E-Rate 2.0 Update
August 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 FCC order
• We will have future sessions closer to the filing window to discuss
updates and more detailed filing instructions, tips, etc.
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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 2.0 Things to Remember
All of this subject to •
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Further releases by FCC –
 Additional orders and clarifications
Eligible Services List –
 Draft released 8/4 – consistent with Order
SLD –
 Fall Training + 40 short videos + Webinar
E-Rate form changes –
 SLD plans new 470 and 471 at least
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
And don’t forget – ALL of this is considered a two year TEST – that
could be undone (at least the eligibility parts) – after two years
Stay tuned for more changes and updates
Goals
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
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
» ENA – no other changes to IA/Broadband
apparent
» Discount rates remain same matrix
– Category 2 – Internal Connections
Category 2
Category 2 – Internal Connections
• $1 B target for internal connections
 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 –
 Circuit cards/components
 Interfaces
 Gateways
 Antennas
 Servers
 Telephone components
 Video components
 VOIP and Video over IP components
 Data protection other than firewall and UPS
– Such as VPN
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
 No extra funding for rural remotes – all equal
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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
 900/976 Call Blocking
 Inside wire maintenance plans
• 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
Measurements
• Measurements – used SETDA targets
 Internet Access – 100 Mb per 1,000 users today
 Internet Access – 1,000 Mb per 1,000 users long-term
 WAN/Last mile – no short-term target
 WAN/Last mile – 10 Gb per 1,000 users long-term
• FCC says “1 Gb fiber can be readily scaled to 10 Gb with
upgraded networking equipment”
• IA/WAN Affordability – price per Mb and per user/device to
be tracked and reported
 Also price by physical layer type, service type,
geography, carrier, carrier type and purchasing
mechanism
Measurements – LAN/WLAN
• LAN/WLAN – FCC is going to do a survey to determine how
to measure and then set goals/track affordability
 Paragraph 54 – contradictory – measure pricing as a
function of number of users
 Track pricing by eligible components including
management
 Track utilization and performance
 Track replacement and upgrade cycles and
architectures to measure cost effectiveness
Measurements - Networks
• Bandwidth utilization and network performance statistics
 FCC assigned the Wireline Competition Bureau (WCB)
to determine measurement methods
– ENA – potential for time-consuming/expensive
reporting requirements?
 FCC assigned WCB/USAC to develop and maintain
best practices and benchmarks for network utilization,
architecture, performance, optimization and
management
– ENA – No indication re who is going to do this at
WCB/USAC at this time
E-Rate 2.0 Break
Goal 2- Maximizing Cost Effectiveness
• Adopt Cost Transparency to share cost
and connectivity data
• Encourage Consortia Purchasing
• Emphasize Lowest Corresponding Price
Cost Transparency
• Adopt transparency to share cost and connectivity data
 Item 21s to be standardized and available to public
» WCB assigned to make this happen
 Contracts requiring no price disclosure will be ignored in
the future
 FCC decided not to require disclosure of other data at
this time
» For example – no disclosure of all bid prices
» FCC decided not to require all bids to be
submitted to SLD
• ENA - Thank goodness
Encourage Consortia Purchasing
• Preferred Master Contract (PMC)
 For Category 2 equipment only
 Nationwide contracts only
» ENA – no idea what these are yet/is this GSA?
 Selected by WCB based on “excellent” pricing
 WCB can decide whether 470 can be waived and
whether the preferred contract must be evaluated by all
applicants in any 470
Encourage Consortia Purchasing
• Preferred Master Contract (con)
 FCC declined to force applicants to use preferred master
contracts “at this time”
 Applicants who have 470s for items on the preferred
master contracts must include the PMC in their bid eval
» ENA - How is that possible for an RFP situation?
» ENA - Where is the list of these contracts?
» ENA - How will applicants know that a certain
model on the preferred list is compatible with what
they want to buy when applicants must accept bids
for “and equivalents”
Encourage Consortia Purchasing
• Consortium Purchasing
 FCC did not address any other consortium purchasing
incentives in this section
 FCC included further requests for comment on
consortium incentive items including –
– Providing 5% consortium incremental discount
– Changing consortium discount rate to weighted
average
– Allowing states to appoint consortia
– Criteria to earn 5% incentive
– Require consideration of state master contracts in
all bid evaluations
Goal 3 – Making E-Rate Fast Simple and Efficient
• Streamline application process
• Simplify discount rates
• Simplify invoicing/disbursement
• All appeals must be first filed with USAC
• Additional measures to improve SLD administration
• Protect against fraud, waste and abuse
Streamline Application Process
• Simplify multi-year contracts
 File 471 in first year
 File Form TBD in second year to explain
» Continuation of multi-year contract
» Identify and explain changes to application such
as
• Discount rate
• Membership of consortium
• Services ordered
• Changes must be consistent with scope of
original 470 and contract
• ENA – SLD will get to decide this
Streamline Application Process
• Exempt low-cost high-speed broadband from competitive
bidding
 Can buy $3,600 per year 100 Mb down/10 Mb up
commercially available broadband
– No 470 required
» ENA - Does not impact local procurement laws
» ENA – have to be prepared to defend that you
bought from a commercially available offering
• SLD will decide whether you did this
correctly
• Will this save small applicants time?
