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FCC Releases Draft ESL, NPRM

Today the Federal Communications Commission has released two major items related to the E-rate program. The first is the draft Eligible Services List, or ESL, for Funding Year 2009. The FCC also released a Notice of Proposed Rule Making, or NPRM, which seeks comment on the addition of several items to the list of products and services that are eligible for E-rate discounts.

Draft Eligible Services List for Funding Year 2009

The draft of the ESL for FY 2009 makes clarifications or additions for the following items:

  • E-mail Archiving – the ESL clarifies that e-mail archiving is an ineligible component of an E-mail service and that storage space is eligible for e-mail files and not for e-mail archiving.
  • Intranet Web Hosting – this item is clarified to state that Intranet Web Hosting (hosting websites and pages that are not available for public accaess) are not eligible and not eligible as a component of a web hosting service.
  • Video-On-Demand Server – the ESL adds "Video-On-Demand Server" to its list of "Ineligible Servers". We note that codecs, MCU, and other items that were previously eligible for discounts are listed as eligible components in the draft ESL.
  • Ethernet – the ESL now lists Ethernet as an eligible digital transmission technology.
  • Softphones – the ELS now specifies that softphones (software-based virtual telephones that operate on end user equipment) are considered end user equipment and not eligible for discounts.
  • VOIP Licenses – user licenses for server-based VOIP are eligible.

The ESL also provides a reminder to providers of Interconnected VoIP services that they must contribute to the Universal Service Fund, if their contribution would not be considered de minimis.

Each year, the Federal Communications Commission and USAC have the opportunity to make changes to the Eligible Services List, or ESL. The ESL is the guideline for what services and products are eligible for E-rate discounts, and any conditions that must be met for eligibility. The document is divided into sections for each service category plus a section for miscellaneous items that span across all of the categories.

The process for updating the ESL begins when USAC submits a draft ESL to the FCC. The FCC will review and then issue a public notice seeking comment on USAC’s draft ESL. The FCC will then accept comments for two weeks and then reply comments for an additional week.

Those wishing to comment on the draft ESL must submit their comments to the FCC by August 14, 2008. A week later, reply comments are due.

After the FCC and USAC have considered the comments and reply comments, a final ESL is released. By commission rules, the final ESL must be released at least 60 days prior to the opening of the Form 471 filing window for the following funding year. At this time, it is unclear how the release of the NPRM will affect the timing of finalization of the ESL or the Form 471 application filing window for FY 2009..

Notice of Proposed Rule Making

The FCC has also released a NPRM seeking comment on whether certain services and products should be added to the current slate of eligible services. The NPRM indicates that if adopted, these changes could be in effect for the 2009 Funding Year.

From the NPRM:

We seek comment on whether, beginning in Funding Year 2009, the Eligible Services List (ESL) should include filtering software, a broader classification of basic telephone service, dark fiber, text messaging, firewall service, anti-virus/anti-spam software, scheduling services, telephone broadcast messaging, and certain wireless Internet access applications.  In addition, we seek comment on whether to retain interconnected Voice over Internet Protocol (interconnected VoIP) as an eligible service for future funding years.  During the pleading cycles established for the Funding Years 2007 and 2008 ESLs, numerous parties commented on the need to make these services eligible for E-rate program discounts.  

Comments to the NPRM are due 30 days after publication in the Federal Register and reply comments are due 15 days later.

Look to Funds For Learning to provide analysis and insight into these developments for Funding Year 2009.


Draft Eligible Services List for Funding Year 2009

FCC Notice of Proposed Rulemaking


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