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FCC Eyes Changing Rules on Year Four Internal Connections

The CEO of the Universal Service Administrative Company said April 23 that the Federal Communications Commission is reviewing a number of options for awarding internal connections support in E-rate funding Year Four, including one under which those applicants who received support in Year Three would not be able to receive it in Year Four.

The issue was raised because of the increased demand for funds in Year Four. USAC projected to the FCC that applicants had requested $5.5 billion against a program cap of $2.25 billion. Based on the initial demand projection, USAC would be able to fund only about a quarter of the amount requested for internal connections from applicants with discount rates of 90 percent, the neediest category. The Schools and Libraries Division said it has just reduced its demand projection by $300 million, but that would still not solve the underlying problem.

USAC CEO Cheryl Parrino said that among the options being considered by the FCC, the approach that had received the most favorable response was one that would deny funding to those applicants who qualified for internal connections support in Year Three. In that funding year, only applicants with discount rates of 82 percent or higher qualified for support. Parrino said it was not yet clear at "what level of specificity" such a rule would be applied. Applicants can make requests at the consortium, district or building level.

Parrino said that the FCC "has asked a lot of folks" for their opinion about possible options, and that the Council of Chief State School Officers was among the groups that favored that particular approach to make internal connections funding available for more schools.

USAC officials said it was expected that the FCC would seek comments on any proposed change in the priority rules before issuing them in final form. USAC has also advised the FCC that implementing that change would cost the agency approximately $750,000 in system changes and would undoubtedly mean delays in getting funding commitments approved this year. "If they're going to do it, they will have to do it soon," Parrino told the quarterly meeting of the Schools and Libraries Committee.

Committee Chairman Kathleen "K. G." Ouye expressed concern about "changing expectations and procedures. . .in the middle of the game."

USAC Board Chair Frank Gumper of Verizon noted that many schools would not be able to make use of requests for advanced telecommunications services if they did not receive funding to build their networks, too.

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