In a previous alert back on August 18, 2011, we talked about this but the time for measuring and demonstrating compliance is quickly approaching. Does June 30, 2012 ring a bell?

To help ensure you reach and maintain compliance, your dedicated CSM Team Leader will be sending you an important email during the week of April 9th. This communication will include helpful tips and reminders regarding where and how to get more information regarding the various programs out there to help you as well as a short list of documents we will need in order to verify your compliance.

It is critical to mention that unless or until we receive confirmation that you have taken all necessary action to update your current CIPA policy to incorporate the provisions of the 21st Century Act by June 30, 2012, we will be unable to process your Form 486(s) once your FY2012/2013 FCDLs are issued. The earliest start date we can put on a Form 486 is July 1, 2012 OR the date that your CIPA policy is updated to include the new requirements (whichever date is later).

We want your date to be July 1, 2012…not some later date because that would mean that you have lost some E-Rate discounts and we don’t want that happening.

So, next week when you see that important email from your CSM team (of course, ALL of the CSM emails are important, right?), be sure to read through it and ask questions and work with your team so we can continue to keep you well ahead of the curve as far as compliance goes.

As always, we welcome your feedback and comments and if you have an idea for an alert or some other topic of discussion, be sure to pass it along to your dedicated CSM Team.

CSM E-Rate Team

In all seriousness, you will be hearing A LOT from your dedicated CSM team members in the coming weeks. Rest assured, they are not being pests, but they are committed to ensuring we have all of the information we need in order to accurately and timely file your applications.

Please let us know if you have any questions or concerns as we move through the next 71 days…your team is always available for you; anytime on any day.

As always, we welcome your feedback and comments and if you have an idea for an alert or some other topic of discussion, be sure to pass it along to your dedicated CSM Team.

CSM E-Rate Team

Background: At CSM, we often take part in proceedings initiated by the FCC or USAC to change or improve the program by requesting that stakeholders offer opinions or suggestions as to how the proposed changes may affect the program or individual classes of users by way of a “Notice of Proposed Rule-Making” (“NPRM”). The last significant NPRM (May, 2010) proceeding resulted in the landmark 6th Report and Order (released 9.28.10) and during that process, CSM suggested several times that the E-Rate Program cannot withstand much more change that does not address the fund’s monetary limitations. We noted that the E-Rate Program is consistently ‘over-subscribed’ to the tune of approximately 2:1; for every one dollar available, two dollars are requested. While this is true for the E-Rate Program, it is not necessarily true for other Universal Service Fund (“USF”) programs (High-Cost, Low Income, Rural Health) which got some of us to thinking…

So, our good friend (and fellow E-Rate Management Professionals Association (E-mpa™) member) John Harrington has begun an online petition to increase the size of the E-Rate fund, without increasing the size of the USF as a whole. The idea is to ‘repurpose’ some of the historically excess funding from other USF programs into the E-Rate program where it is so desperately needed and will be used.

The good news is that since the proposal doesn’t suggest increasing the size of the USF (translation: it will not cost consumers anything), it has significant merit. The bad news is that it may be too late since the FCC just unveiled its new “Connect America Fund” (“CAF”) which is essentially a re-branding of the High Cost Fund within the USF and they may not be able to make any further changes in the short term.

Regardless…here’s your chance to speak now or forever hold your peace. You can sign the online petition either using your name and contact information or anonymously, and leave any useful comments using the following URL:

Sign the Petition (be sure to turn down your speakers)

As you’re all aware, the E-Rate Program really is the last funding source dedicated to K12 technology and we all need to do whatever we can to make sure that the ‘Powers That Be’ know how critical it is to the ongoing success of our students. So…go ahead…
RAISE YOUR VOICE!

As always, we welcome your feedback and comments and if you have an idea for an alert or some other topic of discussion, be sure to pass it along to your dedicated CSM Team.

