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December 2003 Announcements

Please click on the topic below to view the most recent announcements:

 

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Special Notice to Providers of Telecommunications Services (12/24/03, revised 12/31/03)

An Eligible Telecommunications Provider (ETP), a USAC term used for "telecommunications carrier," is an entity that provides telecommunications services, i.e., transmission services on a "common carriage" basis. To be a telecommunications carrier, the carrier must (1) allow the customer to transmit information of its own design and choosing, without change in the form or content of the information, and (2) provide that capability for a fee directly to the public, or to such classes of users as to be effectively available to the public (i.e., hold itself out to serve indifferently all potential users). In many instances, a state regulatory authority certifies a company providing telecommunications services as a common carrier through the issuance of a license or an order. However, some categories of service (such as cellular, paging and satellite) may not be subject to state regulatory authority.

All telecommunications carriers are required under FCC rules to file an FCC Form 499A. By filing a Form 499A and checking at least one of the boxes on line 227, you are indicating that you hold yourself out as a telecommunications carrier and that you meet the above definition. Telecommunications carriers are required to file an FCC Form 499A on an annual basis, as well as Form 499Qs quarterly, as applicable. In order to expedite processing, your FCC Form 498 should also reflect your Form 499 Filer I.D.

If you provided telecommunications services under the E-rate program and/or Rural Health Care program without having filed a Form 499A, this posting serves as notice that your failure to file a FCC Form 499A may be referred to the FCC for appropriate enforcement action.

USAC makes commitments for telecommunications services for applicants when the service provider is identified in USAC's database as an ETP; but, notwithstanding that identification, it is the service provider that is responsible for ensuring it meets these requirements in all instances of discounted telecommunications services.

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Holiday Hours Announcement (12/30/03)

The Schools and Libraries Client Service Bureau will be closed on Thursday, January 1, and Friday, January 2, 2004 in observance of New Year’s. The Client Service Bureau will resume normal operations on Monday, January 5, 2004 at 8:00 a.m. EST.

 

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FCC Releases Third Report and Order (12/24/03)

On December 23, 2003, the FCC released its Third Report and Order and Second Further Notice of Proposed Rulemaking (FCC 03-323) that addresses several matters related to the E-rate program and seeks comment on several issues.

There are important rule changes and clarifications in this Order that all applicants and service providers should read carefully. All rule changes and clarifications shall be implemented upon the effective date of this Order, unless specified otherwise. The effective date will be thirty days after the publication of this Order in the Federal Register. Following are direct quotes from the Third Report and Order:

Upgrading or replacing Internal Connections. [E]ach eligible entity may receive commitments for discounts on Priority Two services . . . no more than twice every five funding years. The practical effect of this rule will be to permit applicants to receive funding once every three years for internal connections, as supported by the record, but will allow applicants to obtain internal connections in two consecutive years as part of a staged implementation of internal connections. In order to give applicants sufficient planning time, . . . this rule will become effective beginning with support received in Funding Year 2005. Commitments for Priority Two services received in years prior to Funding Year 2005 will not be considered in determining an applicant’s eligibility to receive support for Priority Two services. (para 12)

For the purpose of determining whether an applicant is eligible to receive a funding commitment for Priority Two services under this rule, the five-year period begins in any year, starting with Funding Year 2005, in which the entity receives discounted Priority Two services. The rule is applicable to discounts for services that are site-specific to the entity and for services that are shared by the entity with other entities. Thus, if an entity receives support only for shared services in a particular funding year, that funding will be counted as one of the two years out of five that it may receive support. The restriction does not apply to consortium members who do not actually receive Priority Two funding when other members of the consortium receive discounts in specific funding periods. (para. 13)

[E]ven with this revised policy on the funding of internal connections, funding commitments will continue to be made in accordance with the annual funding cap. Thus, it is conceivable that an applicant may be eligible to apply for discounts on Priority Two services and still be denied funding because demand for discounts exceeds available funding. . . . [I]t is the receipt of support for Priority Two services, rather than the application for support, that counts toward the limitation that an entity may receive in only two out of five years. (para. 16)

Basic maintenance on Internal Connections. Maintenance requests will continue to be funded as Priority Two funding. However, maintenance requests will be considered for funding separately from other requests for Priority Two funding and, therefore, will not be subject to the twice-every-five years funding rule . . . (para 21)

