FFL Comments on NPRM
Funds For Learning has submitted the following comments to the Federal Communications Commission in response to the Commission's request for comments to their recent Notice of Proposed Rulemaking related to the E-rate program.
In the Matter of
Schools and Libraries Universal Service
CC Docket No. 02-6
COMMENTS BY FUNDS FOR LEARNING, LCC IN RESPONSE TO
NOTICE OF PROPOSED RULEMAKING, FCC 08-173
Funds For Learning, LLC (FFL) respectfully submits these comments in response to the Commission’s Notice of Proposed Rulemaking related to the eligibility of various services and products for the Schools and Libraries Universal Support Mechanism (or E-rate Program).
Before addressing the specific questions raised by the Commission, it is necessary to review some of the changes that have transpired during the past ten years; and the lessons that have been learned. This review provides both insight and practical feedback to many of the Commission’s questions. Based on this review, Funds For Learning has developed a list of recommended priorities to use in the evaluation of potential changes to E-rate eligibility guidelines.
Advances in Technology
Over the course of the past ten years, there has been a dramatic increase in the use of technology by students and library patrons. The use of advanced communications systems is being steadily woven into the fabric of our nation’s schools and libraries. As access to these networks has increased, teachers and librarians have become more and more comfortable using and relying upon these systems. They trust that these services will be available and they have learned how to integrate them into the educational process. Lesson plans and media centers are designed with Internet access in mind. Today, unlike ten years ago, the use of technology is less likely to be a one-time, special event, and more likely to be a common element in the basic functioning of classrooms and libraries.
The E-rate program itself has played a unique role in this transformation. An analysis of available E-rate funding information shows that the E-rate program has committed over $23 billion dollars to schools and libraries to support their effective use of communications technology. The E-rate program has supported both the initial deployment as well as the on-going costs associated with thousands of communications networks. The amount requested annually by applicants for Priority One services has increased from $1.05 billion in Funding Year 2000 to over $1.89 billion in Funding Year 2008. This growing demand for on-going telecommunications and Internet access discounts provides proof that the E-rate program is fulfilling its original mandate.
As the communication needs of schools and libraries have changed, the underlying technologies being used have evolved and matured, as well. Ten years ago, web sites, local phone service, and e-mail looked and performed differently than they do today. Ten years ago, dial-up Internet access was prevalent and, for most schools, local phone service was still basic, analog dial tone service. Now, dedicated Internet connections are the norm, cell phones are common place, and telephone calls are frequently completed over leased digital data lines or Ethernet connections. A great deal has changed in the world of technology the past ten years.
Ten Years of Experience
The past ten years of the E-rate program have offered schools and libraries many successes, several surprises, and a handful of very painful lessons. A full presentation concerning these topics is beyond the scope of this response. Nevertheless, to adequately consider the eligibility questions posed by the Commission, we must also consider those other aspects of the program that both impact and are impacted by the eligibility guidelines. These include:
- The growing demand for telecommunications and Internet services (“Priority One services”).
- The ever-increasing administrative burden associated with managing the E-rate process.
- The systemic underutilization of committed funds.
- The challenge of developing eligibility guidelines that do not unfairly favor certain technologies over others; and that can adequately accommodate future technologies.
- The need to have eligibility guidelines that can be easily understood by applicants and enforced by the fund administrator without the need for in-depth technical knowledge.
Demand for Priority One Services
The growing demand for Priority One services is a success story, but it is also a threat to the program. For a Priority One service to be truly effective, it must be connected to internal connections infrastructure on a school or library campus. Yet, the growing demand for Priority One services, without a similar increase in the $2.25 billion E-rate funding cap, is making it increasingly unlikely that Priority Two infrastructure projects will receive discounts. Ironically, the on-site infrastructure that ultimately validates the need for Priority One services is in many cases not being installed.
The long-term impact of this phenomenon may mean that those applicants with an existing internal connections infrastructure will enjoy the benefit of robust Priority One services, while those with inadequate networks will be held back from receiving the Priority Two infrastructure that would allow them to tap into more effective Priority One services. In essence, a new digital divide could be created, with the dividing line being those schools lucky enough to have at one-time received Priority Two funding and those who did not.
