Proposed Rule2023-16985
Schools and Libraries Universal Service Support Mechanism, Federal-State Joint Board on Universal Service, and Changes to the Board of Directors of the National Exchange Carrier Association, Inc.
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
August 9, 2023
Issuing agencies
Federal Communications Commission
Abstract
In this document, the Federal Communications Commission (Commission) seeks comment on rule changes and clarifications suggested by commenters to further streamline and improve the application process for all E-Rate applicants, including Tribal and other small, rural entities. The Commission expects that these measures will provide a meaningful difference for Tribal communities, especially Tribal libraries that seek to participate in the E-Rate program.
Full Text
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[Federal Register Volume 88, Number 152 (Wednesday, August 9, 2023)]
[Proposed Rules]
[Pages 53837-53850]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-16985]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 54
[CC Docket Nos. 02-6, 96-45 and 97-21; FCC 23-56; FRS ID 160342]
Schools and Libraries Universal Service Support Mechanism,
Federal-State Joint Board on Universal Service, and Changes to the
Board of Directors of the National Exchange Carrier Association, Inc.
AGENCY: Federal Communications Commission.
ACTION: Proposed rule.
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SUMMARY: In this document, the Federal Communications Commission
(Commission) seeks comment on rule changes and clarifications suggested
by commenters to further streamline and improve the application process
for all E-Rate applicants, including Tribal and other small, rural
entities. The Commission expects that these measures will provide a
meaningful difference for Tribal communities, especially Tribal
libraries that seek to participate in the E-Rate program.
DATES: Comments are due on or before September 25, 2023 and reply
comments are due on or before October 23, 2023. If you anticipate that
you will be submitting comments but find it difficult to do so within
the period of time allowed by this document, you should advise the
contact listed below as soon as possible.
ADDRESSES: Pursuant to Sec. Sec. 1.415 and 1.419 of the Commission's
rules, 47 CFR 1.415, 1.419, interested parties may file comments and
reply comments. You may submit comments, identified by CC Docket Nos.
02-6, 96-45, 97-21, by any of the following methods:
<bullet> Electronic Filers: Comments may be filed electronically
using the internet by accessing the ECFS: <a href="https://www.fcc.gov/ecfs/">https://www.fcc.gov/ecfs/</a>.
[[Page 53838]]
<bullet> Paper Filers: Parties who choose to file by paper must
file an original and one copy of each filing.
[cir] Filings can be sent by commercial overnight courier or by
first-class or overnight U.S. Postal Service mail. All filings must be
addressed to the Commission's Secretary, Office of the Secretary,
Federal Communications Commission.
[cir] Commercial overnight mail (other than U.S. Postal Service
Express Mail and Priority Mail) must be sent to 9050 Junction Drive,
Annapolis Junction, MD 20701.
[cir] U.S. Postal Service first-class, Express, and Priority mail
must be addressed to 45 L Street NE, Washington, DC 20554.
[cir] Effective March 19, 2020, and until further notice, the
Commission no longer accepts any hand or messenger delivered filings at
its headquarters. This is a temporary measure taken to help protect the
health and safety of individuals, and to mitigate the transmission of
COVID-19. See FCC Announces Closure of FCC Headquarters Open Window and
Change in Hand-Delivery Policy, Public Notice, DA 20-304 (March 19,
2020), <a href="https://www.fcc.gov/document/fcc-closes-headquarters-open-window-and-changes-hand-delivery-policy">https://www.fcc.gov/document/fcc-closes-headquarters-open-window-and-changes-hand-delivery-policy</a>.
<bullet> People with Disabilities: To request materials in
accessible formats for people with disabilities (Braille, large print,
electronic files, audio format), send an email to <a href="/cdn-cgi/l/email-protection#3f595c5c0a0f0b7f595c5c11585049"><span class="__cf_email__" data-cfemail="ed8b8e8ed8ddd9ad8b8e8ec38a829b">[email protected]</span></a> or
call the Consumer & Governmental Affairs Bureau at (202) 418-0530
(voice), (202) 418-0432 (TTY).
