E-Rate 2.0 has arrived - Education Networks of America

E-Rate 2.0 Update
August 2014
Rex Miller
E-Rate 2.0 has arrived
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.
Seek out experienced assistance as you prepare and work through the
next E-Rate season
• 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
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
E-Rate Service Provider Leader
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 •
Further releases by FCC –
 Additional orders and clarifications
Eligible Services List –
 Draft released 8/4 – consistent with Order
 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:
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
E-Rate 2.0 has three main goals:
1. Affordable access to high speed
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
» 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
 Third party service allowed for LAN and WLAN
• 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
90% discount reduced to 85%
 All other discount levels unchanged
$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
Current 2 in 5 rule removed
Student Counts –
 Can use estimate for new buildings
 Can count students at 2 buildings if attend multiple schools
Category 2 Installation can begin on April 1st
Category 1 Services
• Phase down support for Voice, VoIP and other legacy
 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
– USAC will have a presumption that data plans and Air
Cards are not cost effective and you will have to prove
 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
• No exceptions or grandfathering for existing multi-year
• 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
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
 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
– 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
– 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
• 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
 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
• 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
• 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
• Enables direct connections between schools and libraries
 “We allow rural schools and libraries to establish direct
» ENA - The FCC states that to get approval of
direct connection that an FCC waiver must be
» 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
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
» 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
» 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
 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
Additional Measures
• All Appeals must be filed first with USAC/SLD
 No loss of ability to appeal to FCC if USAC denies
 Waiver requests still go direct to FCC
• Additional measures to improve SLD administration
 Speeding review of applications, commitments and
 Modernizing USAC IT systems
 Adopting open data policies
 Improving communications with applicants and
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
 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
• 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
• 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
 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
 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
• 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!
Contact ENA
Rex Miller – [email protected]
April Scott – [email protected]
Kris Vivrette – [email protected]
Ward Chaffin – [email protected]
Madeline Dusenberry – [email protected]
SLD News Brief – make sure your are signed up for these e-mails
Go to the SLD website’s training section to sign up
Key info provided on changes to the program all year long
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
[email protected] - 615.312.6000
@ENAconnects ⎜ facebook.com/ENAconnects