On June 29, 2023, the Federal Communications Commission circulated a Further Notice of Proposed Rulemaking (FNPRM) seeking comment on a wide range of potential E-rate rule changes affecting eligible services, transition of service, competitive bidding, program forms and more. Specifically, the FCC requests input from E-rate stakeholders in the following areas:
Multi-year Basic Maintenance Services
The Commission notes that current E-rate rules allow applicants to receive “full funding” for multi-year right-to-use software licenses in the first funding year a purchase is made, but multi-year “software-based services for technical assistance, like bug fixes” are considered to be Basic Maintenance and require amortization over multiple years of service. The FNPRM therefore seeks comment on a “proposal to treat these particular software-based services (e.g., bug fixes, security patches, and software-based technical assistance) in the same way we currently treat eligible Internal Connections software-based services, like client access licenses.” The FCC also seeks comment on permitting applicants to request funding for multi-year BMIC “software-based services” even if only Internal Connections is specified on the applicant’s Form 470.
Transition of Service
Recognizing that determining exact cutover dates for the transition from one vendor to another “can be difficult to determine with accuracy, months in advance of the planned transition,” the FNPRM seeks comment on allowing applicants to request 12 months of service from the higher priced service, then filing a post-commitment change “once the cutover dates are known.” The FNPRM also asks for alternate suggestions for handling the transition from one service provider to another in light of the program’s duplicative service rules.
Duplicative Services
The FNPRM seeks comment on a proposal to allow applicants to “seek needed services from multiple providers as part of the same procurement, so long as the applicant is limited to E-Rate funding based on the least expensive service when one provider could have met all the applicant’s needs.” In considering the proposal, the Commission requests information on how frequently the need to purchase service from multiple providers occurs, as well as additional safeguards to ensure cost-effective purchases.
Competitive Bidding Exemptions
The FNPRM seeks comment on a proposal to grant competitive bidding exemptions to small library applicants seeking less than $10,000. Although the draft Tribal Report and Order creates an exemption of $3,600 for Category Two services, the Commission requests feedback on expanding the threshold to $10,000. Comments are sought on state and local purchasing requirements for purchases of this magnitude.
Mid-Year Bandwidth Increases
Comments are sought on a proposal to allow applicants to submit a “service substitution request to increase the bandwidth using their current provider at the existing committed amount without being found to have violated the program’s competitive bidding rules.” In doing so, the FCC also seeks comment on a requirement for applicants increasing bandwidth mid-year to conduct a new procurement for the next Funding Year.
Providing Guidance on When to Restart Bidding
The FNPRM seeks comment on scenarios where the Commission may be able to “provide more guidance on whether an applicant’s changes to their FCC Form 470 or RFP requires it to restart the competitive bidding process and wait at least 28 days before selecting its service offering(s).” Asking if “there any presumptions or safe harbors the Commission could adopt so that applicants could have more certainty about whether and when they need to restart the competitive bidding process because of that specific change that was made to FCC Form 470 and/or RFP,” the FNPRM seeks suggestions for bright-line guidance.
Spam and Late Bids
The FNPRM seeks comments on “the types of spam and other automated bid responses that are being generated and sent to the applicant once or soon after their FCC Form 470 is posted,” requesting examples of communications and data regarding the frequency and number of automated responses. In addition, comments are sought on a proposal to consider the Allowable Contract Date as a bid response deadline when no alternate deadline is specified on the Form 470 or in an RFP.
Legally Binding Agreements
The FNPRM requests comments on a proposal to accept “board minutes approving a contract offer” as “evidence of an applicant’s acceptance, demonstrating a legally binding agreement.” Further, additional comments are sought on allowing applicants “to rely on a price quotation before submitting their E-Rate applications,” asking if such a rule would streamline the application process.
Creating an “EZ” Application
Comments are sought on the creation of a streamlined “EZ” Form 471 application for use by smaller applicants. The FNPRM asks what types of applicants could benefit from a streamlined application, as well as what information currently collected on the Form 471 would not be needed in an “EZ” version.
Form 470 “Drop-Down” Options
Noting that stakeholders continue to request updates to the Form 470 menu item options despite previous attempts to improve them, the FNPRM requests comment on a proposal to combine or revise the Category Two service types (Internal Connections, Basic Maintenance, and Managed Internal Broadband Services) in order to reduce the chance that an applicant might choose the wrong service type by mistake. Comments are also sought on continued ways to change or improve options for Category One services.
Modifying or Eliminating FCC Form 486
The FNPRM seeks comment on “moving the CIPA certifications to FCC Form 471 and removing the requirement to notify USAC that services have started,” noting that “for the vast majority of applicants that are already in compliance with CIPA, the location of this CIPA certification should make no difference.” Should the 486 be eliminated, the Commission seeks comment on linking the invoice deadline to the date of the Funding Commitment Decision Letter.
Modifying Invoice Deadlines
In the FNPRM, the Commission recognizes that changes to the invoice deadline rules in 2014 have led to “large numbers of waivers related to invoicing errors.” As a result, the FCC requests comment on a proposal to modify the invoice deadline extension rule by allowing extensions to be granted if the request is made within 15 days of the original deadline.
Discounted Invoice Requirements
Comments are sought on amending E-rate rules “to make them consistent with the Commission’s intent that applicants who select the SPI invoicing method must only pay their service provider for the non-discounted share of the costs of the eligible equipment and services, and the service provider must seek the remaining discounted portion of costs from USAC and may not require full payment from the applicant as well when the SPI invoicing method is used.” The proposed rule change is in response to service providers who invoice applicants “for the full cost of the E-Rate services and then provide a credit to the applicant after receiving reimbursement of the discounted share of costs for the equipment and services through SPI invoicing.”
Definition of Internal Connections and Wide Area Network
The FNPRM seeks comment on “amending the definition of “internal connections” and “wide area network” to allow applicants to seek funding for wiring between different schools in the same contiguous area as an internal connection,” noting that “applicants remain frustrated that cabling between two schools… in the same location be considered category one services.”
Definition of Consortium
Comments are sought on modifying the definition of “consortium” in the E-rate program to match the definition used for the Emergency Connectivity Fund program. Noting that E-rate rules “only allow ineligible private sector entities to join consortia if the pre-discount prices for interstate services are at tariffed rates,” comments are sought from removing that requirement as many services have been de-tariffed. The FNPRM also seeks comment more broadly regarding advantages and disadvantages of allowing private sector entities to be in E-rate consortia.
The Further Notice of Proposed Rulemaking may be viewed here.
