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My View on the FY 2011 and FY 2012 Priority Two Discount Threshold

On July 10, 2012, the SLD sent a letter to the FCC stating that they found an additional $650 million that could be used as rollover for FY 2012, and the FCC approved over a billion dollars in rollover for FY 2012 shortly thereafter. It appears that the rollover amount will be enough to fund all 90% Priority Two applications for FY 2012.

While I applaud the regulators’ desire to fund the 90% FY 2012 applications – these are the school districts with the greatest need, after all – many have received P2 E-rate funds in almost every year since the program began. Meanwhile, other applicants that have not consistently received funding to support their infrastructure projects need the infusion of E-rate dollars just as badly. The SLD recommended to the FCC during the July 30 USAC Schools and Libraries Board Meeting to cut off FY 2011 P2 funding at the 88% level. Based on my analysis, there are 1,256 FY 2011 applicants at the 80%-87% level that applied for P2 funds, totaling $676 million. I would have preferred that some of the $650 million USAC found to have been used to fund more FY 2011 P2 projects.

While it is true that if the SLD decided to fund additional FY 2011 P2 projects they might not have enough money to cover all FY 2012 90% P2 applications; it is also true that it would be more work for the FCC and USAC to come up with a mechanism to figure out what percentage of the requests each FY 2012 90% P2 applicant could receive. I believe that it is important for the 90% applicants to share the wealth with fellow E-rate applicants, and they need to recognize the health of the E-rate program depends on more applicants, not less, receiving critical P2 funding.

The FCC acknowledged in the National Broadband Plan that they understand the importance of P2 projects. In fact, they stated that “‚Ķthe FCC should develop ways that Priority 2 funding can be made available to more E-rate applicants‚Ķ.” I hope the FCC acts on this recommendation before the FY 2013 procurement process starts in order to provide more predictability to the process.

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