- Assuming that the annual E-rate funding cap remains at $2.25 billion, it is essential that any changes to the eligibility guidelines take into consideration its impact on the overall demand for E-rate dollars.
The entire E-rate funding cycle has become much more administratively burdensome. New policies, procedures, and document retention requirements, as well as the increasing number and scope of audits, has increased the administrative burden associated with the program. These mechanisms can and do serve an important role in maintaining the integrity of the program; nevertheless, their cumulative effect can unintentionally discourage applicant participation in the E-rate program. It is difficult to quantitatively assess this chilling effect, but strong anecdotal evidence exists to suggest this is the case.
- Changes to the eligibility guidelines should be considered in light of the administrative requirements that will be associated with the change. A rough cost-benefit type analysis should be done on the estimated impact of a change. For example, if a change would negatively impact the administrative burden for many applicants, but might only positively benefit a small number of applicants, that change might not be warranted, even if it fell within the technical parameters of the existing eligibility framework.
Underutilization of Committed Funds
More than 25% of the E-rate funds committed each year go unutilized. The underutilization of funding negatively impacts the program because it artificially lowers the amount of funding available for Priority Two services. There are a number of factors which contribute to this trend, including delays in funding commitments, overestimating variable service fees, price decreases during the course of a contract, and projects halted for reasons not related to the E-rate program. There is a strong correlation between the funding commitment decision letter date of a funding request and its overall utilization rate. Therefore, decreasing the average time between funding request submission and funding request decision will increase the annual utilization rate of funds and/or the availability of Priority Two funds.
- Changes to the eligibility guidelines should take into consideration the impact such changes will have on the speed of the application review process.
The program provides discounts on goods and services necessary to deliver advanced communications services to students and library patrons. Only goods and services that are integral in providing connectivity qualify for discounts.
This basic eligibility framework was established at the inception of the E-rate program. It is bedrock of the E-rate program, and it should not be changed; however, as the Commission has dutifully recognized, there have been significant technology-related changes over the past ten years that warrant a review of specific technologies and services for E-rate eligibility. The pace of technology changes is likely to accelerate even more in the future. The goods and services purchased in the future will likely be more feature-rich, more complex, and more integrated than goods and services available today.
- Eligibility guidelines should continue being developed that emphasize function rather than specific hardware or service classifications.
Easier to Administer Eligibility Rules
Evaluating items for E-rate eligibility will become an increasingly difficult task. This evaluation process is further complicated because most applicants and application reviewers do not possess the high-level technical understanding that will be required to make adequate eligibility assessments using the eligibility framework.
- Practical rules-of-thumb and objective dividing lines should be sought whenever possible, even if it means slightly broadening or narrowing the support provided for specific technologies.
Based on the technological changes and practical E-rate experience of the past ten years, FFL recommends that eligibility for USF discounts be evaluated using the following guidelines:
- Changes should not dramatically increase the demand for E-rate discounts.
- Changes should not be unduly burdensome and/or add significantly to the application review process unless there is significant documented demand for such a change.
- Guidelines should continue to be vendor and technology neutral to the extent feasible.
- Whenever possible, straight-forward guidelines should be developed to help less technically adept individuals evaluate goods and services for E-rate eligibility.
Applying these principles, FFL provides the following comments related to the Commission’s NPRM. Specifically, FFL comments on (A) Interconnected VoIP Service, (B) the definition of basic telecommunication service, (C) Priority One funding for PBXes, (D) security devices, (E) dark fiber services, (F) SMS text messaging, and (G) scheduling services and other end-user services. These comments are summarized in the table below. A thorough discussion concerning each item follows.