<bullet> Availability of Documents: Comments, reply comments, and
ex parte submissions will be publicly available online via ECFS.
For detailed instructions for submitting comments and additional
information on the rulemaking process, see the SUPPLEMENTARY
INFORMATION section of this document.
FOR FURTHER INFORMATION CONTACT: Johnny Roddy <a href="/cdn-cgi/l/email-protection#3d575255535344134f525959447d5b5e5e135a524b"><span class="__cf_email__" data-cfemail="88e2e7e0e6e6f1a6fae7ececf1c8eeebeba6efe7fe">[email protected]</span></a> or
Kate Dumouchel <a href="/cdn-cgi/l/email-protection#33585247561d57465e5c46505b565f735550501d545c45"><span class="__cf_email__" data-cfemail="5d363c29387339283032283e3538311d3b3e3e733a322b">[email protected]</span></a> in the Telecommunications Access
Policy Division, Wireline Competition Bureau, 202-418-7400 or TTY: 202-
418-0484. Requests for accommodations should be made as soon as
possible in order to allow the agency to satisfy such requests whenever
possible. Send an email to <a href="/cdn-cgi/l/email-protection#7a1c19194f4a4e3a1c1919541d150c"><span class="__cf_email__" data-cfemail="ea8c8989dfdadeaa8c8989c48d859c">[email protected]</span></a> or call the Consumer and
Governmental Affairs Bureau at (202) 418-0530.
SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's
Schools and Libraries Universal Service Support Mechanism, Federal-
State Joint Board on Universal Service, and Changes to the Board of
Directors of the National Exchange Carrier Association, Inc., Further
Notice of Proposed Rulemaking (FNPRM) in CC Docket Nos. 02-6, 96-45 and
97-21; FCC 23-56, adopted July 20, 2023 and released July 21, 2023. The
Commission also released a companion Report and Order (Order) in CC
Docket Nos. 02-6, 96-45 and 97-21; FCC 23-56, adopted July 20, 2023 and
released July 21, 2023. The full text of this document is available for
public inspection during regular business hours at Commission's
headquarters 45 L Street NE, Washington, DC 20554 or at the following
internet address: <a href="https://docs.fcc.gov/public/attachments/FCC-23-56A1.pdf">https://docs.fcc.gov/public/attachments/FCC-23-56A1.pdf</a>.
I. Introduction
1. The E-Rate program provides support to ensure that schools and
libraries can obtain affordable, high-speed broadband services and Wi-
Fi equipment to connect today's students and library patrons with next-
generation learning opportunities and services. In January 2022, the
Commission began an initiative to increase Tribal libraries' access to
E-Rate support, recognizing the valuable role that these entities serve
in providing high-speed internet access to Tribal communities. The
Commission first clarified that Tribal libraries are eligible to
participate in the program and later launched a Tribal Library Pilot
Program to ensure that Tribal library entities have equitable access to
the E-Rate program. Building on those efforts, the Commission initiated
a rulemaking proceeding in February 2023 to seek comment on additional
rule changes to improve Tribal participation in the E-Rate program. The
Commission takes steps to further enhance Tribal applicants' access to
the E-Rate program through program simplifications and other changes
that aim to encourage greater Tribal participation in the program. At
the same time, the Commission takes steps to simplify the E-Rate
processes, where appropriate, for other E-Rate applicants and seeks
comment on further possible rule changes suggested by commenters in
this document.
II. Further Notice of Proposed Rulemaking
2. Consistent with the changes adopted in the companion Order, in
the FNPRM, the Commission seeks comment on the discrete issues that may
further simplify the administration of the E-Rate program and reduce
burdens for all applicants, including Tribal and other small, rural
entities. Specifically, to continue meeting the program's performance
goal of making the E-Rate application process and other E-Rate
processes fast, simple, and efficient, the Commission seeks comment on
a number of suggestions raised by commenters in response to the Tribal
E-Rate NPRM, In the Matter of Schools and Libraries Universal Support
Mechanism; Federal-State Joint Board on Universal Service; Changes to
the Board of Directors of the National Exchange Carrier Association,
Inc., CC Docket Nos. 02-6, 96-45, 97-21, Notice of Proposed Rulemaking,
rel. Feb. 17, 2023, FCC 23-10, which sought comment on streamlining or
simplifying the program.