CSM E-Rate Team

Along with release of the ESL, the FCC actually (for the first time in about a decade) followed their own rule regarding the timing of the release of the ESL and the opening of the Form 471 window (60 days apart). USAC has been instructed to not open the window before 11/28/11. That being said, if USAC opens the window say, December 1, 2011 and the ‘following the rules’ theory holds, we could see the window CLOSE as early as mid-February (about 75 days after opening*)…not late March like last year.

What does this mean to you? Well, it means that we need to get a move on with planning so as not to be caught by an earlier window close than your procurement process will allow. I know that most of your dedicated CSM Team leaders have begun scheduling planning meetings in the next couple of weeks. Our plan is to have all of our planning meetings completed by October 28 so, please work with your team to schedule and keep those appointments.

Stand by for another alert early next week with all of the details of our time spent with USAC in Washington, DC as they kicked off applicant training for 2012. **Caution…Cliff hanger to follow**

It’s going to be an interesting year with some of the more recent changes announced…

As always, we welcome your feedback and comments and if you have an idea for an alert or some other topic of discussion, be sure to pass it along to your dedicated CSM Team.

CSM E-Rate Team

*this date is NOT an official date. It is simply calculated using past precedence and procedural guidelines over the last 13 years of the program.

First and foremost, the ‘new’ certification will be applicable for Funding Year 2012/2013 so Form 486 applications certified for funding years prior to that will not be affected. However, since they are giving everyone so much lead time, it is likely those certifications will be verified on a fairly broad basis so if you make the certification, you need to be prepared to back it up with documentation.

The most significant (yet unexpected) change will be that an applicant’s Internet safety policy must be updated to indicate a provision “…for the education of minors about appropriate online behavior, including interacting with other individuals on social networking websites and in chat rooms and cyberbullying awareness and response.”

The order goes on to state the following:

Although we encourage schools to update their Internet safety policies as soon as practicable, making this requirement effective for the 2012 funding year, which begins July 1, 2012, will give schools adequate time to amend their Internet safety policies and to implement procedures to comply with the new requirements after the completion of this rulemaking proceeding. Unless required by local or state rules, schools will not need to issue an additional public notice and hold a hearing in order to update their Internet safety policies in accordance with the new Protecting Children in the 21st Century Act requirements.

Some other ‘fun facts’ from the order include:

A clarification that the Commission and Congress leave the ultimate discretionary authority “…regarding what matter is inappropriate for minors [to the] the school board, local educational agency, library, or other authority responsible for making the determination. This means that a school board, etc. can make a determination as to whether Facebook or MySpace or other social networking websites are accessible under their local CIPA policy.

“Some E-rate recipients have sought guidance regarding the potential application of CIPA requirements to the use of portable devices owned by students and library patrons, such as laptops and cellular telephones, when those devices are used in a school or library to obtain Internet access that has been funded by E-rate. We recognize that this is an increasingly important issue, as portable Internet access devices proliferate in schools and libraries. We believe it may be helpful to clarify the appropriate policies in this area, and intend to seek public comment in a separate proceeding.” Translation: They kicked the can and we can expect to see a Notice of Proposed Rule-Making (“NPRM”) in the coming weeks or months.

What does all of this mean? Well, many (perhaps most) of you will need to amend your existing CIPA policy to incorporate the changes AS WELL AS take whatever steps necessary to implement the changes. It is suggested that this be done as soon as possible, but MUST be done before July 1, 2012.

Please contact your dedicated CSM representative for more information and guidance regarding these changes as we move into active planning for E-Rate Year 15!

As always, we welcome your feedback and comments and if you have an idea for an alert or some other topic of discussion, be sure to pass it along to your dedicated CSM team.

CSM E-Rate Team

First and foremost, it looks as though the ‘late’ opening and closing of the Form 471 window ultimately was considered a success and will be the standard going forward. Apparently applicants, service providers and the program’s administrators liked having some breathing space over the holidays at the end of the year. That being said, one of the ‘problems’ we found in the past year from a timing perspective, was that many of our clients were taking new contracts for services to their Boards for approval right about the same time as mandated budget related cuts were being presented and several of them had trouble getting approval to move forward with the proposed projects. Please keep this in mind as your dedicated CSM Team helps shepherd you through the processes for E-Rate Year 15 (2012/2013), and be prepared to plan your procurement processes to allow you maximum time to address unexpected hurdles.