Interconnected VoIP Service
Internet-based PSTN connectivity services such as SIP trunks and other forms of “IP Dialtone” satisfy the stated criteria as eligible iVoIP service
Eliminate the technology plan requirement for all Priority One services
Priority One Funds for PBXes
Funding equipment purchases as Priority One services would lead to confusion and undermine priority-funding system
Devices that protect LAN at network edge should be eligible
Dark Fiber Services
No technological changes warranting change in eligibility status
SMS Text Messaging
Eligible service congruent with existing eligibility guidance
Scheduling and other services
Such services do not represent conduit access and are not eligible
A. Interconnected VoIP Service
As Voice over IP (VoIP) technology continues to enjoy widespread growth and increasing adoption by entities in both the public and private sectors, we find it logical and appropriate for the Commission to lend consideration to what type(s) of VoIP services should be eligible for support under the E-rate program and how those services should be administered.
iVoIP Definition and Implications
The Commission has established the following as the definition for Interconnected Voice over IP (iVoIP) services:
Interconnected VoIP service is defined as a service that: (1) enables real-time, two-way voice communications; (2) requires a broadband connection from the user’s location; (3) requires Internet protocol-compatible customer premises equipment (CPE); and (4) permits users generally to receive calls that originate on the public switched telephone network and to terminate calls to the public switched telephone network.
Based on our interpretation of the Commission’s definition, we believe Internet-based PSTN connectivity services such as SIP trunks and other forms of “IP Dialtone” would satisfy the stated criteria as an eligible iVoIP service. In addition, based on the regulations specified in the current Eligible Services List as well as those found in the Commission’s Tennessee Order, it is our understanding that only limited types, configurations, and amounts of customer premise equipment (CPE) included as a part of a iVoIP service would be eligible for E-rate funding in the Priority One service categories.
It is in this area that we find substantial confusion among E-rate applicants and service providers, as there are numerous solutions available in the marketplace (commonly referred to as “managed” or “hosted” VoIP services) which include the use of customer premise-based VoIP hardware in conjunction with PSTN connectivity (whether provided on an iVoIP basis or through traditional telecommunications trunking such as T-1 or PRI.) Typically, these types of services may include an IP-based phone system (or call processing server) but may also include voicemail servers, voice gateways and routers, network switches and cabling, telephone handsets, and other components. The hardware is generally owned and maintained by the vendor, with the customer’s option to renew the lease, return, or purchase the hardware at the end of the contract term. In some cases, the “managed” VoIP system is bundled with PSTN connectivity as a part of a comprehensive contract, while in other cases the customer is responsible for obtaining compatible PSTN connectivity on their own accord.
When iVoIP was added to the Funding Year 2007 Eligible Services List, we feel that many E-rate stakeholders interpreted the addition to mean that any type of VoIP service, from a simple SIP trunk to a complete “managed VoIP” solution consisting of a CPE-based VoIP telephone system would be eligible for support as a Priority One funding request. While we agree that the former appropriately satisfies the Commission’s definition of an iVoIP request, we believe the latter would be inconsistent with the current CPE regulations of the Tennessee Order and would therefore not fully qualify for E-rate funding in the Priority One funding category. In addition, we find a very wide variety of service descriptions, billing methods, and technical configurations of VoIP “managed services” from competing vendors, which further complicates the process of separating eligible and ineligible services and components that must be performed by the administrator and applicants in order to ensure that eligibility regulations are appropriately satisfied.
iVoIP Eligibility and Classification
We agree with the Commission’s tentative conclusion that interconnected VoIP services should be eligible for E-rate support as currently defined. We believe that iVoIP services provide an additional option for schools and libraries seeking PSTN connectivity. As such, we believe the amount of requested discounts to the program will remain relatively unaffected, as PSTN connectivity over more traditional methods and protocols is currently supported by the E-rate program.
We believe it is appropriate for the Commission to classify iVoIP services as eligible for E-rate funding in the Telecommunications Services funding category. This classification is appropriate for several reasons. First, iVoIP service providers are currently required to contribute to the Universal Service Fund in the same manner as traditional telecommunications providers. Next, the primary purpose of an iVoIP service is to provide connectivity to the PSTN for voice communications in the same manner as traditional “basic telephone” services. Although iVoIP services utilize, at least in part, a data network such as the Internet, the use of that network is generally limited to the specific purpose providing voice calls. As such, we do not feel that CIPA compliance certifications should be required for applicants seeking program discounts for iVoIP services. However, if an iVoIP service combines PSTN connectivity and conduit Internet access, it would be appropriate to require CIPA compliance certifications for the conduit Internet access bandwidth included as a part of the service.