In response to allegations of waste, fraud, and abuse, [the FCC] prospectively clarif[ies] the services eligible for Priority Two support as basic maintenance costs for internal connections. (para. 22)

Basic maintenance services are “necessary” if, but for the maintenance at issue, the connection would not function and serve its intended purpose with the degree of reliability ordinarily provided in the marketplace to entities receiving such services without e-rate discounts. Basic maintenance services do not include services that maintain equipment that is not supported or that enhance the utility of equipment beyond the transport of information, or diagnostic services in excess of those necessary to maintain the equipment’s ability to transport information. For example, basic maintenance will include repair and upkeep of previously purchased eligible hardware, wire and cable maintenance, and basic technical support, including configuration changes. On-site technical support is not necessary to the operation of the internal connection network when off-site technical support can provide basic maintenance on an as-needed basis. Services such as 24-hour network monitoring and management also do not constitute basic maintenance. Such services are therefore ineligible for discounts under the schools and libraries universal service mechanism. (para. 23)

[T]echnical support, including on-site Help Desks, is not eligible under [the FCC’s] rules if it provides any ineligible features or functions. A Help Desk system typically goes beyond the level of support authorized by the Commission . . . [I]f a technical support contract provides more than basic maintenance, it shall be ineligible for discounts . . . [The FCC] instruct[s] USAC to review and fund requests for discounts on maintenance services in accordance with this clarification, as of the effective date of this Order. (para 24)

To the extent this clarification impacts existing contracts, [the FCC] shall permit parties 90 days from the effective date of this Order to renegotiate those contracts, or to provide the Administrator with an itemized breakout of the components of the contract, clearly identifying the portion of the contract price to be allocated to basic maintenance. [The FCC] will permit parties to utilize cost allocation for signed contracts in existence as of the effective date of this Order. The burden is on the applicant to justify what portion of a contract price should be allocated to basic maintenance services. (para. 24 footnote 47)

Transfer of equipment. The [Telecommunications] Act [of 1996] prohibits the sale or transfer of equipment purchased with discounts from the universal service program in consideration of money or anything else of value. Here, in order to promote the goal of preventing waste, fraud, and abuse, [the FCC] extend[s] that prohibition to all transfers, without regard to whether money or anything of value has been received in return[,] for a period of three years after purchase. (para. 25)

[The FCC] find[s], however, that it would be wasteful to prevent recipients from transferring equipment that, after a reasonable period of time, has been replaced or upgraded. [The FCC] therefore permit[s] recipients freely to transfer equipment to other eligible entities three years or more after the purchase of such equipment. Consistent with the Act, however, such transfers must not be in consideration of money or anything else of value. (para. 26)

[A] recipient may transfer equipment purchased with universal service discounts to other eligible entities if the particular location where the equipment was originally installed is permanently or temporarily closed. In these limited circumstances, . . . it is not necessary for the transferring and receiving entities to have comparable discount levels, as long as each is eligible under the schools and libraries program. (para 27)

In the event that a recipient is permanently or temporarily closed and equipment is transferred, the transferring entity must notify the Administrator of the transfer, and both the transferring and receiving entities must maintain detailed records documenting the transfer and the reason for the transfer for a period of five years. [The FCC] instruct[s] the Administrator to verify compliance with this requirement as part of its beneficiary audit reviews. In order to enable the Administrator to verify compliance with this transfer prohibition, [the FCC] require[s] all recipients of internal connections support to maintain asset and inventory records for a period of five years sufficient to verify the actual location of such equipment. (para. 28)

This rule change shall be implemented upon the effective date of this Order. To facilitate enforcement of this rule, [the FCC] will amend the FCC Form 471 for Funding Year 2005 to include a reasonable use certification. In order to receive discounts, applicants must certify that they will use all equipment purchased with universal service discounts at the particular location for the specified purpose. Applicants will thereafter be held accountable for their compliance with the reasonable use certification. (para. 29)

Allocating eligible and ineligible costs. [I]f a product or service contains ineligible components, costs should be allocated to the extent that a clear delineation can be made between the eligible and ineligible components. The clear delineation must have a tangible basis and the price for the eligible portion must be the most cost-effective means of receiving the eligible service. If the ineligible functionality is ancillary, the costs need not be allocated to the ineligible functionality. An ineligible functionality may be considered “ancillary” if (1) a price for the ineligible component that is separate and independent from the price of the eligible components cannot be determined, and (2) the specific package remains the most cost-effective means of receiving the eligible services, without regard to the value of the ineligible functionality. (para. 37)