Additionally, it seems that the USAC “checkbook” is short approximately $260M in Y13 (2010/2011) to fund ALL of the Priority Two applications at the 80% discount level. Currently, USAC is authorized to fund P2 applications for Y13 all the way down to 81%, and that’s where it has stalled. Some of you may know that about a month ago the FCC put out for public comment, the idea of essentially borrowing some of the $600M that has been identified as rollover funds available for use in Y14 (2011/2012) to fund all of those applications pending in Y13 at 80%. Politically, this is a risky move for the Commission and they aren’t likely to make a decision quickly. They must be careful that it does not appear they are taking money away from the ‘neediest’ (translation=90%) applicants to fund those that are not as ‘needy’ (80%)…it is a difficult balance for them. Stand by for further information as it is available.

It seems there is still much discussion (confusion?) surrounding some of the new rules resultant from the 6th Report and Order and were effective for FY 14 (2011/2012) application processes. Rest assured, we at CSM are working to wade through the muddy waters and ensure that we are able to navigate without a need for goggles in the coming weeks and months.

As always, we welcome your feedback and comments and if you have an idea for an alert or some other topic of discussion, be sure to pass it along to your dedicated CSM team.

CSM E-Rate Team

CSM submitted nearly 500 Form 471 applications on behalf of our clients prior to the close of the window. The Bishop-Perry Order allows a small grace period for certification of forms submitted prior to the close of the window and allows those applications to be considered “Certified In Window” so, if you have not already done so, PLEASE CERTIFY ALL OF YOUR APPLICATIONS AS SOON AS POSSIBLE whether using paper or electronic certification. If you are not certain your applications are certified, please check in with your CSM team right away.

Now is the time in the application process where we will be looking through the applications with a fine toothed comb to ensure we have dotted all of the “I’s” and crossed all of the “T’s” but we will need your help to achieve this goal. The window of opportunity to ‘correct’ or ‘adjust’ much of the content of the Form 471 applications is quite short; about 20 days from 3/24/11. To achieve this objective, we ask that AS SOON AS YOU RECEIVE your Receipt Acknowledgement Letters (RAL), please scan and email or fax a complete copy of each of them to your dedicated CSM Team. This year it is particularly important because of typical beta errors that occur when new systems and databases are deployed. We have unfortunately found some errors that have ‘magically’ resulted from USAC’s rollout of new forms mandated by the FCC’s 6th Report and Order so please get us your RALs as soon as possible in order that corrections can be made within the allowable time frame.

Finally, your applications will be moving into Program Integrity Assurance (PIA) review very quickly. It seems that with the late close of the window, USAC has really stepped up their efforts to review applications quickly since their typical 4 ½ months from window close to start of the funding year (7/1/11) has been shorted by about 5 weeks. A typical PIA review receives a default deadline for response of 15 days. We anticipate that extensions to this time will be hard to get and there will be little to no tolerance for untimely responses. In order that we can facilitate timely response, we ask that you forward all communication from any division of USAC to us immediately for processing. We will let you know what, if anything, we need from you to complete the review or answer the question.

As always, we welcome your feedback and comments and if you have an idea for an alert or some other topic of discussion, be sure to pass it along to your dedicated CSM team.

Welcome to Funding Year 2011/2012!