 FCC can change the minimum speed requirements to
qualify each year
» Even if you are in a multi-year contract for a
fixed speed
Streamline Application Process
• Ease the signed contract requirement
 Signed contract is no longer the only accepted way to
prove a legally binding agreement before filing 471
» However, you still have to prove a legally
binding agreement
• Contract is still best way to do that per FCC
• They may accept e-mails indicating an
“offer” from the vendor that was “accepted”
by the applicant
• ENA – very risky to rely on this “easing”
of the rules – better to just start early
enough to get a signed contract done in
time
• ENA – not sure if the FCC’s simple
concept of what is legally binding is
consistent with state and local law – be
wary of that issue as well before relying
Streamline Application Process
• No E-Rate tech plan required going forward
• Requires electronic filings
 ENA - No indication yet of whether the PIN issuance
method will change and how that impacts this
requirement
• Enables direct connections between schools and libraries
 “We allow rural schools and libraries to establish direct
connections”
» ENA - The FCC states that to get approval of
direct connection that an FCC waiver must be
filed
» ENA – they changed many rules in this Order,
why did they not fix the rules to allow this – filing
a waiver just to get approval seems an odd
simplification
Streamline Application Process
• Measurement of USAC/SLD performance –
 Goal to fund all “workable” applications by 9/1
 Workable = not subject to investigation, audit or similar
reason for delay
» ENA – it appears USAC determines what is
workable?
» ENA – this appears to be a soft target with no
disclosed enforcement penalties for USAC
Simplify Discount Rates
• Require district-wide discount rate
 Total NSLP/Total Students based on district wide
numbers not school by school
– Per FCC, this will allow SLD to let you add sites as
needed to your applications
• New source of urban/rural designation
 FCC moving to US Census Bureau data
– Can go to US Census Bureau website to check your
schools now
» ENA – be alert for more specifics regarding how
to find this info – watch SLD website for how to
use/tools
» District is “rural” if majority of schools are rural
• No indication what to do if 50% rural
• No indication if size/student count matters
Simplify Discount Rates
• National School Lunch program changes – CEP option
 New detailed calculation standards available
– Based on 1.6x certified
 See Order or watch for updates on SLD website
• F/R survey changes
 Surveys can no longer be extrapolated to schools
population if you get more than 50% back
 You can only compare the received surveys to the total
student count for the school
» ENA – death blow for surveys to a large extent
Simplify Invoicing/Disbursement
• Direct Bear invoicing by Applicants and disbursement to
Applicants
 Service providers not required to sign the Bear forms
 Applicants will have to provide USAC with electronic
disbursement instructions – no paper checks
 No payments to consultants – only directly to applicants
 ENA – Make sure you evaluate impact of this new
process on historical Bear use
Simplify Invoicing/Disbursement
• Adopting an invoice deadline
 Invoice deadline codified – but not changed
– 120 days after last day to receive service or
– 120 days after Form 486 notification date
– Whichever is later
 Extensions streamlined
– Only allowed 1 extension of 120 days
» No reason required for extension
 These changes will allow FCC/SLD to de-obligate funds
more quickly and do rollovers of unused funds more
quickly
Additional Measures
• All Appeals must be filed first with USAC/SLD
 No loss of ability to appeal to FCC if USAC denies
appeal
 Waiver requests still go direct to FCC
• Additional measures to improve SLD administration
 Speeding review of applications, commitments and
disbursements
 Modernizing USAC IT systems
 Adopting open data policies
 Improving communications with applicants and
providers
Protect Against Waste, Fraud and Abuse
• Increase Document Retention from 5 to 10 years
 Recent FCC appeal indicated that they can go back
even beyond 10 years if circumstances merit
» ENA – consider keeping all E-Rate documents
effectively “forever”
 Must allow auditors and investigators on premises
• New FCC Strike Force on Waste Fraud and Abuse
 Covers all USF programs
E-Rate Rest Stop
Further NPRM
• FCC asking for more comments on:
 Funding for E-Rate
 Whether to limit contracts to 5 years
» Other than for high cap ex contracts to install new
facilities
 Requirement to use state reported NSLP data only
» As reported to FNS
» ENA - No changes to Pre-K – still ineligible – so not sure
how that impacts this
 Consortium discount rate calculations
» Use weighted average
 Consortium incentives
» As described earlier
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 and
CEP
• Start thinking about your budget
 Can you get $ for new Category 2
 Impact of Voice and other changes
• Expect more enforcement
 Even some of the FCC Commissioners suggest that the
FCC will be looking for money
Things We Think We Know
• Simplification looks very complex
 Preferred price lists for Category 2 items
 Different forms for different years of multi-year contract
 Lots of assignments to SLD and WCB to track pricing
and gather data from applicants in more pervasive
manner
• 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
Things We Think We Know
• Change your policies for E-Rate 2.0
 Document retention to 10 years
» ENA - recommend you never throw it out
» Consider electronic file retention vs. paper
 Technology plan elimination
– However expected requirements to show network
plans, utilization, etc. to USAC
Things We Think We Know
• Expect more FCC/WCB/SLD involvement
 Preferred National Contracts
 FCC/SLD developing lists of best network practices
 More and more information appears to be required for
SLD to review and publish
» Pricing and service levels among others
 Very close to having FCC require purchasing off of
national or state master contracts
 Very close to having to submit all bid responses to
USAC/SLD
 Much of this is “assigned” to WCB and SLD and still to
be designed/released
– Be alert for form changes, surveys and new forms
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
 New Discount Rate formula – can’t test one school, will
they test the whole district
 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
What Now?
• Be alert for additional information to flow
 Eligible Service List – draft to be finalized
 More FCC updates, orders, clarifications
 Changes to FCC Forms to match the Order
 Additional changes from FCC/USAC on items that were
assigned to WCB/USAC
• Be careful on 470s and bids
 Make sure you check rules on Preferred Contracts and
other changes before you do your bids
• Use resources
 SLD website, fall training and News Brief
 Third party, state, vendor and other district resources
 You are not alone!
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
Until we talk E-Rate again
Contact ENA Today
Rex Miller
rmiller@ena.com - 615.312.6000
www.ena.com
@ENAconnects ⎜ facebook.com/ENAconnects