Schools and libraries should continue to allocate eligible and ineligible costs in their contracts with service providers. In the interests of ensuring that support be provided only for eligible services, the Administrator also should continue to employ the use of the cost allocation method when necessary. (para. 38)

[T]he Administrator may rely on the cost allocation methods [the FCC] adopt[s] today in applying the 30 percent rule and performing any resulting adjustments. (para. 39)

Annual update of the Eligible Services List. [The FCC] now adopt[s] a more formalized process for updating the eligible services list, beginning with Funding Year 2005. Under the new rule, USAC will be required to submit by June 30 of each year a draft of its updated eligible services list for the following funding year. The Commission will issue a Public Notice seeking comment on USAC’s proposed eligible services list. At least sixty days prior to the opening of the window for the following funding year, the Commission will then issue a public notice attaching the final eligible services list for the upcoming funding year. The Commission anticipates that this public notice will be released on or before September 15 of each year. This process will provide greater transparency to the development of the eligible services list. The yearly updated list will interpret what may be funded under current rules, and will represent a safe harbor that all applicants can rely on in preparing their applications for the coming funding year. (para. 40)

Prohibition on the provision of free services. The Commission requires that an entity must pay the entire undiscounted portion of the cost of any services it receives through the schools and libraries program. For the purpose of this program, the provision of unrelated free services by the service provider to the entity constitutes a rebate of the undiscounted portion of the costs, a violation of the Commission’s rules. (para. 41)

Service substitution procedures. [The FCC] also formally adopt[s] and codif[ies] the Administrator’s current procedures relating to requests for service or equipment changes. These procedures provide flexibility to applicants where it has become necessary to make a minor modification to their original funding request. [The FCC] find[s] that the Administrator’s service substitution procedures are consistent with the Commission’s goal of affording schools and libraries maximum flexibility to choose the offering that meets their needs most effectively and efficiently. . . . [H]owever[,] USAC’s current procedures permit a service substitution only if the substitution does not result in an increase in the pre-discount price of the eligible service. [The FCC] will permit applicants to substitute an eligible service with a higher pre-discount price, but will provide support based on the lower, original price, rather than the higher price for the substituted service. (para. 42)

[S]ervice change requests will be granted for a substitute service or product where (1) that service or product has the same functionality; (2) the substitution does not violate any contract provisions or state or local procurement laws; (3) the substitution does not result in an increase in the percentage of ineligible services or functions, but (4) support shall be provided based on the lesser of the pre-discount price of the original service or the substitute service. In order to ensure the integrity of the competitive bidding process, [the FCC] require[s] the applicant’s request for a service change to include a certification that the requested change in service is within the scope of the controlling Form 470, including any associated Requests for Proposal (RFP), for the original services. [The FCC] also require[s] that support not be provided in excess of the amount the applicant originally would have been eligible for. (para. 43)

Certain on-premise Priority 1 equipment issues. [I]t is administratively efficient for USAC to use the factors relied upon in the 1999 Tennessee Order as a processing standard. USAC has posted an advisory on its website providing guidance to help applicants and service providers understand how it has implemented the 1999 Tennessee Order. Specifically, USAC has provided guidance that a private branch exchange (PBX) that routes calls within a school or library is not eligible for support as Priority One on-premises equipment. This guidance is consistent with [the FCC’s] 1999 Tennessee Order because a PBX, like most on-premises equipment, is presumed to be Priority Two internal connections. Moreover, it is unlikely that an applicant would be able to establish a rebuttal to that presumption, because the PBX functions to transmit information from and between multiple locations within a local network. (para. 47)

[T]he 1999 Tennessee Order does not preclude the provision of support for on-premises equipment that constitutes basic termination equipment. Accordingly, an applicant may receive a discount for the lease of a cable modem as part of Priority One Internet access. A cable modem is a type of basic terminating component. It is analogous to a channel service unit/data service unit (CSU/DSU) or a network interface device (NID) in that it functions as the termination point for a Priority One service. . . . [The FCC] conclude[s] that it is appropriate to provide discounts on the lease of a single basic terminating component used at a site as a Priority One service. (para. 48)