VoIP Managed Service Eligibility and Classification
While we agree that iVoIP services should be eligible for Priority One support in the Telecommunications Services category, we feel that the purchase of Voice over IP hardware and software components should remain eligible as Priority Two (Internal Connections) services but should not be considered eligible as Priority One services.
It is our opinion that the Tennessee Order draws a clear and effective line between what types of hardware and software (or “customer premise equipment”) qualify for Priority One funding and what types of equipment are more appropriately classified as local area network components (Internal Connections.) We believe that the Tennessee Order plays a critical role in the preservation of the separation between the Priority One and Priority Two service categories, a separation which has a substantial effect on the Priority Two discount threshold (among other aspects of the program.) Therefore, we recommend that any VoIP equipment that does not satisfy the conditions set forth in the Tennessee Order remain ineligible for Priority One funding.
Altering the Tennessee Order to include selected types of VoIP hardware (or traditional PBX hardware) as eligible for Priority One funding will lead to increased confusion and difficulty in program administration. The current VoIP hardware market consists of a very wide variety of VoIP solutions, from simple “one box” call processing to complex, multi-component telephony systems. As such, we believe that clear and unambiguous divisions between eligible and ineligible VoIP components (as exemptions from the Tennessee Order) will be extremely difficult to establish while retaining technological and vendor/manufacturer neutrality.
In addition to neutrality issues, network consolidation and convergence will contribute to difficulty in establishing what components could be reasonably exempted from the Tennessee Order and what components must remain in the Internal Connections service category. For example, most VoIP systems utilize an organization’s network switches, routers, and hubs for connecting IP telephone handsets to the central call processing infrastructure. Typically, organizations utilize the same LAN infrastructure for VoIP devices and laptops, desktops, servers, and other networked devices. If an exception to the Tennessee Order is made for VoIP hardware, it could potentially be construed to provide Priority One funding for LAN infrastructure (since that infrastructure would be required for the VoIP system.) If such a change were implemented, it could have a significant effect on the Priority Two discount threshold as more applicants procure network infrastructure via Priority One funding requests.
While managed VoIP services are an attractive solution for applicants, we believe that continuing to provide funding for iVoIP services as Priority One requests and VoIP hardware (or hardware-based managed services) as Priority Two requests preserves the structure and integrity of this aspect of the E-rate program, resulting in more streamlined and efficient operation and oversight. To that end, we urge the Commission to consider clarifying the Eligible Services List and Tennessee Order in light of the solutions available in the marketplace in order to reduce confusion and the potential for funding denial.
B. Basic Telephone Service and Technology Plan Requirements
The Commission asks if it should expand the definition of “basic” telephone service to include additional services. We recommend that the Commission should expand and clarify the definition of “basic” telephone service to focus on the functionality provided and not on the specific technology used to provide the service. For example, local telephone service can be provided through several technologies including POTS lines, PRI trunk lines, Centrex services, T-1 lines, and others. This will give applicants more options for basic services without having to meet the technology plan requirements that are currently in effect. Other program requirements such as evaluating services for cost effectiveness will ensure that applicants are purchasing services that are appropriate to meet their needs for these basic services.
We further recommend that the Commission consider eliminating the program’s current technology plan requirements for all Priority One services, as these services can be seen as “basic” for education in today’s interconnected society.
C. Expansion of Priority One Funding for PBXes and Other On-Premise Equipment
As indicated earlier in this response, we believe that the Tennessee Order is an extremely effective means of establishing the separation of Priority One and Priority Two funding categories with respect to on-premise equipment included as a part of a Priority One service. While we feel that it is appropriate for the Commission to inquire as to whether PBXes, key systems, and other telephony components should be considered “basic telephone” services for the purpose of exempting these technologies from technology planning requirements, it is our opinion that modifying the Tennessee Order to provide funding for these components as Priority One services could lead to confusion among E-rate stakeholders.
