E-Rate Central News for the Week
July 30, 2012
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.
The critical funding news released last week was the agenda for this week's quarterly meeting of USAC's Schools & Libraries Committee. The meeting agenda includes proposals which, if approved by the Committee and subsequently by the FCC, would set final Priority 2 funding thresholds for both FY 2011 and FY 2012. The Committee will be considering the following two proposals:
- "Consideration of Approval to Make Commitments for Priority 2 Services at a Discount Rate of 90 Percent for Funding Year 2012 and Approval to Deny Requests for Priority 2 Services at a Discount Rate of 89 Percent and Below for Funding Year 2012."
- "Consideration of Approval to Make Commitments for Priority 2 Services at a Discount Rate of 88 Percent and Above for Funding Year 2011 and Approval to Deny Requests for Priority 2 Services at a Discount Rate of 87 Percent and Below for Funding Year 2011."
The FY 2012 funding proposal follows quickly on the heels of a recent USAC announcement that it had identified $1.05 billion in funds available for roll-over into future years, and an FCC announcement two weeks ago that the entire amount would be rolled into this year. The proposal to set the final Priority 2 threshold at 90% this early in the year is unprecedented, but so too is the problem it is meant to address. Our analysis — perhaps "conjecture" is a better word — is as follows:
- The funding demand for FY 2012, both for Priority 1 and Priority 2 was unexpectedly high — so high, in fact, that there was serious concern that Priority 2 could be fully funded at the 90% level. Without a higher than expected roll-over amount, the only real option appeared to be to prorate Priority 2 funds among 90% applicants, an action fraught with problems.
- The critical component of determining how much money is available for roll-over is the reserve amount set aside to cover awards and disbursements for earlier funding years. Setting a reserve level is a somewhat subjective process. It is not inconceivable that, for political reasons, USAC felt compelled, or was pushed, to lower the reserve level enough to "identify" sufficient roll-over funds to fund all 90% requests — but not a penny more.
- Having thus stretched to fund 90%, we suspect that USAC and the FCC would be delighted if the final requirement was less than the full $1.05 billion provided. Neither would be willing to stretch further to fund at 89% or lower. This being the case, the advantages of finalizing the threshold at 90% early in the year is that it will help USAC clean up the backlog of pending applications and will provide certainty, albeit not always welcome news, to all Priority 2 applicants.
The proposal to finalize the FY 2011 funding threshold at 88% is less surprising. USAC had already hinted that the threshold would not go much lower than 90%. Finalizing at 88% is one percentage point lower than the current interim level.
Wave 5 for FY 2012 will be released on Tuesday, July 31, for $78.1 million. This will bring cumulative FY 2012 funding to $864 million. Only Priority 1 applications are currently being funded.
Wave 54 for FY 2011 will be released on Wednesday, August 1, 2012, for $4.0 million. Cumulative funding for FY 2011 is $2.30 billion. Priority 2 funding is currently being provided at 89% and above, and denied at 80% and below.
No funding wave for FY 2010 is scheduled this week.
E-Rate Updates and Reminders
FCC Appeal Decisions Watch:
The FCC issued four appeal decisions last week.
Al Noor High School, et al (DA 12-1172): Granted sixteen appeals (and dismissed two more as moot) by applicants whose funding had been denied for the lack of a valid contract or other legally binding agreement. In three cases, the FCC found that the contracts were valid under the rules. More importantly, in the other cases, the FCC found that the "contracts had minor errors or were not signed and dated by both parties before the petitioners filed their FCC Form 471 applications, [but that] all petitioners had some form of an agreement in place during the relevant funding year prior to the filing of their FCC Form 471 applications."
La Poynor ISD (DA 12-1175): Granted relief to an applicant that had erroneously canceled its entire application when it had meant to cancel only one funding request.
Akisha Networks and Central Montcalm PSD (DA 12-1189): Denied three appeals of application denials involving consultants who had assisted the applicants while, at the same time, either owning, or being paid commissions by, vendors providing E-rate services to those applicants.
South Country CSD (DA 12-1190): Dismissed as moot, an appeal filed by an applicant that had been funded for the same services under a separate application.
FCC Comment Deadlines:
Comments were due July 23rd (although none have yet been posted on the FCC Web site) on a petition for clarification filed by the State Educational Technology Directors Association ("SETDA"). SETDA's petition asks for clarification on the "educational purpose" criterion as it applies to remote VPN access to school computer systems by students and teachers (see our newsletter of June 25, 2012). Reply comments are due August 6th.
Comments on the draft FY 2013 Eligible Services List ("ESL") are due August 6th. The proposed ESL makes no significant changes in product and service eligibility, but does include a restructuring of the Priority 1 services under new section headings (see our newsletter of July 9, 2012). Reply comments are due August 21st.
Interestingly, as a part of the ESL comment process, the State E-Rate Coordinators' Alliance ("SECA") has filed a petition for clarification pertaining to the eligibility of free VoIP handsets and other end-user equipment. Although the ESL clearly states that end-user equipment is not eligible, Footnote 25 of the FCC's Gift Rules Clarification Order (DA 10-2355) provides a limited exception for cell phones provided free to the general public in cellular telephone contracts. Certain suppliers have been citing that exemption to support the eligibility of bundled services including more sophisticated "free" wireless devices or handsets. SECA asks the FCC to more carefully define the free phone exemption.
Schools and Libraries News Brief Dated July 27 – Writing an Appeal
The SLD News Brief for July 27, 2012, provides some tips on filing appeals, whether they be filed with USAC or the FCC. The article suggests that any applicant, service provider, or other program participant affected by adverse decisions:
- Mark your submission as an appeal: The word "appeal" should be clearly delineated on the first page (and cover sheet, if submitted by fax).
- Identify yourself (personally and by entity): The first page should also include entity name, BEN or SPIN, name/address and other contact information, and alternate contact if available.
- Specify the USAC decision you are appealing: List all affected Form 471 application numbers, FRNs, or other form identifiers involved. Address all denial or reduction reasons, if more than one.
- State briefly, but precisely, why you feel the USAC decision is wrong: If applicable, cite the rule or the order and the specific language that supports your argument.
- Note any other information that should be reviewed.
- Retain all documentation.