E-Rate Update
Fall 2014
Rex Miller
Introduction
E-Rate 2.0 has arrived
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Today’s session is focused on the changes enacted by the recent E-Rate
2.0 and 2.1 FCC orders
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Seek out experienced assistance as you prepare and work through the
next E-Rate season
Q&A
• At the end of the presentation
• ENA is available at your convenience
• Webinar will be available on the ENA website at www.ena.com
ENA Background
Customer service and education focus
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K-12 customized service
E-Rate expertise
• E-Rate Program Service Provider since Year 1 (1998)
Experienced E-Rate team
• Rex Miller, April Scott, Kris Vivrette, Madeline Dusenberry, Ward
Chaffin
E-Rate Service Provider Leader
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A Top-10 E-Rate Service Provider
Over $500M in E-Rate funded
Over $144M in 2014 E-Rate filings
E-Rate News
Window Opening Date set
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Opening anytime after Dec 29, 2014
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Closing to be determined – expected in March
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Similar to last year
Eligible Services List issued for ’15-16
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Streamlined to match the E-Rate 2.0 order
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Includes overview of items removed from list
New 470 and 471 for ‘15-16
E-Rate Order 2.1 Approved December 11th
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Actual order to be released
E-Rate 2.0 Things to Remember
On Dec 11th, the FCC approved the 2nd Order related to E-Rate 2.0
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The Main Focus is an increase in E-Rate funds of $1.5 Billion
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Final Order is still not released, but there are some additional changes that
will need understanding – mainly related to more flexibility to get dark fiber
and rural connectivity where none exists today
All of this subject to •
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WCB/USAC interpretation –
 Where they are tasked to figure things out
PIA Review 2015 –
 Where the things they don’t always tell us will be implemented re: testing
New FCC Strike Force to combat waste fraud and abuse
The original order indicated that much of this was a two year test and would
be revisited – we believe the second order may have removed the “two year
test” concept from some items
Stay tuned for more changes and updates
Goals
Per FCC, E-Rate 2.0 has three main goals:
1. Affordable access to high speed broadband
2. Maximizing cost effectiveness
3. Making E-Rate fast, simple and efficient
We will attempt to combine both orders in the
overview
Goal 1 – Affordable Access to High Speed Broadband
• Affordable access to high speed broadband
 Created Category 1 and Category 2
– Category 1 – Broadband – this is funded first
» Discount rates remain same matrix
» Construction cost amortization no longer required
– can receive all construction costs in Year 1
» Certain differences between dark fiber and lit fiber
have been removed
» Applicants may be able to construct their own fiber
if most cost-effective and subject to certain
safeguards to be described in Order 2.1
– Category 2 – Internal Connections
Category 2
Category 2 – Internal Connections
• $1 B target for internal connections
 Order 2.1 seems to guarantee the $1 B target each year
 This not just Wi-Fi
 Shortened list of eligible items
– Routers, Switches, Wi-Fi
– Added caching
– Cloud services OK
– Basic maintenance of eligible items is OK as part of
the per student cap
• ENA – even if districts have Wi-Fi, they still get to spend
$150 on basic maintenance, routers, switches, etc. for LAN
Category 2
• Managed Wi-Fi Eligible –
 Renamed Managed Broadband Internal Connections by
FCC
 Third party service allowed for LAN and WLAN
management
• Eliminated –
 Everything else – including PBXs and Servers
Category 2 Funding
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90% discount reduced to 85%
 All other discount levels unchanged
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$150 per student available over 5 years ($2.30 per square foot for libraries)
 Can be received all in year 1
 Ordered by discount rate
 5 year applicant “budget”
 $9,200 funding floor per school/library
 NIFs will typically not be eligible for WiFi
 Order 2.1 includes more $ for large urban libraries ($5 per sq ft)
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Current 2 in 5 rule removed
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Student Counts –
 Can use estimate for new buildings
 Can count students at 2 buildings if attend multiple schools
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Category 2 Installation can begin on April 1st
Category 1 Services
• Phase down support for Voice, VoIP and other legacy
services
 Voice including VoIP and cellular/mobile
– 20% discount rate reduction per year starting 2015
• Items removed 2015 – no phase-down
» Web Hosting
» Voice Mail
» E-Mail
» Paging
» Texting
» Directory Assistance
Category 1 Services
• Items removed 2015 – no phase-down
 Cell Service data plans and Air Cards – unless they can be cost
effective vs. other internal broadband or external broadband
– USAC will have a presumption that data plans and Air Cards
are not cost effective and you will have to prove otherwise
 Custom Calling Plans
 Direct Inward Dialing
• ENA – some pieces of currently eligible voice are immediately
ineligible and some are phased out
 Need to watch how PIA treats this as some of these items are
normal components of voice service – like a phone number/DID
• No exceptions or grandfathering for existing multi-year contracts
• Order 2.1 affirmed that they will make certain voice items immediately
ineligible despite the complexities (and low value)
Goal 2- Maximizing Cost Effectiveness
• Adopt Cost Transparency to share cost
and connectivity data
 Item 21 Data now public
• Encourage Consortia Purchasing
 Still being determined
• Emphasize Lowest Corresponding Price
Goal 3 – Making E-Rate Fast Simple and Efficient
• Streamline application process?