3. The Commission remains committed to protecting the integrity of
its programs. As the Commission considers proposals that look to
further simplify the administration of the E-Rate program and reduce
barriers that may inhibit Tribal and other small, rural applicants from
participating in the program, the Commission notes its intention that
reducing barriers does not mean reducing its commitment to maintaining
the integrity of the E-Rate program. The Commission utilizes several
different resources at its disposal to ensure that protections are in
place prior to implementation of any rules regarding the oversight and
administration of E-Rate, as well as investigating and rooting out bad
actors from the program. The Commission intends for the Wireline
Competition Bureau (Bureau) to continue coordinating with the
Enforcement Bureau, the Office of Managing Director, the Office of
General Counsel, the Office of Economics and Analytics and other
Commission resources to ensure the E-Rate program is protected.
Further, the Commission intends that the Bureau and other relevant
Commission offices continue consultation with other entities, such as
the Government Accountability Office (GAO) and the FCC Office of
Inspector General, that have a shared interest in maintaining the
integrity and improving the operations of the Commission's programs.
Where possible, the Commission will strive to incorporate the
recommendations of the various entities in the decisional documents in
an effort to establish robust protections against waste, fraud, and
abuse. The Commission seeks comment on these commitments and how best
to ensure that any of the proposals herein maintain and enhance
safeguards to protect the integrity of the E-Rate program. For example,
do commenters believe it would be beneficial to
[[Page 53839]]
compile and make available recommendations that were submitted as part
of such consultations?
4. Updating Eligible Services. License/Software Distinction. The
Commission first seeks comment on allowing all eligible multi-year
software-based services that are purchased with category two equipment
to be requested and reimbursed in the same manner. Currently, software-
based services are eligible as Internal Connections service when they
are necessary for the operation of a piece of eligible Internal
Connections equipment, such as a client access license. However, bug
fixes, security patches, and technical assistance-based software
services are eligible as Basic Maintenance of Internal Connections
(BMIC) services. As explained in the Sixth Report and Order, 75 FR
75393 (12/03/2010), ``[r]equests for basic maintenance will continue to
be funded . . . if, but for the maintenance at issue, the service would
not function and serve its intended purpose with the degree of
reliability ordinarily provided in the marketplace to entities
receiving such service.'' Applicants are currently required to amortize
the cost of BMIC-related services, including for example, software-
based technical assistance services, across the length of the BMIC
multi-year contract, and cannot receive full funding for the BMIC
software-based technical assistance services in the first year of the
contract, even if the applicant has prepaid for the multi-year BMIC
software service with the purchase of the category two equipment. This
means that the current E-Rate rules allow the applicant to receive full
funding for an internal connections-related multi-year software service
in the first funding year, but for other multi-year software-based
services for technical assistance, like bug fixes, which are considered
to be BMIC services, the applicant must split the cost of the multi-
year software service evenly for each funding year, even if the
applicant was required to prepay for the multi-year BMIC software-based
services at the start of the contract period. This procedure stems from
the Commission's efforts in 2010 to only have the E-Rate program pay
for basic maintenance services that are actually provided over the
course of the funding year, and to prevent the E-Rate program from
being used to prepay for BMIC services that were never used or needed
by the applicant.
5. In their comments to the Tribal E-Rate NPRM, the State E-Rate
Coordinators' Alliance, the Schools, Health, and Libraries Broadband
Coalition, the Consortium for School Networking, and the State
Educational Technology Directors Association (collectively, the Joint
Commenters) explain that this distinction in the treatment of multi-
year software-based services causes confusion during the competitive
bidding process, where applicants are concerned about funding denials
if they select the incorrect service subcategory (i.e., use internal
connections instead of BMIC) on FCC Form 470, and places a burden on
applicants that requires them to divide the cost of a prepaid multi-
year BMIC software-based service request across multiple funding years.