[I]t is appropriate to provide Priority One discounts on service provider charges to recoup the cost of leasing optical equipment to light fiber, when that optical equipment is the single basic terminating component of an end-to-end network and it is necessary to provide an end-to-end telecommunications or Internet access service. [The FCC] reach[es] that conclusion even though the optical equipment on the customers’ end, as a technical matter, is dedicated to the customer’s sole use. (para. 49)

Carryover of unused funds. [The FCC] also amend[s] the rules to require the Administrator to file with the Commission quarterly estimates of unused funds from prior years of the schools and libraries support mechanism when it submits its projection of schools and libraries program demand for the upcoming quarter. This amendment codifies the Administrator’s existing reporting practice and reporting cycle. The quarterly estimate serves to prepare the Administrator for the annual release of carryover funds and provides schools and libraries with general notice regarding the amount of unused funds that may be made available in the subsequent year. (para. 54)

[The FCC] further amend[s] the rules to make unused funds available annually in the second quarter of each calendar year for use in the next full funding year of the schools and libraries mechanism. Based on the estimates provided by the Administrator, the Commission will announce a specific amount of unused funds from prior funding years to be carried forward in accordance with the public interest to increase funds for the next full funding year in excess of the annual funding cap. For example, the Commission will carry forward the unused funds as of second quarter 2004 for use in the Schools and Libraries Funding Year 2004, thereby increasing the available funds in Funding Year 2004 above the annual funding cap of $2.25 billion. The Wireline Competition Bureau will announce the availability of carryover funds during the second quarter of the calendar year, when it announces the universal service contribution factor for the third quarter of each year. The amount of unused funds to be carried forward will be deemed approved by the Commission if it takes no action within 14 days of release of the public notice announcing the contribution factor and the amount of unused funds. (para. 55)

In order to implement the Commission’s prior decision to carry over funds beginning April 1, 2003, [the FCC] modif[ies] the schedule for this year only in order to implement the process for Funding Year 2003. [The FCC] direct[s] the Administrator to carry forward unused funds as projected for the first quarter of 2004 for use during the remainder of Funding Year 2003. While there will be an increase in the amount of funds available in Funding Year 2003, . . . no decisions previously made by USAC concerning the distribution of funds for Funding Year 2003 will be reversed or revisited. Only funding requests that are currently pending will be considered for the Funding Year 2003 carryover funding. (para. 57)

Lit fiber as a Priority 1 service. In order to receive support for services using lit fiber as a Priority One service, the school or library must purchase a functioning service from either a telecommunications service provider or internet access provider, which in turn is responsible for ensuring that both the fiber and the equipment to light the fiber are provided. (para. 76)

In cases in which a school or library has previously purchased equipment to light fiber, such equipment may be traded-in to the service provider and leased back by the applicant. The applicant may not use the credit for the trade-in to pay its non-discounted portion of the services. Such a contract modification would be deemed a minor contract modification under section 54.500(g) of the Commission’s rules if this was within the scope of the original contract and the change has no effect or negligible effect on price, quantity, quality, or delivery under the original contract. For instance, such a change could fit within the minor contract modification rule if the original contract was for the provision of high bandwidth transmission capability. (para. 76 footnote 155)

Go to the Third Report and Order (FCC 03-323)

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Holiday Hours Announcement (12/22/03)

The Schools and Libraries Client Service Bureau will be closed on Wednesday, December 24, and Thursday, December 25, 2003 in observance of Christmas. The Client Service Bureau will resume normal operations on Friday, December 26, 2003 at 8:00 a.m. EST.

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FY2004 Filing Window Closes
February 4, 2004
(12/19/03)

Applicants are reminded that the Funding Year 2004 Form 471 application filing window closes on February 4, 2004 at 11:59 p.m. EST.

You are also reminded that January 7, 2004 is the last possible date for you to post your Form 470 online in order to meet the 28-day filing requirement and to submit a complete Form 471 by the window close. However, if you post a Form 470 online on that date, you must accomplish all of the following ON February 4, 2004:

  • Select a service provider
  • Sign a contract (except for non-contracted tariffed and month-to-month services)
  • Submit your complete Form 471.

