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Historical Day for E-rate

On September 23, the FCC today announced some of the most sweeping changes to the E-rate since the inception of the program. Out of the announcement emerged four major themes; providing applicants with greater flexibility, streamlining the application process, further guarding against waste, fraud and abuse and the adoption of the eligible services list for Funding Year 2011. While the official Orders have not been released by the Commission, sources indicate that the Orders should be released and available for viewing shortly.

Providing Greater Flexibility For Applicants
Perhaps the most significant development that came out of yesterday’s meeting was the announcement that the funding cap will be indexed to general economy inflation in an effort to stifle depreciation and increase the number of applicants vying for Priority 2 funding for internal connections projects. Commissioner McDowell dissented on this point, arguing that the barometer should have been based on the telecommunications inflation index as the rates have historically remained level. Nonetheless, the Commission adopted the increase of the funding cap which will give applicants more spending power with current day dollars.

One of the most discussed issues by the Commission was allowing applicants to open up E-rate funded services to the community for after-hour use, so long as it does not interfere with educational purposes. The reasoning behind this being that this will allow community members to have access to those services at school and library sites in their local communities. This is positive news for residents without access to services such as the Internet and furthers the goal of the Obama administration to provide broadband access to all Americans.

The FCC also introduced the concept of a pilot program to expand the current rules regarding connectivity to portable devices. While it is still unclear on how much this will muddy the waters in terms of E-rate funding for services and related equipment to achieve this goal, this is a strong indication that the Commission realizes the importance of wireless connectivity and the benefits of distance learning.

Streamlining the Application Process
There was little discussion on the specifics of streamlining the application process. However, the Commission agreed that eliminating the technology plan requirements for P1 services would simplify the application process for E-rate applicants. Sources indicate that more information will be available once the official Orders are released.

Adoption of the Eligible Services List
The Commission also approved the Eligible Services List for Funding Year 2011, which reinstates dark fiber as an eligible service. Applicants will be able to obtain fiber from any provider including state and regional carriers as long as it is the most cost-effective. This point came with a caveat from a couple of the Commissioners emphasizing that private carriers may have difficulty competing with public entities in the leasing of dark fiber to applicants. Also on the Eligible Services List for FY 2011 is web hosting, which will continue to remain eligible..

Guarding Against Waste, Fraud and Abuse
As always the Commission focused on the prevention of waste, fraud and abuse. Applicants will now be subject to the federal law regarding gifts from vendors, this in an effort to stifle any improprieties regarding competitive bidding practices. The FCC also recommended codifying the competitive bidding requirements. What that means specifically for applicants is still unclear, as the FCC regulations involving competitive bidding are already on the books.

Yesterday’s announcement marks an important step in the advancement of the E-rate program. Not only will the funding cap be indexed to inflation, yesterday’s announcement appears to pave the way for a new era in technology in education. The Commission realizes the importance of access to the Internet for all students in advancing educational goals. Perhaps this new wireless connectivity pilot program will open up the door to more virtual classrooms and distance learning programs. It is too soon to tell how that progression will affect E-rate program rules and regulations. One thing is clear however, the Commission is dedicated to furthering developments in the E-rate program as is evidenced by yesterday’s announcement.

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