The Commission therefore seeks comment on the proposal to treat these
particular software-based services (e.g., bug fixes, security patches,
and software-based technical assistance) in the same way it currently
treats eligible Internal Connections software-based services, like
client access licenses. The Commission also proposes to allow
applicants that sought bids on their FCC Form 470 only for Internal
Connections software services to be permitted to request funding for
their multi-year BMIC software-based services without being found to
have violated its competitive bidding rules for failing to check the
correct box for this software request, and to allow applicants
requesting these types of software-based services to be funded based on
how the software-based service is contracted and invoiced with the
service provider (e.g., funding a multi-year software-based service for
bug fixes in a single funding request during the first year of service
if the service is paid for in that first year). The Commission seeks
comment on these proposals.
6. Transition of Services. Applicants and service providers have
also sought additional clarification on how to request E-Rate support
when an applicant is transitioning services between two providers
during the same funding year. To prevent funding duplicative services,
program procedures do not allow Universal Service Administrative
Company (USAC) to commit funding to two funding requests for the same
service, to the same recipients, that overlap in time. At the same
time, due to concerns about exceeding the E-Rate funding cap, the
Commission's service substitution rules require that post-commitment
service substitutions be based on the lower of either the pre-discount
price of the service for which support was originally requested or the
pre-discount price of the new, substituted service. As such, applicants
are encouraged to work with their service providers to try to determine
the cutover dates when transitioning service to a new provider during a
funding year. The Commission recognizes, however, that this can be
difficult to determine with accuracy, months in advance of the planned
transition.
7. One approach is to allow applicants to request twelve months of
service from the higher-priced service offering, and then file a post-
commitment request to change the service provider once the cutover
dates are known. The Commission notes that this suggestion results in
the service request being funded higher than the actual costs of the
services, and may inflate the overall demand for E-Rate support for
that year. However, the Commission seeks comment on whether this is
still the best way to allow for mid-year service provider transitions,
or whether it should consider alternative guidance or a rule change
regarding these types of mid-year transitions. For instance, should the
Commission consider amending its service substitution rules to allow
applicants in this unique situation to request a service substitution
that will result in an increase in the pre-discount price if the
transition occurs at a different date than had been anticipated and
requested? If so, should the Commission require applicants to include
an explanation in their service substitution request documenting the
reasons that the change resulted in an increase in the pre-discount
price? Should the Commission limit USAC's ability to grant such a
service substitution request on the availability of funding for the
applicable funding year under the funding cap? Based on prior years'
data, the Commission does not expect this to be a large amount of
funding, but it generally does not increase annual E-Rate demand post-
commitment. Are there any other issues that the Commission should take
into account by allowing applicants to potentially receive a commitment
amount higher than the one originally approved for the services? How
might such increases in funding impact the annual E-Rate cap adopted by
the Commission? Are there budget control measures that the Commission
should adopt to ensure this new proposal does not cause the Commission
to exceed the cap? The Commission seeks comment on these questions and
how mid-year service provider transitions should be handled in the E-
Rate program.
8. Duplicative Services. The Commission next seeks comment on the
Joint Commenters' request for additional clarification regarding cost-
effective purchasing on services from two
[[Page 53840]]
different providers. In the Second Report and Order, 68 FR 36931 (06/
20/2003), the Commission found that requests for duplicative services,
or services that provide the same functionality for the same population
in the same location during the same time, are ineligible and
contravene the program requirements that discounts be provided based on
the reasonable needs and resources of the applicant. It also found that
requests for duplicative services are not cost-effective, but the
Commission recognized that determining whether particular requests are
functionally equivalent depends on the circumstances. In the Macomb
Order, In the Matter of Requests for Review by Macomb Intermediate
School District, Technology Consortium, Clinton Township, MI, Schools
and Libraries Universal Service Support Mechanism, CC Docket No. 02-6,
rel. May 8, 2007, FCC 07-64, USAC denied a funding request from the
Macomb Intermediate School District Technology Consortium, which
requested T-3 connections to provide internet access to its school
district from three separate service providers. The Commission agreed
that the school district violated Sec. 54.511 of the Commission's
rules by not selecting the most cost-effective service offering among
the bids considered, but provided the school district with funding for
all three T-3 connections at the amount associated with the least
expensive of the three providers.