The following materials associated with Funding Year 2004 Forms 471 must be received by 11:59 p.m. EST on February 4, 2004 or postmarked on or before February 4, 2004 in order for the request to receive consideration as inside the window. These materials are:

  • The Form 471 itself (whether online or paper)
  • The Block 6 certification of the Form 471 with the signature of the authorized person (whether online or paper)
  • The Block 5 certification of any Form 470 cited in a Funding Year 2004 Form 471 with the signature of the authorized person (whether online or paper).

If you submit your Form 471 or your Form 471 certification on paper, you are advised to keep proof of the date of mailing. If an application is placed in a drop-off box, the postmark date may be after the drop-off date if the last pickup of the day has already occurred. For more information, please refer to Proof of Postmark or Delivery posted in the Reference Area of this web site.

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Applicants and Service Providers Register for WebEx Training (12/17/03)

The SLD has been offering online E-rate training to service providers on a number of topics. The SLD is now making the live training sessions available to applicants as well as service providers on a space-available basis. In addition, both applicants and service providers can view sessions that have been recorded previously.

Upcoming live sessions will be offered on the following topics:

  • Electronic Invoicing (for service providers)
  • Electronic Notifications (for service providers)
  • Program Overview

For further details on times and dates and to register, please go to the WebEx site. You can follow the registration instructions for an online session by selecting the “Registration” link, or attend a recorded session by selecting the “Recorded Session” link under the “Attend a Session” heading. We will continue to add archived versions of recorded sessions as these recordings are processed.

Service providers are also reminded that they can be added to the list to receive the service provider agenda electronically by sending an e-mail message to service provider listserv and put "subscribe sld-sp" (without the quotes) in the body of the message.

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FCC Issues Ysleta Order on “System Integrator” Approach (12/09/03)

On December 8, the FCC issued an Order (FCC 03-313) that consolidates the review of appeals from eight FY2002 appellants who used a “Systems Integrator” approach in their Forms 470 and whose related funding requests were denied by the SLD. In this order, the FCC clarified important concepts for applicants and service providers. Go to FCC Order 03-313 [PDF, 330kb].

There are some very important points of clarification in the Order that all Funding Year 2004 applicants should read carefully. Following are direct quotes from the Order providing such clarifications:

Technology plans. An applicant’s FCC Form 470 must be based upon its carefully thought-out technology plan and must detail specific services sought in a manner that would allow bidders to understand the specific technologies that the applicant is seeking. Thus, a Form 470 that sets out virtually all elements that are on the eligible services list would not allow a bidder to determine what specific services the applicant was seeking. The Form 470 should not serve as a planning device for applicants trying to determine what is available or what possible solutions might meet the applicant’s specified curriculum goals. A Form 470 should not be a general, open-ended solicitation for all services available on the eligible services list, with the hope that bidders will present more concrete proposals. The research and planning for technology needs should take place when the applicant drafts its technology plan, with the applicant taking the initiative and responsibility for determining its needs. The applicant should not post a broad Form 470 and expect bidders to do the “planning” for its technological needs. (para. 28)

Some applicants have simple, straightforward requests, such as discounts on telephone lines to each of their classrooms or dial-up Internet access for several computers in a library. Other applicants seek discounts on highly complex and substantial systems that span multiple sites and utilize highly advanced equipment and services. The FCC Forms 470 developed from an applicant’s technology plans should mirror the level of complexity of the services and products for which discounts are being sought. (para. 29)

Systems Integration services. The applicant’s FCC Form 470, based on the applicant’s technology plan, puts potential bidders on notice of the applicant’s specific needs to encourage competitive bids, so that the applicant may avail itself of the growing competitive marketplaces for telecommunications and information services. The fact that these certifications on the FCC Form 470, all of which relate to the actual products and services for which the applicant will seek discounts, are required on the FCC Form 470, indicates that the Commission’s rules and procedures contemplate that providers will bid on the cost of the specific products and services eligible for discounts, based on the applicant’s technology plan. [The FCC’s] rules and procedures do not contemplate that potential providers will bid solely on Systems Integration services, with the expectation that the applicant will decide on specific products and services after the applicant has selected a provider. (para. 26)

