E-Rate Modernization Zone
The Positives and the Negatives
IT1 SOURCE, LLC
Richard Fly
Director, Government Programs
Unsustainable Path
Existing E-Rate format no longer fully effective
•
Current funding accounts for less than 50% of demand
•
Program designed to provide “access”, but does not
assist with upgrade to faster speeds
•
Current pace of demand effectively eliminates Internal
Connections support
•
Promotes gamesmanship within application process
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Encourages continuation of legacy systems
•
Provides no path for Common Core implementation
“80% of schools and libraries
believe that their broadband
connections do not meet
their current needs.”
- Jessica Rosenworcel, FCC
Commissioner
“Although the E-Rate
program has been
successful in bringing
affordable telephony and
basic broadband
connectivity to K-12
classrooms, in the era of
tablets and digital content,
the connectivity provided
under the current E-Rate
framework is no longer
sufficient.”
- Margaret Spellings, LEAD
Commission Co-Chair
$5.2 Billion Demand
Steady increase in overall demand
FY2013 funding cap set at
$2.38 billion
•
Priority 1 demand for FY2013
approximately $2.7 billion
•
•
Funding cap being consumed
by P1 demand at higher and
higher discount levels (64% in
FY2013)
No remaining funding to
support Internal Connections
demands - entities forced to
find alternate funding streams
Funding Requested Amount ($ Billions)
•
E-Rate Demand
Demand
Outpaces
Funding!!
$6.0
$5.0
$4.0
$3.0
Internal Connections
and Basic Maintenance
(Priority 2)
$2.0
$1.0
Telecommunications
and Internet Access
(Priority 1)
$98 99 00 01 02 03 04 05 06 07 08 09 10 11 12
Funding Year
Data courtesy of Funds for Learning, LLC
Cumulative Annual Demand as a Percentage of
Funding Cap Based on Priority System and Discount
Threshold
Data courtesy of Funds for Learning, LLC
Goals of E-Rate 2.0
Goal 1
Ensure Affordable Access to High-Speed Broadband
1.
2.
3.
Internet Access
WAN/Last-Mile
Internal Connections
Goal 2
Maximize Cost-Effectiveness
Goal 3
Make Application Process Fast, Simple, and Efficient
Goal 1 – Affordable Access
Steps to Close the Gap
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Additional $1 billion target for eligible internal
connections in FY 2015 and 2016*
Removal of telephony and video support to
focus attention on broadband connectivity
Expands eligible products and services within
Category 2
Established funding floor to ensure all schools
have some access to support
Establishes functional bandwidth targets for
better adoption of connected classroom
* Fund shifting may still occur – additional $1 billion must be used for Category 1 until demand is met
Structural Differences
Highlighted differences between old and new
E-RATE 1.0
E-RATE 2.0
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Priority levels (1 & 2)
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2-in-5 Rule
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P1 cap exhausted before P2 is funded
•
P1 provides Internet and Telecom
•
Heavy support for phone services
•
Little to no support for managed services
•
P2 discounts up to 90%
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No minimum spend
•
•
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Category levels (1 & 2)
5-yr “budget” (can be spent all in year one)
Category 1 funding cap remains
Removes telecom, video, servers, storage
Schools may request discounts on purchases
up to $150/student (over 5 years)
Basic maintenance and managed Wi-Fi are
eligible for Category 2
Category 2 top level discount reduced to
85%
$9,200 funding floor
Category 1 Services
Voice Support
•
Discounts for voice services will phase down
•
70% discount for FY2015
•
20% decrease each funding year
Services no longer eligible (FY2015 - no phasing)
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Paging
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Telephone service components
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Text messaging
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Custom calling services
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Email
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Web hosting
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Voicemail
Key Bandwidth Targets
Adoption of SETDA recommendations
INTERNET ACCESS
Short term:
100Mbps per 1,000 students and staff
Long term:
1Gbps per 1,000 students and staff
WAN/LAST-MILE
Short term:
No performance measure
Long term:
10Gbps per 1,000 students and staff
**FCC will track and report affordability by price per mb and per user**
Goal 2 – Cost Effectiveness
Increase Pricing Transparency
•
All services and equipment purchased must be made available by USAC
•
No entity may opt out – unless specific law, rule, or other restriction
provides exemption
•
All vendor contracts must allow for dissemination of pricing data
Promote Consortia and Bulk Purchasing
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USAC instructed to prioritize consortia applications
•
WCB may designate master contracts for Category 2
•
WCB may exempt master contracts from Form 470 filing requirement
•
FCC rules updated to allow consortium leads to seek bids, even without
authority to purchase services
Goal 3 – Make Application Process Fast,
Simple, and Efficient
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Simplify Application Process
•
Simplify Discount Rate Calculations
•
Simplify Invoice and Disbursement Process
•
Additional Measures to Improve Administration
Simplify Application Process
1.
2.
3.
4.
5.
6.
Streamline for multi-year contracts
•
Form 471 only submitted for first funding year
Eliminate tech plan requirements
Exempt certain broadband services from competitive bidding
•
Bandwidth speeds must be at least 100 Mbps down and 10 Mbps up
at pre-discount of $3,600 AND be commercially available
Ease signed contract requirement
Requires electronic filing of documents
Enables direct connections between schools and libraries
Simplify Discount Rate Calculations
1.
2.
3.
4.
Adopt district-wide discount rates
•
Requires discount based on entire district, rather than building-bybuilding rate
Update definition of “rural”
•
Adoption of US Census Bureau definition – based on population
density and geography
National School Lunch Program – CEP utilization
•
Eligibility calculated by multiplying percentage of directly certified by
CEP national number (1.6)
School-wide income survey changes
•
E-Rate discounts may only be applied to surveys actually collected
Simplify Invoice and Disbursement Process

Adopts invoicing deadline
•
120 days after date of last service OR
•
120 days after Form 486 notification

Extension process streamlined
•
Allows applicants to request and automatically receive one-time 120day extension
**Changes allow SLD faster process to de-obligate funding**
Additional Measures to Improve
Administration
1.
2.
3.
4.
5.
Extend document retention and inspection requirements
•
Document retention extended from 5 to 10 years
•
Applicants and Providers must permit appointed personnel to conduct
compliance inspections
Appeals must be first submitted to USAC for review
Modernization of USAC IT systems
FCC requirement that USAC provide more clear and simple communication
Expediting review of applications, specifically Category 1
Items to Consider
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Are your processes up to compliance standards?
How will changes to telecom components affect your budget?
How will changes to Category 2 affect your IT strategy?
•
Are you eligible for discount for new Category 2 products?
Check new discount rates based on updated information – make sure
budgets are accounting for changes
Work more closely with your Procurement/Purchasing Departments to
better leverage existing contracts – eliminate need for Form 470
Work with Providers who have capability to leverage master contracts
Make sure that your competitive bidding process is compliant with FCC
and SLD requirements
When All Else Fails…
GET ASSISTANCE
You do not have to go this alone
USAC:
http://www.universalservice.org/sl
THANK YOU
IT1 SOURCE, LLC
Richard Fly
richard.fly@it1.com
(602) 235-0308
http://www.it1.com