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E-Rate 2.0 Update

E-Rate 2.0 Update. August 2014. Rex Miller. Introduction. E-Rate 2.0 has arrived Today ’ s session is focused on the changes enacted by the recent E-Rate 2.0 FCC order

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E-Rate 2.0 Update

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  1. E-Rate 2.0 Update August 2014 • Rex Miller

  2. Introduction • 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 • Q & A • At the end of the presentation • ENA is available at your convenience • Webinar will be available on the ENA website at www.ena.com

  3. 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 Chaffin • 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

  4. 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 • SLD – • 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: testing • 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

  5. Goals • E-Rate 2.0 has three main goals: • Affordable access to high speed broadband • Maximizing cost effectiveness • Making E-Rate fast, simple and efficient

  6. 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 apparent • Discount rates remain same matrix • Category 2 – Internal Connections

  7. 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

  8. Category 2 • Managed Wi-Fi Eligible – • Renamed Managed Broadband Internal Connections by FCC • Third party service allowed for LAN and WLAN management • 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

  9. 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

  10. Category 1 Services • Phase down support for Voice, VoIP and other legacy services • 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

  11. 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 broadband • USAC will have a presumption that data plans and Air Cards are not cost effective and you will have to prove otherwise • 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 number/DID • No exceptions or grandfathering for existing multi-year contracts

  12. Measurements • 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 mechanism

  13. 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 management • Track utilization and performance • Track replacement and upgrade cycles and architectures to measure cost effectiveness

  14. 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 management • ENA – No indication re who is going to do this at WCB/USAC at this time

  15. E-Rate 2.0 Break

  16. Goal 2- Maximizing Cost Effectiveness • Adopt Cost Transparency to share cost and connectivity data • Encourage Consortia Purchasing • Emphasize Lowest Corresponding Price

  17. 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

  18. 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

  19. 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”

  20. 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 average • Allowing states to appoint consortia • Criteria to earn 5% incentive • Require consideration of state master contracts in all bid evaluations

  21. 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

  22. 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 as • 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

  23. Streamline Application Process • Exempt low-cost high-speed broadband from competitive bidding • 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 correctly • 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

  24. 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 time • 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 on anything other than a signed contract

  25. 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 requirement • Enables direct connections between schools and libraries • “We allow rural schools and libraries to establish direct connections” • ENA - The FCC states that to get approval of direct connection that an FCC waiver must be filed • 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 simplification

  26. 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 workable? • ENA – this appears to be a soft target with no disclosed enforcement penalties for USAC

  27. 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 use/tools • District is “rural” if majority of schools are rural • No indication what to do if 50% rural • No indication if size/student count matters

  28. 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

  29. Simplify Invoicing/Disbursement • Direct Bear invoicing by Applicants and disbursement to Applicants • 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

  30. 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 quickly

  31. Additional Measures • All Appeals must be filed first with USAC/SLD • No loss of ability to appeal to FCC if USAC denies appeal • Waiver requests still go direct to FCC • Additional measures to improve SLD administration • Speeding review of applications, commitments and disbursements • Modernizing USAC IT systems • Adopting open data policies • Improving communications with applicants and providers

  32. 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

  33. E-Rate Rest Stop

  34. 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 facilities • 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

  35. 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 CEP • 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

  36. 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 manner • 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

  37. 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

  38. 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 USAC/SLD • Much of this is “assigned” to WCB and SLD and still to be designed/released • Be alert for form changes, surveys and new forms

  39. Timing of 2015 Approvals • 2014 Year has been a great year for approvals – much improvement • 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 faster • 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

  40. 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!

  41. Resources • Contact ENA • Rex Miller – rmiller@ena.com • April Scott – ascott@ena.com • Kris Vivrette – kvivrette@ena.com • Ward Chaffin – wchaffin@ena.com • Madeline Dusenberry – mdusenberry@ena.com • 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 • Websites • 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

  42. Until we talk E-Rate again

  43. Rex Miller • rmiller@ena.com - 615.312.6000

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