Overbroad Forms 470. Just as an FCC Form 470 may fail to provide sufficient information to potential bidders by not listing all the services for which the applicant may seek discounts, an applicant’s FCC Form 470 may fail to provide sufficient information by virtue of its overbreadth, with so many services listed that it fails to indicate which services the applicant is likely to pursue. Potential vendors of specific services are less likely to respond to an all-inclusive FCC Form 470, concluding that the applicant does not realistically intend to order all services listed, and being unable to determine which services are actually being sought. (para. 32)

[T]he requirement for a bona fide request means that applicants must submit a list of specified services for which they anticipate they are likely to seek discounts consistent with their technology plans, in order to provide potential bidders with sufficient information on the FCC Form 470, or on an RFP cited in the FCC Form 470, to enable bidders to reasonably determine the needs of the applicant. An applicant may, in certain circumstances, list multiple services on its FCC Form 470, knowing that it intends to choose one over another. However, all products and services listed on the FCC Form 470 must be linked in a reasonable way to the applicant’s technology plan and not request duplicative services. The Commission has previously stated that [it] expect[s] applicants to “do their homework” in determining which products and services they require, consistent with their approved technology plan . .…[R]equests for service on the FCC Form 470 that list all services eligible for funding under the E-rate program do not comply with the statutory mandate that applicants submit “bona fide requests for services.” (para. 36)

Detail on Form 470/RFP. Applicants must submit a “complete” description of services sought “for competing providers to evaluate.” Service providers thus must have sufficient information to evaluate the services sought in order to formulate bids. Similarly, if an applicant on its FCC Form 470 refers potential bidders to an RFP it has released or will release, the applicant’s RFP must provide sufficiently detailed and specific information that potential bidders may evaluate the E-rate eligible services sought in order to formulate bids. (para. 34)

Existence of an RFP. [A]pplicants will know at the time that they submit their FCC Form 470 whether they intend to release an RFP relating to the services listed on the FCC Form 470. To the extent that the applicant also relies on an RFP as the basis of its vendor selection, that RFP must also be available to bidders for 28 days. This clarification will help to fulfill the purposes of the FCC Form 470 by informing potential bidders if there is, or is likely to be, an RFP relating to particular services indicated on the form. (para. 39)

State and local procurement rules. Although compliance with any applicable state and local procurement laws is one of the minimum requirements for selecting services under the E-rate program, there are also certain specific FCC requirements with which all E-rate applicants must comply, regardless of state and local law. Section 54.504(a) of the Commission’s rules specifically states that the Commission’s “competitive bid requirements apply in addition to state and local competitive bidding requirements . . . .” For example, program rules require the posting of an FCC Form 470 and Form 471 in order to obtain funding under the program, and these constitute federal requirements that apply in all circumstances, regardless of state and local law. Similarly, even though a state or local procurement law may permit an applicant to forego competitive bidding for products and services under a certain dollar threshold, the Commission’s rules require that applicants for E-rate services seek competitive bids on all such services, to the extent that the services covered by the state law are eligible for discounts from the federal universal service fund. (para. 41)

Most cost-effective bid. Applicants must select the most cost-effective offerings, and price must be the primary factor in determining whether a particular vendor is the most cost-effective. Price need not be the exclusive factor in determining cost-effectiveness, however, so that schools and libraries selecting a provider of eligible services “shall carefully consider all bids submitted and may consider relevant factors other than the pre-discount prices submitted by providers.” (para. 47)

[P]rice must be the primary factor in considering bids. Applicants may also take other factors into consideration, but in selecting the winning bid, price must be given more weight than any other single factor. (para. 50)

Ineligible products and services. [A]pplicants and service providers are prohibited from using the schools and libraries support mechanism to subsidize the procurement of ineligible or unrequested products and services, or from participating in arrangements that have the effect of providing a discount level to applicants greater than that to which applicants are entitled. The Administrator has implemented this Commission requirement by requiring that: (1) the value of all price reductions, promotional offers, and "free" products or services be deducted from the pre-discount cost of services indicated in funding requests; (2) costs, trade-in allowances, and discounts be fairly and appropriately derived, so that, for example, the cost for eligible components is not inflated in order to compensate for discounts of other components not included in funding requests; and (3) contract prices be allocated proportionately between eligible and ineligible components. (para. 60)

[A]pplicants may not contract for ineligible services to be funded through discounts under the E-rate program. (para. 61)

