E-Rate Order Highlights
The following briefly summarizes the highlights of the FCC’s recently adopted order dealing with E-Rate funding for schools and libraries. To review the order in its entirety, please go to this link. The order is broken down into three conceptual categories, each of which is discussed below.1.To enable schools and libraries to better serve students, teachers, librarians, and their communities, the Order provides these institutions with more flexibility to select and make available the most cost-effective broadband and other communications services by:
- allowing applicants to lease dark or lit fiber from the most cost-effective provider, including non-profit and for-profit entities (including community networks), so that applicants can choose the services that best meet their needs from a broad set of competitive options and in the most cost-effective manner available in the marketplace.
Eligible schools and libraries should be free to meet their communications needs by leasing fiber from entities other than telecommunications carriers that are able to provide schools and libraries the same services that a traditional telecommunications carrier can provide a school or library over a fiber network.
In order for schools and libraries to utilize and make the most efficient use of dark fiber, the order makes eligible certain costs associated with leased dark fiber. Specifically, the order permits the inclusion of maintenance costs and installation charges. Providing support for maintenance costs and installation charges will enhance access to advanced telecommunications and information services by helping schools and libraries make use of an existing or new local fiber network. At this time, however, the Commission declined to extend support to cover special construction charges that may be incurred to build out connections from applicants’ facilities to an off-premises fiber network, preferring to seek further comment in a subsequent proceeding on the potential effect of such changes on the fund. Also, not included as eligible for funding is the cost of modulating electronics needed to light dark fiber. The applicant is therefore responsible for covering these costs in order to receive E-rate funding for the lease of dark fiber.
- changing the rules to permit schools to allow community use of E-rate funded services outside of school hours.
NOTES: The order revises the rules to permanently allow schools to open their facilities, when classes are not in session, to the general public to utilize services and facilities supported by E-rate. To primarily use services supported by E-rate, E-rate recipients must ensure that students always get first priority in use of the schools’ resources. First, schools participating in the E-rate program may not request funding for more services than are necessary for educational purposes to serve their current student population. Second, any community use of E-rate funded services at a school facility shall be limited to non-operating hours of the school and to community members who access the Internet while on a school’s campus. Thus, the public can utilize a school’s facilities and services during times when the school is not in session, such as after school hours, weekends, school holidays, and summer breaks. Further, the decision about whether to allow community access rests with the school, and the order leaves it to schools to establish their own policies regarding specific use of their services and facilities, including, for example, the hours of use.
Schools may not charge for the use of services and facilities purchased using E-rate funds. However, the Act does not prohibit an eligible entity from charging fees for any services that schools or libraries purchase that are not subject to a universal service discount. Thus, an eligible school or library may assess computer fees to help defray the cost of computers or training fees to help cover the cost of training because these purchases are not subsidized by the universal service support mechanisms. Similarly, these institutions should not be prohibited from recovering costs reasonably associated with permitting community access, such as additional electricity, security, and heating costs used to facilitate community access.
- supporting eligible services to the residential portion of schools that serve students with special circumstances.
NOTES: Generally, internal connections to dormitory rooms, study centers within dormitories, teachers’ centers, and residential programs have been found to be ineligible for support under the E-rate program. But, the following are examples off-site activities that the Commission determined are integral, immediate, and proximate to the education of students or the provision of library services to library patrons, and thus, would be considered to be an educational purpose: a school bus driver’s use of wireless telecommunications services while delivering children to and from school, a library staff person’s use of wireless telecommunications service on a library’s mobile library unit van, and the use by teachers or other school staff of wireless telecommunications service while accompanying students on a field trip or sporting event.
