routine PIA review. SECA notes that (1) the deadline is a matter of policy, rather than a statutory requirement, which the FCC can waive for good cause, and (2) that the FCC "…has previously granted a universal waiver of procedural deadlines for the first year of implementation of a requirement."

Should the FCC ultimately grant SECA's waiver request, relief would presumably be given to applicants who have had funding denied for missing Item 21 attachments. In the interim, however, we recommend that applicants so denied file their own individual appeals with the FCC citing their own specific circumstances. If funding denials (or USAC appeal denials) occurred more than 60 days ago, applicants' FCC appeals must also request a waiver of the 60‑day appeal deadline. We would also encourage applicants filing these appeals to reference the SECA filing.

E-Rate Updates and Reminders

FCC Rejects "Due Process" Argument

The Commission has denied what should be the final FCC appeal by Integrity Communications, Ltd. (FCC 12-8). Among several issues raised in the appeal was an allegation that Integrity's due process rights had been violated when USAC sent delayed funding notification letters to Integrity's E-rate clients without first giving Integrity an opportunity to appeal. The situation arose when an audit found that Integrity had invoiced USAC for the discounted share of progress payments under a client's project contract that did not permit such payments. USAC had given Integrity six months to submit a compliance plan, and had notified the company that funding awards and invoice payments for all its clients would be held until the compliance issue had been resolved. This action set off a series of appeals and filings which delayed funding for well over six months — clearly not a help to Integrity's marketing efforts.

In our view, the tortuous history of the Integrity situation has led to an FCC E-rate decision that may have established an unfortunate precedent for both applicants and service providers seeking to address USAC's disciplinary or investigatory procedures. The decision relies heavily on legalistic definitions of the Due Process Clause (under the Fifth and Fourteenth Amendments) and on protected property interests.

Lost in these arguments is a more important concept of fairness more broadly described in a white paper submitted to the FCC last August by the State E‑Rate Coordinators' Alliance ("SECA") dealing with black hole and COMAD issues (see reference in last week's newsletter to the resumption of funding for Atlanta Public Schools).

Ineligible Telecom Providers:

We have recently noticed a number of PIA inquiries on New York parochial school applications involving the ineligibility of certain suppliers of telecommunications services. To review briefly, any type of service provider can provide Internet access or Priority 2 services, but, to provide telecommunications-type services, a carrier must normally be an eligible telecommunications provider (or, more technically, a company that has filed an FCC Form 499). There are three exceptions, specifically:

  • An Internet access service may include a bundled telecommunications circuit, but only to the extent that the circuit is used to provide basic access to the Internet.
  • VoIP and wireless data services can be provided in the Internet access category.
  • Non-telecom providers can provide dark fiber Telecommunications in the Internet access category.

For more traditional telecom services, Form 499 filings are a hard and fast requirement. To determine whether any particular vendor is recognized as a Form 499 filer, check the company's listing in the SLD's SPIN Contact Search database. Look for a "Y" in the column so labeled.

An applicant seeking telecommunications services from an ineligible service provider has the following two basic options:

  1. Select a new (and eligible) service provider and request a SPIN change. The change can be made during the PIA review process.
  2. Convince the existing supplier to file a Form 499 to qualify as an eligible carrier. Since this process can take some time, it may be necessary to request a hold on PIA review until this can be done.

Internet Explorer Compatibility:

A number of applicants and consultants, often those with new computers, have been experiencing various glitches with the SLD's online systems. Some of these problems stem from the use of Internet Explorer 9 ("IE9") rather than Internet Explorer 8 ("IE8"). If you are experiencing problems, and cannot find a computer with IE8, the first line of defense should be to click the IE9 compatibility mode icon.

Non-Recurring Services Invoice Deadline:

The deadline for submitting SPI or BEAR invoices for non-recurring services is next Monday, January 30, 2012 (i.e., 120 days, plus the weekend, after September 30, 2011, which was the last day to receive services). Specifically, this deadline applies to FRNs for installation services for either:

  • FY 2010, unless the normal service delivery deadline has been extended (typically until September 30, 2012).
  • Earlier funding years for which the service delivery deadline had been extended until September 30, 2011.

Schools and Libraries News Brief Dated January 20 – Calculating Discounts

Last week's SLD News Brief for January 20, 2012, discusses the calculation of discounts for a variety of applicant types including:

  • Individual school
  • Library outlet/branch
  • School district
  • Library system or library consortium
  • Consortium of schools and/or libraries
  • School or library non-instructional facility ("NIF") without classrooms
  • School NIF with classrooms
  • New school construction
  • New library construction
  • Head Start, pre-kindergarten, juvenile justice, or adult education
  • Schools with changing student populations

And, as a final topic, the ever popular:

  • Alternative discount mechanisms

The News Brief also highlights the look and feel updates to the SLD's Data Retrieval Tool ("DRT") as we discussed in last week's newsletter.

 

Disclaimer: This newsletter may contain unofficial information on prospective E-rate developments and/or may reflect our own interpretations of E-rate practices and regulations. Such information is provided for planning and guidance purposes only. It is not meant, in any way, to supplant official announcements and instructions provided by either the SLD or the FCC.