To that end, your dedicated CSM team has been working hard to button up any ‘loose ends’ so your Form 471 application(s) can be submitted and certified in a timely manner. The new forms require quite a bit more specific information mandated by the 6th Report and Order and there are portions of the application that if not completed, will preclude us from submitting and certifying your form(s) in a timely manner. Particularly, unlike prior years, we are unable to even submit the Form 471 applications without Bock 2 (Impact of Services) and Block 6 budget information complete. The FCC has taken an active interest in the progress of broadband deployment subsidized by the E-Rate program and Block 2 of the Form 471 is where that information is recorded. Additionally, as you remember from prior years, Block 6 budget information is necessary to support some of the certifications that are made on the Form regarding your commitment to provide resources to support the services that are being discounted by the E-Rate program so, it is critical we have accurate information to complete this section of the Form 471.

That being said, please use this alert as your friendly reminder that if you still have a response to these requests on your ‘to do’ list, we would GREATLY appreciate some communication sooner rather than later. We completely understand that some of you are simply waiting on Board approvals or other complex processes to run their course before you are able to respond completely so, if you’re in this situation, please disregard this notice…until next week when we start bugging you again.  On that note, please remember that your CSM team may be awaiting complete, executed contracts and pricing details so as soon as that information is available, please forward it right away.

In all seriousness, we are committed to you, our clients and will work as long and hard as necessary to ensure success with your E-Rate application processes…but there are some things we just can’t do alone.

If you are not sure whether you have any unfinished requests for information, please email or call your CSM account team for an update. I can assure you, they have this information at their fingertips and will do whatever is necessary to help you facilitate completion.

Tick, tock. We have 14 minutes…I mean, 14 days.

Thank you for your time and attention and we look forward to submitting and certifying those applications so we can get them APPROVED!

As we discussed in our September 24 alert, the highlights of the Order were discussed in summary at the FCC’s Open Commission Meeting and as also discussed, we were hesitant to speak freely about what the proposed changes meant until we could read the Order and hear from USAC what implementation of the Order would entail. Below are some updates to our previous alert as well as some new information released and disseminated through the training session held on September 30, 2010. In order to understand how these changes may affect you (the applicant), it is important to understand the relationship of USAC and the FCC. The FCC makes the rules, USAC enforces/interprets them during implementation of the application process.

• More flexibility to select the most cost effective broadband solution available (whether ‘lit’ or ‘dark’) even if provided by a non-telecommunications provider such as a State, municipal, Research and Education network or ‘other’ provider.

  It is important to understand that the FCC has made VERY CLEAR, their expectation of USAC to verify there was a fair and open competitive process and that the proposed solution MUST be cost effective. We feel this was stressed as much as it was because there is a concern that often, there is not much separation between the ‘municipality’ and the applicant if an alternative solution is to be considered. Additionally, if dark fiber is to be considered, it is critical the applicant has considered the cost of lighting the fiber appropriately in their evaluation procedure. Candidly, we would highly recommend you work with your dedicated CSM account manager if dark fiber is on your radar for FY 2011/2012. We will discuss this more thoroughly in a separate alert that is topic specific.

• The establishment of a LIMITED PILOT (we cannot stress this enough) program allowing support for the use of wireless services on portable devices (including eBook readers) from anywhere, including a student’s home.

  Our initial understanding was correct. This program will require a separate, grant-like application for access to the available funds, which have been set at $20M in the first year, not the $100M suggested by the USDoE. There is a whole set of initial criteria outlined in the Order that may or may not be all inclusive. We will discuss this more deeply in an upcoming topic specific alert but suffice it to say that the FCC intimated that unless you are already implementing this sort of ‘anytime / anywhere’ learning environment, you will probably be out of the running in the pilot years. Again, please discuss with your dedicated CSM account manager if it is something you are considering for FY 2011/2012.
  

• A streamlined application process including removing the requirement for a Technology Plan if the applicant is applying only for Priority One services.

