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E-Rate Modernization ZoneThe Positives and the Negatives
IT1 SOURCE, LLCRichard FlyDirector, Government Programs
• 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
• Encourages continuation of legacy systems
• Provides no path for Common Core implementation
Existing E-Rate format no longer fully effectiveUnsustainable Path
“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
“80% of schools and libraries believe that their broadband
connections do not meet their current needs.”
- Jessica Rosenworcel, FCC Commissioner
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 $-
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
E-Rate DemandSteady 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
$5.2 Billion Demand
Data courtesy of Funds for Learning, LLC
Demand Outpace
s Funding
!!
Funding Year
Fund
ing
Requ
este
d Am
ount
($ B
illio
ns)
Internal Connectionsand Basic Maintenance
(Priority 2)
Telecommunicationsand Internet Access
(Priority 1)
Cumulative Annual Demand as a Percentage of Funding Cap Based on Priority System and Discount Threshold
Cum
ulati
ve P
erce
ntag
e of
Cap
Data courtesy of Funds for Learning, LLC
Goals of E-Rate 2.0
Ensure Affordable Access to High-Speed Broadband1. Internet Access2. WAN/Last-Mile3. Internal Connections
Maximize Cost-Effectiveness
Goal 1
Goal 2
Goal 3 Make Application Process Fast, Simple, and Efficient
• 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
Goal 1 – Affordable AccessSteps to Close the Gap
* Fund shifting may still occur – additional $1 billion must be used for Category 1 until demand is met
E-RATE 1.0
• Priority levels (1 & 2)
• 2-in-5 Rule
• 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%
• No minimum spend
• 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
E-RATE 2.0
Structural DifferencesHighlighted differences between old and new
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)• Paging• Telephone service components• Text messaging• Custom calling services• Email• Web hosting• Voicemail
Key Bandwidth TargetsAdoption of SETDA recommendations
INTERNET ACCESSShort term: 100Mbps per 1,000 students and staffLong term: 1Gbps per 1,000 students and staff
WAN/LAST-MILEShort term: No performance measureLong term: 10Gbps per 1,000 students and staff
**FCC will track and report affordability by price per mb and per user**
Goal 2 – Cost EffectivenessIncrease 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• 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
• Simplify Application Process
• Simplify Discount Rate Calculations
• Simplify Invoice and Disbursement Process
• Additional Measures to Improve Administration
Simplify Application Process
1. Streamline for multi-year contracts• Form 471 only submitted for first funding year
2. Eliminate tech plan requirements3. 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
4. Ease signed contract requirement5. Requires electronic filing of documents6. Enables direct connections between schools and libraries
Simplify Discount Rate Calculations
1. Adopt district-wide discount rates• Requires discount based on entire district, rather than building-by-
building rate2. Update definition of “rural”
• Adoption of US Census Bureau definition – based on population density and geography
3. National School Lunch Program – CEP utilization• Eligibility calculated by multiplying percentage of directly certified by
CEP national number (1.6)4. 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 120-
day extension
**Changes allow SLD faster process to de-obligate funding**
Additional Measures to Improve Administration
1. Extend document retention and inspection requirements• Document retention extended from 5 to 10 years• Applicants and Providers must permit appointed personnel to conduct
compliance inspections2. Appeals must be first submitted to USAC for review3. Modernization of USAC IT systems4. FCC requirement that USAC provide more clear and simple communication5. Expediting review of applications, specifically Category 1
Items to Consider• 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 ASSISTANCEYou do not have to go this alone
USAC:http://www.universalservice.org/sl