Specifically, the Commission proposes to revise its rules to allow residential schools that serve populations facing unique challenges, such as Tribal schools or schools for children with physical, cognitive, or behavioral disabilities to receive E-rate funding for priority one and priority two services in those residential areas. The order allows residential schools that serve unique populations – schools on Tribal lands; schools designed to serve students with medical needs; schools designed to serve students with physical, cognitive or behavioral disabilities; schools where 35 percent or more of their students are eligible for the national school lunch program; or juvenile justice facilities – to receive E-rate funding for all supported services provided in the residential areas of those schools. Based on the record before it, the Commission found that these schools serve students whose educational needs may not be otherwise met without attending such a residential school. Therefore, the Commission concluded that it was reasonable and consistent with the public interest to provide support for E-rate services provided to the residential areas of those schools, including Internet access, telecommunications, telecommunications services, and internal connections.
However, the Commission declined to expand this proposal to any school that has a dormitory or residential facility on its grounds.
- indexing E-rate’s funding cap to inflation to preserve the purchasing power of a successful program.
NOTES: The Commission found that indexing the current $2.25 billion E-rate cap to inflation is a sensible approach to gradually aligning the support provided by E-rate with the needs of schools and libraries, which the E-rate program is designed to serve. Using the analysis described below, the cap for funding year 2010 will be increased to $2,270,250,000.
The Commission is seeking proposals for a limited pilot program to establish best practices to support off-campus wireless connectivity for portable learning devices outside of regular school or library operating hours.
NOTES: If a device that provides wireless Internet access service, such as a laptop or other mobile computing device, is taken off school or library premises, however, applicants are required to cost allocate the dollar amount of support for wireless Internet access use for the time that the device is not at the school or library and remove that portion from its E-rate funding request. If that same device, however, is left on school or library grounds all of the time, the E-rate program would pay 100 percent of the applicant’s non-discount share for wireless Internet access use. As such, current rules may prevent full utilization of the learning opportunities that portable wireless devices, such as digital textbooks, can provide off campus and outside of regular school hours. Advances in technology have enabled students to continue to learn well after the school bell rings, including from their homes or other locations, for example, youth centers. Commenters noted that, in addition to the educational benefits, improvements and cost reductions in portable learning devices like e-readers, smartphones, and tablet computers make funding off-premises wireless connectivity for these devices a cost-efficient supported service. To assist the Commission in its inquiry and program development, it is establishing a trial program to investigate the merits and challenges of wireless off-premises connectivity services, and to determine whether it should ultimately be eligible for E-rate support. The Commission plans to use this trial program to gather more information about the implementation challenges described above and to identify and disseminate best practices in existing projects. It asks schools and libraries that already are implementing or experimenting with wireless off campus learning to provide the Commission with information about their projects.
2. Simplifying and streamlining the E-rate application process:
- streamlining the application process to reduce the administrative burden on applicants.
NOTES: To request funding, schools and libraries must follow an application process that includes developing a technology plan, seeking competitive bids, and filing application forms. S sections 54.504 and 54.508 of our rules are amended to eliminate the E-rate technology plan requirements for all priority one applications. The technology plan requirements for applicants requesting priority two funding remain in place.
- removing the technology plan requirement for priority one (telecommunications services and Internet access) services.
NOTES: It is reasonable to eliminate the technology plan requirement for all priority one service requests, even when the applicant is not subject to a state or local technology planning requirement, and regardless of the amount of the request. Even without a Commission requirement, most entities will continue to evaluate their needs by conducting technology planning. Furthermore, the Commission finds that this change will simplify the current application process and will reduce the costs for applicants of complying with and administering the E-rate program. Reducing the burden on applicants will result in greater E-rate participation, particularly for the schools with the fewest resources and greatest need to participate in the program.
Eliminating the technology plan requirement for priority one applications also will reduce costs associated with administering the E-rate program.
While declining to eliminate the technology plan for priority two applicants, the Commission adopts measures to simplify the technology planning process. First, section 54.504 of our rules is amended to eliminate the requirement that technology plans covering the entire, upcoming funding year be in place when the FCC Form 470 is submitted. Section 54.508 of the rules is also amended to eliminate the requirement that applicants demonstrate they have a budget sufficient to acquire and support the non-discounted elements of the plan. The E-rate program already has rules in place to ensure that applicants have sufficient resources, and thus this requirement is redundant.
