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FCC Makes It Easier for E-rate Applicants to Switch Vendors

The Federal Communications Commission has issued a decision that should make it easier for E-rate applicants to switch service providers.

In a March 16, 2000, decision on an appeal filed by the school district in Copan, OK, the FCC said it could not "anticipate the variety of circumstances under which it may be reasonable for an applicant to substitute service providers." Consequently, the commission said it would let an E-rate recipient switch service providers if the change was permissible under its state and local procurement regulations and it had notified its original provider of its intent to change.

Previously, the Schools and Libraries Division had specified that so-called SPIN changes would only be permitted when a provider refused to participate in the program, had gone out of business or had breached its contract with the applicant. The SLD also required applicants to post a new Form 470 application if their new vendor had not participated in the applicant's original bidding process.

In the Copan district's case, its service provider had moved to another city and had told the school district it would be unable to provide service for a year. The district requested a SPIN change in April 1999, but the SLD rejected it four months later, saying that situation did not qualify under the program's existing guidelines. The district then appealed the decision to the FCC.

In its decision, the FCC wrote: "Although we do not wish to encourage service provider substitutions, we recognize that circumstances for applicants and providers may change over the course of a relationship, as appears to have been the case in Copan. Accordingly, where an applicant determines that a SPIN change is allowed under its state and local procurement rules and under the contract between the applicant and its original provider, we will not limit the applicant's ability to substitute providers or otherwise deny the applicant the benefits of universal services support." The policy, the commission concluded, "is consistent with the commission's express goal of affording schools and libraries maximum flexibility to choose the offering that meets their needs most effectively and efficiently."

The FCC also acknowledged that applicants could sometimes get a better deal outside of the Form 470 posting process. Noting that Copan's substitute vendor would be able to provide the service at a lower price, the commission staff said, "if the applicant discovers a provider offering more competitive prices, then we believe that the applicant should have the flexibility to select the provider whose service offering best meets the applicant's needs." Again, if state and local procurement laws permitted the switch, and the applicant could get out of its current contract, it said the FCC would not bar it from switching vendors, even if the new vendor did not respond when the original Form 470 was posted.

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