On September 28, the FCC released the Sixth Report and Order outlining some substantial changes to the E-rate program. The Commission adopted these new rules on September 23 and the rules will become effective 30 days after publication in the Federal Register. The adopted changes are summarized below in three categories: new rules and clarifications, off-site wireless connectivity pilot program, and the final Eligible Services list for FY2011.
New Rules and Clarifications
The adoption of the Sixth Report and Order follows the Commission’s goals of providing greater flexibility for applicants, streamlining the application process and protecting against fraud, waste and abuse. The following items constitute some of the most substantial changes to the current E-rate rules and regulations.
Technology Planning – This Order eliminates the requirement for applicants to have a technology plan for Priority One services (telecommunications and internet access). However, the technology plan requirement still applies to Priority Two requests (internal connections and basic maintenance). Applicants will also no longer be required to prove that they have a budget sufficient to “acquire and support” the non-discounted portion in that technology plan. Applicants now will be found in compliance even if their technology plans only cover a part of the upcoming funding year which is a departure from past requirements.
Competitive Bidding – In their efforts to simplify and streamline the competitive bidding process, the Orders give details of a new Form 470. The new form should be available before the FY2011 filing window opens at the end of the year. If an applicant has already filed a Form 470 for FY2011, they will not be required to post another Form 470.
Disposal of Obsolete Equipment – The FCC will now permit applicants to “… [dispose] of E-rate equipment for payment or other consideration, but no sooner than five years after the equipment is installed…” This overturns previous guidance barring applicants of reselling or transferring ownership of E-rate funded equipment for money or anything of value.
Community Use – After finding success in test markets across the nation, the FCC will now allow community use of a schools Internet Access during non-operating hours and as long as it does not interfere with educational purposes. However, schools must adhere to following conditions: 1) Schools will not be permitted to request funding for more services than are necessary for educational purposes; 2) Community usage must be limited to non-operating hours; 3) Schools cannot charge for the use of the services and facilities purchased using E-rate discounts. However, schools may charge fees to help offset costs associated with items not purchased with E-rate dollars.
Indexing the Annual Funding Cap to Inflation – The FCC will use the gross domestic product chain-type price index (GDP-CPI) to inflation-adjust the amount of funds available annually to E-rate program participants. In practical terms, the cap for FY 2010 would increase to $2.27 billion. The FCC will continue to roll over unused E-rate dollars into future years.
Receiving Gifts – Applicants will now be held accountable to the same gift rules applicable to all federal agencies. Applicants will have to certify on the Form 471 that they are in compliance with the new gift ban regulation.
The E-rate Deployed Ubiquitously (EDU) 2011 Pilot Program
The FCC authorizes up to $10 million for FY2011 for this pilot program as the FCC is investigating “…the merits and challenges of wireless off-premises connectivity services…” The FCC Wireline Competition Bureau will be administering this pilot program and there is a two step process. The FCC will release a Public Notice with further information and details about deadlines and the applicant must apply for E-rate funds in the normal fashion. The FCC understands that applicants that have programs in place already are using a service provider that was not competitively bid through the E-rate procurement rules. The FCC will waive that requirement for the first phase of this program.
Final FY 2011 Eligible Services List
The biggest change to the Eligible Services List (ESL) for FY2011 is the addition of “Dark Fiber” to the eligible services for Priority One. Dark fiber may now be purchased from any E-rate service provider (vendors need not be telecommunications carriers), and the applicant must light the fiber immediately. While installation and maintenance of dark fiber will be eligible, any subsequent special construction will not be eligible for E-rate discounts.
Web hosting will continue to be eligible for E-rate discounts in FY2011. In addition web hosting eligibility has actually been expanded somewhat to include blogging, chat, IM, and similar services.
The ESL also deemed the following items as ineligible for FY2011: wireless internet access applications, advanced firewalls, intrusion prevention/detection, anti-spam, anti-virus, online backup services, and scheduling services.
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Funds For Learning is your leading source for news and analysis of the FCC Sixth Report and Order. Continue to check our FCC E-rate Broadband Order page for the latest updates and further analysis of the Orders and the implications on the E-rate program. If you have any questions about the Orders, please call 405-341-4140 or email us at email@example.com.