9. The Joint Commenters request clarification that applicants may
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. The Commission seeks comment on this
proposal and the desire by schools to purchase services from multiple
providers in the same procurement. How often is the scenario in the
Macomb Order present in current school network configurations? How can
USAC best evaluate whether applicants need the services requested from
multiple providers, or whether the services are actually duplicative,
such as requests for redundant or failover connections? What kind of
documentation can applicants and/or service providers use to
demonstrate that the services are not duplicative services (i.e.,
redundant or failover connections)? What safeguards can the Commission
use to only fund services that are needed and are being used by the
applicant? The rules require that price must be the primary factor in
considering which service offering is the most cost-effective, but
should the Commission require price to be the only factor in order to
ensure applicants select the least expensive service option in these
scenarios when the applicants wishes to use multiple providers for the
requested services? Are additional safeguards needed to ensure
competitive bidding is still effective for ensuring cost-effective
services when applicants seek to contract with multiple service
providers for the requested services? What information or data may need
to be collected on the funding application forms to demonstrate the
requested services are needed and are not duplicative services? Are
there other issues that the Commission should consider in allowing
multiple service providers to be selected for the same procurement and
requested services? Finally, the Commission also seeks comment on
whether further guidance is needed for applicants seeking redundant or
resilient circuits provided by a single carrier. While redundant
circuits would be considered duplicative, are there any unique types of
arrangements or network configurations being used that might be needed
and how can applicants and/or service providers document the need?
10. Other Simplification Opportunities. The Commission seeks
comment on other changes to the eligible services list and cost
allocation requirements that could simplify the E-Rate program,
particularly for new and smaller applicants. For example, should the
Commission revise the eligible services list to use the same terms as
used on FCC Form 470 or FCC Form 471? For instance, would it make more
sense to use the terms from FCC Form 470 like fiber, cable, copper,
wireless, and other in the eligible services list of data transmission
and/or internet access services, rather than listing out specific
types, like ``Broadband Over Power Lines''? Are there terms in the
eligible services list that should be updated or streamlined? Are there
updates the Commission could make to the eligible services list process
to make it easier to approve and release the list with sufficient time
for review, before applicants must submit their funding applications?
For cost allocation requirements, are there additional changes the
Commission could make to clarify when applicants must cost allocate
parts of their E-Rate funding requests? For example, are there other
types of equipment similar to cabling, such as switches, for which cost
allocation guidance is needed? Are there other examples of challenging
cost-allocation calculations that the Commission could further
streamline for Tribal applicants? Are there other examples of ancillary
use unique to Tribal libraries or small entities that share buildings
on which the Commission could consider providing further guidance? Are
there particular challenges with cost allocation of category two
services used in multipurpose buildings, that the Commission could
simplify? The Commission seeks comment on these questions and other
suggestions for simplifying the cost-allocation. Finally, should the
Commission consider changes to the application process for certain
eligible services? Specifically, the Commission seeks comment on
whether a rolling category two application deadline or a second
application filing window for category two services would simplify or
complicate the E-Rate program. If the Commission were to consider
changes to the deadline for filing for category two applications, what
limits would be needed to ensure demand can be appropriately
calculated?