In order to ensure vendor and technological neutrality, the scope of a modification to the Tennessee Order to include additional on-premise equipment as a Priority One service must be broad enough to encompass various technologies from competing manufacturers. Clear limitations must be established regarding what types of equipment qualify for Priority One funding in order to preserve the separation of the Priority One and Priority Two service categories. As VoIP and other technologies continue to contribute to the convergence and consolidation of voice, video, and data networks, proprietary telephony systems are increasingly being replaced with standards-based integrated IP networks which render this delineation difficult to identify.
Given this, we believe that the Tennessee Order currently serves this purpose effectively. We believe that the expansion of the Order to include additional hardware components as Priority One services could dramatically affect the separation of the Priority One and Priority Two service categories. It could raise the Priority Two discount threshold to a level that would exclude nearly all applicants from receiving Priority Two funding, which would have the net effect of eliminating the Priority Two funding categories.
D. Firewalls, filtering, and network security
Starting with Funding Year 2005, the Commission formally recognized that as a practical matter, schools and libraries must deploy reasonable network security measures to ensure that E-rate supported networks operate reliably. As such, the following definition was adopted for eligible firewalls in the Eligible Services List:
A firewall is a hardware and software combination that sits at the boundary between an organization's network and the outside world, and protects the network against unauthorized access or intrusions.
Based on this definition, it is our opinion that the Commission’s intent was to provide E-rate funding for network security devices that exist at the local area network edge, providing protection against intrusions and threats posed by networks which exist outside an applicant’s scope of control (such as the Internet.) We note that the Commission’s definition does not address specific technologies, and as such, applicants and service providers have expressed difficulty and confusion in determining what types of products and services appropriately qualify for support as a “firewall.”
We agree with the Commission’s assertion that reasonable network security measures are a requirement for reliable network operation. As such, we believe that the Commission should establish policy that allows funding for proactive, but not excessive, network security products and services. We believe that this policy may be informed by investigating the functionality of three major classifications of security devices: firewalls and edge security, local area network and end-user device security, and content security.
Firewalls and edge security
We believe that firewalls and other security devices that protect an applicant’s local area network from intrusions at the network edge (threats that originate outside an applicant’s network) should be eligible for funding in the Internal Connections funding category, irrespective of technological implementation. Such functionality would include (but not be limited to) traditional stateful packet inspection firewalls, intrusion detection and prevention (IDS/IPS) devices, deep packet inspection firewalls, and firewall traversal devices designed to ensure that approved data is able to be routed to and from the network edge safely. We believe firewalls and network edge security technologies represent reasonable protective measures which ensure that an applicant’s network can operate with an acceptable degree of reliability at the intersection of the services funded in the Priority One and Priority Two funding categories. We believe that this functionality is consistent with the existing definition of a Firewall in the current Eligible Services List. However, we believe that applicants and service providers would benefit from the explicit inclusion of the technologies stated above, as well as a clarification that eligible firewall services do not include network security functionality that exists inside the network edge or penetrates an applicant’s local area network.
Local area network and end-user device security
In addition to threats that stem from outside networks, modern networks also suffer from security threats which originate from devices inside the local area network, such as malicious code (viruses and malware) or connected devices which contain outdated or absent security patches. We believe that network access control (or NAC, a technology that ensures that any devices attached to a local area network have the appropriate security patches and updates before they are allowed access to network resources) and anti-virus solutions are appropriately classified in this manner. Unlike devices which protect networks from threats that originate beyond the network edge, these technologies ensure that sensitive data and resources are not disseminated by devices which exist inside an applicant’s local area network.