 SLD goal – all workable applications approved by 9/1
 Tech Plan eliminated
• Simplify discount rates?
 District wide rate – not school by school
 CEP option method available
 Rural/Urban – now using Census Data
• Simplify invoicing/disbursement
 BEAR payments direct to applicants – next year
• Protect against fraud, waste and abuse
 Increase Document Retention to 10 years
 Order 2.1 affirmed change to 10 years
Further NPRM
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FCC Open Items:
 More Funding for E-Rate?
– $1.5 B added in Order 2.1
 Whether to limit contracts to 5 years
– Unknown
 Consortium discount rate calculations and incentives
– Unknown
 Urban Clusters?
– Order 2.1 changes urban clusters under 25k to rural
– This should resolve the concerns re rural vs urban
 Release of detailed Order 2.1 still pending
– Not sure what else might be in it
– Be alert for info from that final release of details
Things We Think We Know
• Test your discount rate now so that it is not a surprise
 Could have changes due to district wide average/CEP
• Start thinking about your budget
 Can you get $ for new Category 2
– FCC/SLD encourage all to apply?
– Order 2.1 seems to confirm that there will be $1 B
– Will Category 2 get any leftover $
 Impact of Voice and other changes
– 20% Phase Down means 20% of total cost of voice
Things We Think We Know
• Lots of items with different treatment
 New discount rates for Category 2
 Different discount rates for Voice vs. Internet
 Lots of miscellaneous charges are now ineligible and
have to be cost allocated out
 Dark fiber options are more prevalent for underserved
Timing of 2015 Approvals
• 2014 Year has been a great year for approvals – much improvement
 2014 year had unique circumstances
» No P2 funding for two years leading to significantly fewer
applications to review
» More staffing hired to make sure process was faster
• 2015 year is much more complex
 New Category 2 funding to be approved
 Integration of significant changes in eligible services
 Up to three different discount rate matrixes to apply
 Potential for high $ fiber construction applications
 Additional items requiring changes to forms and practices
• Expect significant slowdown in approvals – especially if FCC wants to
push Category 2 approvals faster or at equal speed as Category 1
funding requests
New Forms
• Form 470
 Very few changes
 Can use 2014 form until new form is available online
• Form 471
 Redesigned to meet new rules
 New questions regarding network scalability
 Discount Rate changes included
 Separate category for Voice Services
 Item 21 part of 471 – not a separate attachment
 Category 2 Budget Information
 Test this when it is available
471 Timing
E-Rate Timing Soapbox
E-Rate continues the trend of the later closing of filing window in
March
Strongly encourage applicants who want to get approved before
July 1 to file their 471s as soon as possible
• Target mid-February at the latest
PIA will likely start for you before the 471 filing window is closed, so
be ready
Advantages
• Earlier approval
• No last-minute rush to file
• If you have an error, you can file another 471 before filing deadline
and cancel initial incorrect filing – probably easier than using RAL
process
Resources
Contact ENA
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Rex Miller – rmiller@ena.com
April Scott – ascott@ena.com
Kris Vivrette – kvivrette@ena.com
Ward Chaffin – wchaffin@ena.com
Madeline Dusenberry – mdusenberry@ena.com
SLD News Brief – make sure your are signed up for these e-mails
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Go to the SLD website’s training section to sign up
Key info provided on changes to the program all year long
Websites
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SLD – main E-Rate rule site – training/WebEx
 www.universalservice.org/sl/
 Separate section of SLD website for E-Rate 2.0 updates
 Fall training slides will be posted if you cannot attend
 E-Rate Modernization section and webinars
Contact ENA Today
Rex Miller
rmiller@ena.com - 615.312.6005
www.ena.com
@ENAconnects ⎜ facebook.com/ENAconnects