11. Changing or Clarifying the E-Rate Competitive Bidding
Requirements. The E-Rate program's competitive bidding requirements
reflect the Commission's determination that competition is the most
efficient and effective means for applicants to select the most cost-
effective service offerings. The Commission has long held that a fair
and open competitive bidding process is fundamental to the integrity of
the E-Rate program. Thus, the Commission has consistently required
applicants to treat all potential bidders equally throughout the
procurement process, provide all bidders access to the same
information, and ensure that no bidder receives an unfair advantage.
Selecting the most cost-effective bid and ensuring that price of the
eligible equipment and services is the primary factor considered in the
bid evaluation process are other fundamental requirements of the
Commission's competitive bidding rules.
12. Competitive Bidding Exemptions. In their comments to the Tribal
E-Rate NPRM, the American Library Association (ALA) recommends that
small libraries requesting less than $10,000 in E-Rate funding to be
subject to fewer competitive bidding requirements and less rigorous
review during the application process by treating funding requests
under $10,000 as de minimis. Specifically, ALA explains that libraries
rely on state and local procurement rules for these purchases and
additional competitive bidding requirements are not needed
[[Page 53841]]
because of the low amount of requested funding. The Commission seeks
comment on this proposal to create a competitive bidding exemption for
E-Rate funding requests under $10,000 submitted by libraries. In the
Order, the Commission adopted a competitive bidding exemption for
libraries making category two purchases of $3,600 or less, per funding
year. The Commission seeks additional comment on expanding the
exemption for libraries making smaller annual E-Rate requests (i.e.,
less than $10,000), along with data to support such a change. For
example, ALA notes that 62.3% of libraries requested less than $10,000
in total support for category one and category two services in funding
year 2023, and 100% of libraries in certain rural states, like Montana,
did so. However, the Commission also relies on fair and open
competitive bidding to result in applicants making cost-effective
purchases. If the Commission adopts this proposal, how can the
Commission ensure that applicants are still making cost-effective
purchases? What state, local, or Tribal procurement rules are in place
for purchases that are under $10,000? Should the Commission also
consider permitting schools to use the competitive bidding exemption
for category two purchases of $3,600 or less, per funding year, or
another exemption for school entities? If the exemption is expanded to
schools, how can the Commission protect the E-Rate program from waste,
fraud, and abuse? For example, ALA's proposal relies on the fact that
libraries are subject to state and local procurement laws and
requirements; are all school entities subject to state, local or Tribal
procurement requirements? For example, are private schools subject to
any specific state, local, or Tribal procurement requirements? The
Commission seeks comment on these questions and supporting data for
adopting a competitive bid exemption for E-Rate purchases under $10,000
per funding year.
13. Mid-Year Bandwidth Increases. The Commission next seeks comment
on adopting a limited exception to its competitive bidding rules to
allow applicants to seek bandwidth increases in between E-Rate funding
cycles. The E-Rate program rules require applicants to competitively
bid services using FCC Form 470. This process starts at least 28 days
before the applicant files their E-Rate funding requests during the
annual application filing window, but can occur six months before, or--
in the case or multi-year contracts--years before the funding request
is submitted. Applicants are encouraged to seek bids for and sign
contracts for a range of bandwidths in order to accommodate changes in
bandwidth needs in the future, but applicants are not always able to
anticipate changes in their bandwidth needs. In 2020, for example, the
Bureau opened a second application filing window in September to
address increased on-campus bandwidth needs as a result of remote
learning challenges from the COVID-19 pandemic. However, in other
instances, applicants may be unable to increase their bandwidth mid-
funding year without potentially violating the E-Rate program
competitive bidding rules.
14. The Joint Commenters therefore suggest an exception to the
competitive bidding rules to allow applicants to increase bandwidth
during the school year (i.e., mid-funding year) by submitting 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. The Commission seeks
comment on this proposal and how to allow for bandwidth increases
without opening the door to applicants avoiding its competitive bidding
rules or unfairly favoring incumbent service providers. What
limitations would need to be adopted in order to ensure that the
exception for mid-funding year bandwidth increases is not misused? How
can USAC keep track of such mid-funding year bandwidth increases? Do
commenters agree that applicants be allowed to request a service
substitution request increasing the bandwidth, limited at the original
funding commitment cost? Should such applicants be required to
competitively bid for the increased bandwidth in the subsequent funding
year? The Commission seeks comment on these questions and other issues
the Commission should consider in adopting this exception to the E-Rate
competitive bidding requirements.