While the benefits of local area network and end-user device security technologies are clear, we believe that their inclusion as eligible services would be very difficult to administer in a manufacturer- and technology-neutral manner. While some manufacturers’ solutions perform NAC or anti-virus functions in a centralized manner, others require the installation of clients or other software on end-user devices in order to effectively propagate service. Were the Commission to provide funding for all NAC or anti-virus solutions, we believe that careful consideration must be given to the Commission’s definition of such services so as to mitigate the potential for misinterpretation of the eligibility regulations to include other types of ineligible software (such as operating systems for end-user devices).
The third classification of security functionality we propose is that of content security. Content security technologies are primarily concerned with ensuring that certain types of content are prevented from distribution to identified parties within an applicant’s network. Examples of technologies that perform content security functionality are content filtering (for the purposes of ensuring CIPA compliance) and anti-spam (automated deletion of unsolicited or unwanted e-mail.)
Network edge security (and, to a certain extent, local area network and end-user device security) technologies promote network reliability and minimize downtime by proactively identifying and eliminating malicious threats. By contrast, content security services regulate the distribution of content to end-users within an applicant’s network. As such, content security solutions do not directly contribute to the stability or reliability of an organization’s network infrastructure, but exist as a matter of operational convenience for the organization’s user base.
Because of this, we believe that the inclusion of content security technologies as eligible services is inconsistent with the treatment of other content-based and non-essential network infrastructure services described in the Eligible Services List. While such services may be beneficial to applicants, we feel that the functionality provided by content security products falls outside the scope of the eligibility guidelines for Internal Connections as these types of services are not an “essential element” in the distribution of information to individual areas of instruction.
In further refining the eligibility of network security products, the Commission can significantly reduce the confusion surrounding security functionality while contributing to greater operational efficiency for the program administrators, all while remaining technology neutral. Many applicants take a comprehensive approach to securing their local area networks, incorporating many of the elements discussed in the categories above. By providing clarification as to which types of security technologies qualify for E-rate discounts, applicants can better strategize as they plan their network infrastructures in light of emerging technologies.
E. Dark Fiber
With the release of the NPRM, the Commission has specifically asked commenters to refresh the record with regard to changes in technology that may have occurred that would impact the Commission’s decision regarding the eligibility of unlit or dark fiber. Since 2003, the technology surrounding the use of fiber optic networks has progressed; however, the technology has not altered to the point where the Commission’s prior conclusion regarding the eligibility of unlit fiber should change. While there have been advances in technology that have increased the amount of data that can be transmitted over a strand of fiber optics, these advancements in technology do not seem to rise to a level where the Commission’s prior conclusion should be revisited.
F. SMS Text Messaging
We believe that SMS text messaging should be considered an eligible Priority One (Telecommunications) service. Currently, the Commission’s regulations stipulate that the delivery of text-based email to mobile devices is an eligible service. Because SMS text messaging is functionally comparable to mobile e-mail, we believe this inclusion is congruent with existing eligibility regulations.
By including SMS messaging as an eligible service, the Commission reduces the complexity and administrative overhead involved in the funding request review and invoicing processes.
G. Scheduling Services, Telephone Broadcast Messaging, and Wireless Applications
While the above services can prove beneficial to applicants, we believe that such services represent sources of content rather than conduits for the transportation of information. As such, we believe that expanding the scope of eligible services in this manner would be inconsistent with the treatment of other services and products which serve as content sources (or provide for the creation or manipulation of content).
Funds For Learning, LLC commends the Commission for continuing to investigate emerging technologies for the expansion of eligible services under the program. The framework for determining eligibility is a fundamental aspect of the program and it should not be changed; however, because of advances in the use and availability of communications technologies by schools and libraries, it is important that the Commission consider potential changes to the E-rate eligibility guidelines.
John D. Harrington
 Analysis of E-rate funding data by Funds For Learning. September 17, 2008.
 The Commission’s recent Notice of Inquiry provides a valuable mechanism by which stakeholders can provide this type of broad feedback.
 Analysis of E-rate funding data by Funds For Learning. September 17, 2008.
 NPRM at ¶ 8.
 FCC 99-216, released August 11, 1999
 NPRM at ¶ 16