Monthly Archives: October 2013

FY 2014 Eligible Services List Approved

The FCC released the FY 2014 Eligible Services List (“ESL”) last week.  With minor changes, primarily related to the eligibility of interactive communications features provided as a part of web hosting, the final ESL tracks closely with the draft version released for comment last July.

The accompanying FY 2014 ESL order (DA 13-2037) highlighted the two following changes from the FY 2013 ESL:

Lit and Dark Fiber Clarifications:

Additional language was added to clarify that that special construction charges for leased dark fiber are eligible only on the applicant’s property.  Special construction charges for dark fiber from the applicant’s property line out to a carrier’s fiber network are not eligible (see diagram).  For leased lit fiber, all service charges are eligible, implicitly including charges associated with the off-campus construction.

Although not mentioned in the ESL order, two points should be noted:

  1. Since the only necessary distinction between lit and dark fiber is the ownership of the fiber lighting electronics (i.e., at least the relatively inexpensive GBICs), applicants may prefer a lit fiber solution if off-campus construction charges are significant.
  2. Based on changes proposed in the current E-Rate 2.0 NPRM, the different treatment of special construction charges for lit and dark fiber may be eliminated, possibly as early as FY 2015.

    Dark Fiber Eligibility

Carrier fiber network

Web Hosting and E-Mail:

Web hosting has become a contentious issue since it was first added to the ESL in 2003.  We believe that the FCC first viewed web hosting as a minor expense associated with basic school websites providing luncheon menus, bus schedules, etc.  However, as more and more services have migrated online, applicants and vendors have increasingly pushed for greater E-rate support for the “hosting” portion of these services.

The FY 2014 ESL draft proposed the following limitations:

  1. Interactive communication web hosting features such as blogging and web mail are not considered eligible for E-rate support as standalone services; and
  2. Applicants may seek web hosting services from a single provider and may not request funding for multiple web hosting providers (i.e., there can be only one host of a school’s basic website).

With one exception, the final version retains both limitations.  The one change was that the “web mail” feature was eliminated from the prohibition of standalone services.  Blackboard Engage successfully argued that web mail is the equivalent of e-mail, and thus should be eligible as a standalone service.  The FCC agreed, but warned that requests for discounts on both traditional and web-based e-mail services would be considered duplicative.

E-Rate Updates and Reminders

October Deadlines:

Technically, the invoicing deadline for recurring FY 2012 services is Monday, October 28, 2013.  Associated SPIN changes, if required, should also be made by this date.  This year, for the first time, the FCC has instructed USAC to issue automatic one-year invoice deadline extensions to any applicant or service provider missing this deadline.  Practically, therefore, the deadline will be one year hence.

The most common Form 486 deadline for early FY 2013 funding waves 1-6, issued before July 1, 2013, is October 29th.  The next few deadlines, based on the requirement to file Form 486s by the later of 120 days from FCDL issuance or the start of service, are:

Wave 7       10/30/2013
Wave 8       11/07/2013
Wave 9       11/13/2013
Wave 10     11/20/2013

FCC Appeal Decisions Watch:

The FCC issued one appeal decision last week granting a competitive bidding violation waiver under a Petition for Reconsideration for Fall River PSD (DA 13-2055).  The underlying issue in this case stemmed from a USAC finding that the district had selected a service provider without using price as the primary factor.  Consistent with precedent, the FCC has been waiving this rule, but only if applicants demonstrate that they had, in fact, chosen the lowest cost provider.  In this case, the FCC had initially rejected the district’s request for a waiver, finding that the district had not demonstrated this fact.

An important aspect of the FCC’s decision to reverse its initial Fall River decision is that it demonstrates what it takes to prevail in a Petition for Reconsideration.  The decision notes that the “Commission’s rules do not favor requests for reconsideration which rely on facts not previously presented” to the FCC.  The district’s success with this Petition is the result of having “previously argued that it had selected the lowest-cost vendor, and has now presented documentation which is responsive to the evidentiary shortcoming identified in the underlying order.”

Schools and Libraries News Brief Dated October 25 – Service Substitutions

Changing Service Providers Curing a Funding Cycle

A substitution is required whenever an applicant needs to apply committed funding to a product or service which no longer matches its description in the Item 21 attachment.  This might occur when:

  • The equipment manufacturer no longer offers the particular piece of equipment listed on the funding request.
  • The particular piece of equipment listed on the funding request may still be available but regular maintenance on that equipment is difficult or impossible to obtain.
  • The needs of the applicant, while still within the scope of the original request, have changed.
  • The applicant wants to change – or has already changed – service providers, and the new service provider offers a different product, service, or configuration than that described in the original request.

In some cases, when a manufacturer makes a product change, it will request a global service substitution, freeing all its customers from requesting individual substitutions.  Otherwise, it’s up to the individual applicants to request needed changes.  Normally, as long as the substitutions are for similar functionality, these requests can be approved (albeit not necessarily quickly).

Last week’s News Brief also discusses other limitations on service substitutions and how determinations are made on similar functionality.