  Yes, it’s true…there is no requirement for a Technology Plan if you are applying ONLY for Priority One services (telecommunications and/or internet access). You MUST however, ensure CIPA compliance if your Priority One services allow access to the Internet (whether telecommunications or Internet Access) but a formal technology plan is only required if an applicant is applying for Priority Two products or services (Internal Connections and Basic Maintenance of Internal Connections). Additionally, the budget requirement of the Technology Plan has been removed and there are now only 4 criteria required for a complaint plan. All other requirements regarding the need for a documentation of a draft plan prior to the posting of a Form 470, etc. are still in place; however, this is a welcome change for many applicants and will definitely help streamline and simplify the process for those who traditionally only file for discounts on their telephone and data lines. Please work with your dedicated CSM account team if you have any questions about your specific situation.
  

• Codification of strengthened controls to guard against Waste, Fraud and Abuse (WFA).

  Well, this was one of two ‘bombshells’ dropped on the group present in DC. The FCC has adopted and codified rules that participants in the E-Rate program (applicants and service providers) will be subject to the Federal gifting guidelines. What this means to participants is, in a nutshell, that if a single ‘gift’ (includes meals) valued at more than $20.00 or ‘gifts’ cumulatively valued at $50.00 (in a calendar year) are given or accepted by either the applicant or the service provider, the participant will be considered in violation of the competitive bidding rules. Until further notice, we at CSM would highly recommend you (as an applicant) seriously consider whether you are willing to put all of your E-Rate funding at risk by going to lunch with your service provider or accepting that iPad or iTouch at a conference. This is not meant to be a scare tactic…but we can assure you, there was a collective ‘uh oh’ moment when the ramifications were considered. It is important to understand that even if your District has gifting guidelines in place, unless they are more strict than what the Federal guidelines are, the Feds win. Please stay tuned for more information in a subsequent topic specific alert.
  

• Release of the Eligible Services List for 2011.

  Yes, Web Hosting is still eligible and other than the addition of dark fiber or fiber leased from a non-telecom provider, the other ‘bombshell’ dropped on the group was the determination that ‘unbundled warranties’ will no longer be eligible for discount through the E-Rate program. What is an ‘unbundled warranty’, you ask? Well, in layman’s terms (and for ease of description), an unbundled warranty is anything like “SmartNet”…a contracted ‘extended’ service period that allows for replacement of equipment should it fail after the initial manufacturer’s warranty has expired. Yes, we know that many of you count on using E-Rate to help offset some of the costs associated with these contracts but the FCC has ruled…there will be no funding available for these solutions in FY2011. It is critical you discuss with your dedicated CSM account manager, what your options are in the near term as many of you may need to go out to bid (or RFP, etc) for a modified solution as part of FY2011 procurement.
  

• Indexing the annual cap for inflation on a ‘go forward’ basis.

  Yes, it’s true and it is effective for 2010 (current year). The 2010 inflationary index is 1% which equates to $22.5M. Add that to the $2.25B annual fund and we start with $2,272,500,000.00 barring any ‘rollover funds’. Eh…it’s a start.
  

Finally, USAC looked into their crystal ball and have targeted the 471 window opening to be mid-December with a late February close. This is because there are also significant changes to Forms 470 and 471 that have to be accommodated in their systems. That being said, as always we would recommend moving forward with your application processes as soon as possible.

In an effort to not completely overwhelm everyone, I will stop there and assure you that I will be sending out topic specific alerts over the next couple of weeks. I would GREATLY appreciate any specific questions you may have so I can answer them to the group…if you have a question, chances are other have the same one.

As always, we welcome your feedback and comments and if you have an idea for an alert or some other topic of discussion, be sure to pass it along to your dedicated CSM representative.

Below are some highlights with comments.  Be sure to watch for follow up alerts as we are able to interpret the actual language of the Order once it is officially released.

• More flexibility to select the most cost effective broadband solution available (whether ‘lit’ or ‘dark’) even if provided by a non-telecommunications provider such as a State, municipal, Research and Education network or ‘other’ provider.
  What we don’t know yet is whether this addition to the Eligible Services List is targeted ONLY at fiber solutions or whether it applies to all forms of broadband services (wireless, microwave, etc.).  We also don’t yet know whether ‘build out’ costs are to be supported so, stay tuned.

