Funding

What the New E-Rate Application, Funding and Deadlines Mean to You

An FCC adviser explains what districts should expect from a modernized application process and updated funding priorities.

Chas EberleChas Eberle is an attorney adviser in the Telecommunications Access Policy Division of the FCC’s Wireline Competition Bureau, where he works on modernization of the E-rate program. THE Journal asked him to share some practical tips for districts tackling their new E-rate applications. 

THE Journal: How will the new E-rate application process differ from the old one? 

Chas Eberle: The E-rate Modernization Order took several steps to simplify the E-rate application process for funding year 2015 (FY2015). The overall process remains the same, though there are some significant changes to the forms. First, the FCC Form 470, which is used to seek competitive bids for E-rate supported services, and the FCC Form 471 must be submitted electronically. Over the next two funding years, all E-rate forms will transition to be electronic-only forms. Applicants and service providers can find all forms and instructions on the website of the Universal Service Administrative Company website. USAC administers the E-rate program for the FCC. 

Applicants must seek competitive bids for E-rate supported services by posting an FCC Form 470. There are a few changes to the FCC Form 470, which reflect changes the FCC made to the E-rate program. For example, the FCC now allows applicants to receive support for “Managed Internal Broadband Services,” which is reflected in the FCC Form 470 as an internal connections service type. 
From a process perspective, applicants still must wait at least 28 days from the time their FCC Form 470 is posted before selecting a service provider and must use price as the primary factor in selecting the winning bid. 

The online FCC Form 471 has many new features intended to make the form more user-friendly and to save time. Schools that are part of a school district must now calculate their discounts on a districtwide basis. Form 471 Block Four also includes a tool for calculating each school or library’s five-year category two budget. Item 21 is now embedded in the Form 471, and applicants may no longer file separate Item 21 attachments.

THE Journal: Are there are any specific services that E-rate might fund that were not funded before?

Eberle: As mentioned above, the E-rate Modernization Order added Managed Internal Broadband Service (managed WiFi) and caching functionality to the E-rate program’s Eligible Services List (ESL). These services are consistent with the FCC’s goal of ensuring that schools have affordable access to high-speed broadband sufficient to support digital learning. Though the FCC is not currently considering adding or removing other services, the FCC revises the ESL annually. As part of that process, we release a Public Notice with a draft ESL and seek comment. Anyone interested in advocating for funding for additional services should review the draft ESL — typically released in the fall — and file comments.

It’s also important to note that the E-rate Modernization Order focused on expanding funding for WiFi in schools and libraries. Though internal connections and basic maintenance of internal connections had been eligible for E-rate discounts, there was no funding available for what were previously called “priority two” services in FY2013 and FY2014. The Commission has now set a $1 billion annual target for internal connections funding (now designated as “category two”) and established a five-year, $150 (pre-discount) per-student budget for category two services. These steps are designed to provide more predictable and equitable funding for WiFi networks.

THE Journal: On the other side of the coin, what services will not be funded this year or in years to come? 

Eberle: The E-rate Modernization Order eliminated funding for several legacy services in order to focus funding on high-speed broadband. The following will no longer be supported beginning in FY2015: 1) components of telephone service, including directory assistance, text messaging, custom calling services, direct inward dialing, 900/976 blocking, inside wire maintenance plans and voicemail; 2) e-mail; 3) web hosting; and 4) paging. Support for voice services will be phased out over five years. Applicants will not receive E-rate support for newly ineligible services that are part of pre-existing multiyear contracts.

THE Journal: Can you explain how the phase-out of voice services will work and what the net effect will be for schools that fund their voice services primarily through E-rate? 

Eberle: Discount rates for voice services will be reduced by 20 percentage points every year beginning in FY2015, until support is completely phased out in FY2019. For example, a school district with an 80 percent category one discount rate will receive a 60 percent discount on voice services in FY2015, 40 percent in FY2016, 20 percent in FY2017, and no discount beginning in FY2018.  

If an applicant’s discount rate changes between funding years, the applicant’s reduced voice services discount will be based on the applicant’s discount rate for the current year. Once the phaseout is complete, there will no longer be E-rate support for any voice services.

THE Journal: What kinds of recommendations is the FCC making to schools in terms of migrating their voice services? 

Eberle: The Commission does not recommend specific services or vendors. Schools are encouraged to consider all responses to the Form 470 in a technologically neutral manner and select the most cost-effective bid.

THE Journal:
If FCC evaluations at the end of the funding year show that enough schools have been adversely affected by the new funding structure, do you foresee the possibility of waivers or exemptions for funding voice services? 

Eberle: After consideration of a fulsome record, which included substantial support from stakeholders for refocusing the program on broadband services, the FCC decided to phase out support for voice services over five years. At the same time, the FCC focused more attention on WiFi services and raised the cap so that all schools and libraries should be positioned to get full support for connections to and within their buildings. The FCC is committed to refocusing the program on broadband, but will continue to monitor the impacts of all changes resulting from the E-rate Modernization Order.

THE Journal: What are some resources you can suggest to help districts make decisions about their E-rate priorities? 

Eberle: The USAC Schools and Libraries Division website has many tools to assist districts with every step in the E-rate process.

The E-rate Modernization Order took several steps to improve cost-effective purchasing in the E-rate program. Increased pricing transparency will give schools more information and allow them to make informed purchasing decisions. USAC will make pricing information from Form 471, Block 5, Item 21 publicly available on its website. 

Though technology plans are no longer required to receive E-rate discounts, we strongly encourage all schools to review their existing technology plans in light of the program changes in the E-rate Modernization Order.

THE Journal: What sort of network evaluations should districts do to make sure they are getting the most out of the new E-rate? 

Eberle: That’s a good question. Later this year we are hoping to start some public discussions about best practices for school districts and libraries when it comes to network purchases. Because E-rate pricing will now be publicly available, schools and libraries will now be able to see what their cohorts across the country are purchasing and how much they are paying.

THE Journal:
What application deadlines do districts need to know about? 

Eberle: Applicants must post all Form 470s no later than Feb. 26, 2015, though we strongly encourage applicants to post their Form 470 early to allow ample time for bid evaluation, entering into a contract with a service provider and completing an E-rate application. The Form 471 application-filing window for FY 2015 opened on Jan. 14, 2015, and will close at 11:59 p.m. EDT on Thursday, March 26, 2015. Again, we very strongly encourage applicants not to wait until the last minute to file their applications for E-rate support.

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