Schools and Libraries Division officials indicated Oct. 20 that they are still discussing with the Federal Communications Commission how to deal with funding requests that are currently under review for services that will become ineligible for the 2004 funding year.
In response to a question about how new rules regarding dark fiber would be applied to previous years, USAC Vice President George McDonald told the quarterly meeting of the Schools and Libraries Committee of the Universal Service Administrative Company that "we still don't know yet.." When the formal eligible services list was released on October 10, additional language had been added, noting that major changes were "Effective for Funding Year 2004 and later years." This led stakeholders to conclude that this question had been resolved.
Committee chairman Brian Talbott noted that many applicants had written dark fiber installations into their approved tech plans. "What are we going to do about these approved plans?"
SLD Staff Member Phil Gieseler agreed. "This is a very large concern in many corners."
USAC Board member Robert Rivera, a systems integrator, expressed concern that "If you pulled fiber, and it was not lit, and it's not eligible, could you be subject to a COMAD?"—a commitment adjustment in which service providers are required to pay back the Universal Service Fund when discounts have been disbursed in violation of the rules.
McDonald said that "the SLD has not been given guidance to change" its position on applications for the 2003 funding year, a year in which dark fiber was listed as an eligible service. He said SLD staff had not been given "a definitive on answer on ‘will we look back?' "
Mark Seifert, deputy chief of the FCC's Telecommunications Access Policy Division, also acknowledged that this issue was still under discussion. Seifert indicated that the staff was working on a "legal basis" for extending the eligibility retroactively.
Gieseler said that a court decision had been remanded to the FCC concerning the issue of whether dark fiber was a telecommunications services. He made clear that there was "no issue with fiber itself," or when fiber was used in a local area network. "In general, we have provided funding for that capability if it was included in the tech plan."
McDonald said the SLD had been asked whether an applicant that owns the electronics that light the fiber could sell the electronics to a service provider as a way of reducing the cost of the service. He said that issue was also under discussion with the FCC.
Gieseler indicated that among the issues that are being discussed with the FCC are "to what degree can an applicant install equipment for their immediate needs versus their future need?" In general, it is considered to be more cost-effective to install wiring once in anticipation of future needs. However, that position could run afoul of the E-rate program's requirements that applicants be able to demonstrate that they already have adequate resources, including desktop computers, to use E-rate eligible services effectively, or that they have budgeted sufficiently to acquire them.