15. Providing Guidance to Applicants on When Competitive Bidding
Must be Restarted. The Commission next seeks comment on how to reduce
confusion about when changes made to the information provided on FCC
Form 470 or related requests for proposals (RFP) requires an applicant
to restart the competitive bidding process and wait at least 28 days
before selecting their service offering(s). Under the Commission's
competitive bidding rules, applicants must conduct a fair and open
competitive bidding process. This means that applicants must treat all
potential bidders equally throughout the entire procurement process,
provide all bidders access to the same information, and ensure that no
bidder receives an unfair advantage. Furthermore, applicants must
describe the requested services with sufficient specificity to enable
potential service providers to submit responsive bids for such
services. Sometimes, the facts are clear that the requested E-Rate
services were not fairly competitively bid and there was a violation of
the competitive bidding rules. For example, applicants may not request
E-Rate support for services that were not included on FCC Form 470.
Similarly, applicants that fail to indicate the existence of a RFP have
also been denied E-Rate support for suppressing fair and open
competitive bidding. As such, in some instances, when applicants make a
change to an FCC Form 470--such as by modifying the services being
requested or by including an omitted RFP--that would change whether a
service provider reviewing the original FCC Form 470 could submit
responsive bids, the competitive bidding process should be restarted to
allow all potential bidders the opportunity to bid based on the
additional or modified information, and the applicant should wait at
least 28 days after making these changes before selecting the most
cost-effective service offering(s). In other cases, the Commission has
granted requests for review where an applicant changed information on
FCC Form 470 or associated RFP without finding a competitive bidding
violation because the change did not impact potential bidders' ability
to be able to submit responsive bids.
16. As these examples indicate, whether a change to FCC Form 470 or
RFP results in an unfair competitive bidding process is often a fact-
specific inquiry. The Commission therefore seeks comment on scenarios
where it can 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). E-Rate participants are encouraged to provide examples of
instances where they believe changes to FCC Form 470 and/or RFP do not
result in an unfair competitive bidding process as all potential
bidders would still be able to submit responsive bids although certain
information was modified in FCC Form 470 and/or RFP. Are 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
[[Page 53842]]
because of that specific change that was made to FCC Form 470 and/or
RFP? For instance, should applicants correcting errors in their
bandwidth requests by less than 50% not be required to restart the
competitive bidding clock (i.e., the minimum 28 day waiting period)?
Are there other types of common changes to FCC Form 470 and/or RFP that
should not require applicants to restart their competitive bidding
process? The Commission seeks comment on these questions and what type
of guidance or clarifications would be helpful for the Commission to
provide on when changes to FCC Form 470 and/or RFP would not result in
an unfair competitive bid process and when the applicant would be
required to restart their competitive bid process and wait a minimum of
28 days before selecting the most cost-effective service offering(s)
after making the change or modification.
17. Spam Bids and Bids Received After 28 Day Waiting Period. Under
the E-Rate competitive bidding rules, applicants are required to
carefully consider all received bids, with price being the primary
factor, and select the most cost-effective service offering. Applicants
must also wait at least 28 days before selecting the most cost-
effective service offerings. Applicants are permitted to set deadlines
to close the competitive bid process (of at least four weeks after FCC
Form 470 is filed) or establish other disqualification factors in FCC
Form 470. The Joint Commenters explain that applicants are receiving
more spam bids and other automated or ``robo'' responses to their FCC
Form 470 that do not contain the information on the specific services
requested by the applicant and seek guidance on whether these bid
responses have to be considered and retained. They also seek guidance
on whether and how long bids must be considered after the required four
weeks have passed. Specifically, the Joint Commenters explain that
service providers have set up automated responses to be sent, often
within 24 hours, after an FCC Form 470 has been posted on USAC's
website. In addition, multiple automated bid responses may be sent to
the applicant for a single FCC Form 470. However, the automated bid
responses do not contain the pricing and other information requested in
FCC Form 470 and require the applicant to reach out to the service
provider for additional information. The Joint Commenters request that
the Commission clarify that spam and other automated bid responses do
not meet the definition of an authentic bid and that applicants may,
but are not required to, consider spam or other automated bid responses
or be required to retain copies of the spam and other automated bid
responses pursuant to the document retention rule. The Joint Commenters
further explain that requiring applicants to acknowledge and retain
spam and other automated bid responses is an onerous burden, and that
the Commission should impose some minimal responsibility on service
providers to submit responsive bids to the applicants and the automated
bid responses should not be used as a basis to deny funding because of
a non-compliant competitive bid process.