 

• The establishment of a LIMITED PILOT (we cannot stress this enough) program allowing support for the use of wireless services on portable devices (including eBook readers) from anywhere, including a student’s home.
  Our initial understanding is that this program will require some sort of ‘application’ that might look like a BTOP grant or something similar.  A letter to the FCC from the US Department of Education has suggested that the pilot program be funded at $100M in the first year and increase by $20M in each subsequent year.  As stated above, we cannot stress enough that this pilot program will be very limited and will probably only include those applicants who have the ability to demonstrate “readiness” by having a plan for professional development, assessment and very strong oversight controls; not to mention, available budget.  Again, stay tuned.

 

• A streamlined application process including removing the requirement for a Technology Plan if the applicant is applying only for Priority One services.
  What we don’t know yet is whether this change has language related to whether an applicant’s State technology plan requirements play a part in this ‘streamlining’ idea.  Stay tuned.

 

• Codification of strengthened controls to guard against Waste, Fraud and Abuse (WFA).
  Interestingly, each Commissioner spoke specifically to the need for an even more watchful eye on the competitive bidding processes associated with procurement of newly eligible broadband services that may be provided by a municipal or other provider (COE in California) to ensure a fair and open process.  The Commission publicly stated their concern that there are many instances where there is barely an ‘arm’s length’ separation between the applicant and potential provider and that the applicant MUST ensure the procurement is fair, open and most importantly, cost effective.  Additionally, the “gift” rules have been codified using the guidelines that Federal employees must follow.  Since we haven’t seen the language yet, stay tuned for more information as the Order is released and interpreted.

 

• Release of the Eligible Services List for 2011.
  Other than the addition of the broadband services noted above, the other BIG NEWS was that Webhosting will remain on the ESL for 2011.  Those of you who have been holding your breath on this one can now breathe a sigh of relief but don’t get too comfortable…yet.  We have not seen the order and we are certain the Commission has this service in their crosshairs (for whatever reason) so there may be some changes/limitations to what is ultimately eligible as part of a webhosting solution.  Be sure to speak with your dedicated CSM representative about your specific situation.  Another point of interest is that the release of the 2011 ESL allows the establishment of the ‘filing window’ for 2011…we anticipate the 471 window will open in mid to late November, barring any ‘complications’ on USAC’s end in implementing some of the changes that may affect their internal systems.

 

• Indexing the annual cap for inflation on a ‘go forward’ basis.
  This is where the Commission was not in unanimous agreement because two of the five Commissioners (McDowell and Baker) both spoke passionately about the need for comprehensive Universal Service Fund (USF) reform and felt that adjusting the E-Rate program now, by this essentially infinitesimal amount, is ‘piecemeal’ reform and won’t ultimately have any significant impact.  Commissioner Copps noted that he would be inclined to support a significant increase to the available E-Rate funds because “E-Rate is the ONLY oversubscribed, capped Universal Service Program and it is the most successful.”  We have heard rumblings that USF reform may include a reallocation of some of the USF programs, particularly the High Cost Fund, to significantly increase the annual cap on the E-Rate program without increasing the overall size of the USF.  But for now, the inflationary index will allow the fund to grow from its current $2.25B to approximately $2.7B for 2011.  Not bad, but stay tuned.

 

We anticipate the formal Order will be released sometime today and we will immediately begin our analysis for our valued customers.  All in all, it was a great day for E-Rate applicants across our Country and we look forward to helping you continue to achieve success with the program in your organization.

Official transcripts of the Commissioners’ comments can be found at:

Chairman Genachowski DOC-301649A2.pdf

Commissioner Copps DOC-301649A3.pdf

Commissioner McDowell DOC-301649A4.pdf

Commissioner Clyburn DOC-301649A5.pdf

Commissioner Baker DOC-301649A6.pdf

As always, we welcome your feedback and comments and if you have an idea for an alert or some other topic of discussion, be sure to pass it along to your dedicated CSM representative.