- facilitating the disposal and recycling of obsolete equipment that received E-rate support by authorizing schools and libraries to receive consideration for such equipment.
NOTES: The Act prohibits an eligible school or library that has purchased telecommunications services and network capacity at a discount under the E-rate program from reselling or otherwise transferring those services, or any equipment components of such service, in consideration for money or any other thing of value. In the Schools and Libraries Third Report and Order, the Commission also prohibited schools and libraries from transferring the equipment components of eligible services to other schools within three years of their purchase, even without receiving money or other consideration, unless the donating school or library permanently or temporarily closes. The Commission also stated that “[r]ecipients of support are expected to use all equipment purchased with universal service discounts at the particular location, for the specified purpose for a reasonable amount of time.” The Act and the Commission’s rules, however, do not currently specify what schools and libraries are permitted do with equipment components of eligible services acquired with E-rate support once the equipment is obsolete. Section 54.513(a) of the rules is amended to permit the disposal of equipment components of E-rate services (E-rate equipment) for payment or other As it is in the public interest and consistent with the Commission’s environmental initiatives and the goal of making technology affordable for all, schools and libraries are encouraged to donate and recycle their obsolete equipment whenever possible.
3. Improving safeguards against waste, fraud, and abuse.
- codifying the requirement that competitive bidding processes be fair and open.
NOTES: Applicants and service providers must conduct and participate in a fair and open competitive bidding process; we find that codification of this requirement is warranted. Parties are reminded that all applicants and service providers have had, and will continue to have, an obligation to comply with any applicable state or local procurement laws, in addition to the Commission’s requirements the following types of conduct are necessary to satisfy a fair and open competitive bidding requirement. As a general matter, all potential bidders and service providers must have access to the same information and must be treated in the same manner throughout the procurement process. Any additions or modifications to the FCC Form 470, RFP, or other requirements or specifications must be available to all potential providers at the same time and in a uniform manner. Moreover, consistent with precedent, it is a violation of the Commission’s competitive bidding rules if: (1) the applicant has a relationship with a service provider that would unfairly influence the outcome of a competition or would furnish the service provider with “inside” information; (2) someone other than the applicant or an authorized representative of the applicant prepares, signs, and submits the FCC Form 470 and certification; (3) a service provider representative is listed as the FCC Form 470 contact person and that service provider is allowed to participate in the competitive bidding process;251 or (4) a service provider prepares the applicant’s FCC Form 470 or participates in the bid evaluation or vendor selection process in any way.
In the Mastermind Order, the Commission found that an applicant violates the Commission’s competitive bidding rules if the applicant turns over to a service provider the responsibility for ensuring a fair and open competitive bidding process. The Commission concluded in the SEND Order that a competitive bidding process is undermined when an applicant employee with a role in the service provider selection process also has an ownership interest in the vendor that is seeking to provide the products or services.
In the Ysleta Order, the Commission found that an applicant violates the Commission’s competitive bidding rules if its FCC Form 470 does not describe the desired products and services with sufficient specificity to enable interested parties to submit responsive bids. We emphasize that this is not an exhaustive summary of the types of conduct that we have found, and will continue to find, to violate the competitive bidding process. Because we cannot anticipate and address every possible action that parties may take in the E-rate application process, we expect that we will continue to use the appeal process as necessary to decide alleged competitive bidding violations. Applicants are required to certify on the FCC Form 471 that they have not received anything of value or a promise of anything of value other than the services and equipment requested on the form. In the NPRM, we listed gift-giving as one example of prohibited conduct under a fair and open competitive bidding process.
The rule does not discourage companies from making charitable donations to E-rate eligible entities in the support of schools – including, for example, literacy programs, scholarships, and capital improvements – as long as such contributions are not directly or indirectly related to E-rate procurement activities or decisions. If contributions have no relationship to the procurement of E-rate eligible services and are not given by service providers to circumvent our rules, including rules that require schools and libraries to pay their own non-discount share for the services they are purchasing, such contributions will not violate the prohibition against gift giving.