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FCC Decides to Keep Year 4 Priority Rules in Place

The Federal Communications Commission June 29 backed off from a proposal to change the E-rate priority rules for Funding Year 4.

The Schools and Libraries Division has indicated that once the FCC and the Office of Management and Budget approve a new Form 486, it will be able to begin issuing funding commitments for Year 4. The FCC has approved a funding cap of $2.25 billion for the fourth funding year, which runs from July 1, 2001 to June 30, 2002.

Demand for funding surged in the latest application cycle, creating a situation in which there may not be enough funds to support the full amount of requests for internal connections support from the neediest applicants, those qualifying for a 90 percent discount rate. That had prompted the FCC to propose changing the rules so that applicants who received internal connections funding in Year 3 would not be eligible for that support in Year 4. Most parties commenting on the proposal urged the FCC not to change program rules in the middle of a funding year.

In its final rule, the FCC said it remained "strongly committed to ensuring that discounts continue to go to schools and libraries that are economically disadvantaged. Based on the current record, we conclude it is not reasonable to revise the rule for Funding Year 4 applications. We will continue to consider the operational and other implementation issues raised by commenters for future funding years."

The FCC did approve a permanent change in the deadline for installations. From now on, applicants will have until Sept 30, rather than June 30, to complete an installation involving non-recurring costs. The change acknowledges that most school districts use the summer months to install networking equipment. The change makes permanent a policy that the FCC has ended up adopting every program year so far.

The FCC also said that in certain cases, it would give applicants an additional year, up until Sept. 30, to complete an installation. The key date in these cases is March 1. The additional time will be granted 1) if applicants receive a funding commitment letter after March 1 in the funding year for which discounts are authorized, 2) if an applicant does not receive authorization to change service providers or substitute services until after March 1 of the pertinent funding year, 3) if service providers are not able to complete an installation for reasons beyond the service provider's control, or 4) if a service provider refused to complete an installation while a funding disbursement has been held up because of an investigation of program compliance.

Applicants who are seeking additional time because of circumstances involving 3) and 4) above will need to document their situation with the SLD before the original deadline. The ultimate deadline will rest on when the applicant ultimately receives its approval.

In addition, the FCC made clear that applicants who received funding commitments this past April for Year 2 "out-of-window" applications will have until Sept. 30, 2002 to complete their work.

Funding requests for recurring expenses such as telephone service or Internet access, however, could only be used during the standard funding year of July to June.

For the full text of the FCC notice, see

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