When confronted with products or services that contain both eligible and ineligible functions, SLD in the past has utilized cost allocation to determine what portion of the product price may receive discounts. [The FCC] generally endorse[s] this practice as a reasonable means of addressing mixed use products and services. . . . [The SLD] should ensure that discounts are provided only for “basic maintenance” and not for technical support that falls outside the scope of that deemed eligible in the Universal Service Order. For instance, calls from end-users may involve problems with end-user workstation operating systems and hardware, and Help Desks typically field questions about the operation and configuration of end-user software. Such end-user support is not eligible for E-rate funding. Even if the actual correction of a problem involves non-contractor personnel, and is therefore not reimbursed with E-rate funds, the routing and logging function of the comprehensive Help Desk activities would effectively support ineligible services, and therefore is ineligible for discounts. (para. 64)

Service provider involvement in the application process. [D]irect involvement in an application process by a service provider would thwart the competitive bidding process. (para. 60)


Go to FCC Order 03-313 [PDF, 330kb].

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Miscellaneous Updates to Web Site (12/05/03)

Following is a list of the documents or pages that have changed on this web site since the last posting on updates:

The “Get Help!” page has been removed because users can now Submit a Question without first referring to that page. Links to submit questions from other Reference Area documents are being redirected to the Submit a Question page as well.

The documents Cost Allocation Guidelines for Products and Services that Contain Eligible and Ineligible Components and Cost Allocation Guidelines for File Servers and Other Components contain minor updates to improve the clarity of the examples provided.

The document Service Substitutions now contains a list of the information that an applicant must provide for the SLD to process a service substitution request.

The document E-rate Discounts for Schools and Libraries has been updated for Funding Year 2004. This document can be accessed from the “Program Overview” link in the Reference Area; the “Program Description” link that pointed to the same document has been removed. The content of this document is also available on the series of web pages linked to the “Applicants” title bar on the upper left side of this web page.

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“Invoice Check” Procedure Available for Internal Connections FRNs (12/05/03)

The Task Force on the Prevention of Waste, Fraud and Abuse recommended that applicants have the ability to review their portion of a Service Provider Invoice Form (Form 474) submitted by Internal Connections service providers before payments are disbursed to those service providers. The SLD announced in its response to the Task Force recommendations that this “invoice check” procedure has been implemented. The procedure is detailed below.

To request an invoice check, applicants should call the Client Service Bureau at 1-888-203-8100. They should be prepared to provide specific information about each FRN for which they wish notification prior to payment. Each time a SPI Form that references an FRN in an invoice check status is submitted for payment, the SLD will ask the service provider to obtain a certification from the applicant that the invoiced services were delivered and installed. Payment will not be processed on an FRN subject to an invoice check until the applicant makes this certification.

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Task Force Recommendations Filed with FCC (12/01/03)

On November 26, USAC filed the Recommendations of the Task Force on the Prevention of Waste, Fraud and Abuse [PDF, 150kb] with the FCC. The filing has also been posted to the Task Force section of this web site.

The filing consists of four parts:

  • The transmittal letter to the FCC
  • USAC’s interim response
  • The Task Force’s cover letter to USAC
  • The Task Force recommendations.

USAC would like to express its appreciation for the time, effort and preparation that the members of the Task Force put into writing and completing their recommendations.

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Revised Document Posted For On-Premise Priority 1 Equipment (12/1/03)

The SLD has posted a revision to the document “On-premise Priority 1 Equipment.” This document describes the circumstances in which equipment located at applicant sites can be considered a part of a Priority 1 service (telecommunications services or Internet access.)

The revised document clarifies that the FCC Order that provides guidance for SLD’s review of funding requests that include on-premise Priority 1 components involved a specific fact pattern. (This Order is often known as the “Tennessee Decision,” and is cited in the revised web site document.) SLD utilizes the principles of this decision, based on that fact pattern, as a processing standard for funding requests. We are not able to provide Priority 1 treatment to on-premise components that do not meet this fact pattern. It is possible that the FCC might rule differently if a different fact pattern were presented to them.

The revised document clarifies that Priority 1 funding is not available for PBX’s, because they are utilized to route calls within the premises of a school or library. They will continue to be eligible as Internal Connections.

Click here to view the revised document.

 

Content Last Modified: December 19, 2003