18. For purposes of disqualifying spam or other automated bid
responses or consideration of bids received after a deadline set in FCC
Form 470, the Joint Commenters request that the Commission clarify the
requirements and confirm that spam and other automated bid responses do
not need to be treated as bids and that applicants may rely on the 28
day allowable contract date (ACD) as the deadline for submitting bids
when FCC Form 470 is silent on the bid submission deadline. In general,
the Commission would expect applicants to carefully consider all bids
received before the bid selection process has occurred, unless they
provided a specific bid submission deadline and noted that bids
received after the deadline would be disqualified on FCC Form 470. In
light of the concerns raised by the Joint Commenters, the Commission
first seeks comment 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. Please include examples of
these types of bid automated bid response communications and other data
regarding the frequency and number of automated responses that
applicants receive after posting their FCC Form 470. The Commission
seeks further comment on the Joint Commenters' request that the ACD be
used as the bid response deadline when FCC Form 470 is silent on the
bid submission deadline. The Commission notes that applicants are
already allowed to state that bids that do not include all of the
required information and/or are received after a specific deadline will
be disqualified on their FCC Form 470 or in the accompanying RFP. The
Commission requests further comment on why applicants are not able to
add language to their FCC Form 470 that non-responsive bids will be
disqualified or that bids received after the 28-day minimum waiting
period will be considered late and will also be disqualified. Are
changes to FCC Form 470 needed to include specific disqualification
criteria that could be checked by the applicant? For example, should
the Commission add a field to FCC Form 470 to allow applicants to
indicate the deadline for submitting bids and any other requirement
that will result in a bid being disqualified from consideration? The
Commission also notes that it has an open proceeding related to a
competitive bidding portal that could collect all bids that are
received by the applicant and reduce confusion about these types of
bids and deadlines. Procedurally, should the Commission delay taking
action on the treatment of spam and other automated bid responses until
after it takes action in that open proceeding, or should the Commission
consider these proposals while that proceeding is still pending before
the Commission? Would the proposed bidding portal be helpful as a
competitive bid document repository to reduce the documentation
retention related burdens on applicants? The Commission further seeks
comment on how to ensure applicants are complying with program rules to
carefully consider all bids received and retain them for the
appropriate ten-year document retention period, if spam or other
automated bid responses are not treated as ``bids.'' If exceptions are
made regarding the consideration and retention of certain types of bid
responses, how does the Commission ensure the exception is not misused
and responsive bids are not considered or retained as required by the
Commission's rules? The Commission seeks comment on all of these
questions, as well as any other issues the Commission should consider
to ensure the E-Rate competitive bidding process remains fair and open,
and compliant with the Commission's rules if changes or clarification
is provided about what response is a bid.
19. Evidence of a Legally Binding Agreement. The Commission's E-
Rate rules also require that the applicant have a signed contract or
legally binding agreement before requesting E-Rate funding. When
modifying this rule in 2014 to allow for legally binding agreements
rather than requiring only signed contracts, the Commission explained
that USAC would consider the existence of a written offer from the
service provider containing all the material terms and conditions and a
written acceptance of that offer as evidence of a legally binding
agreement. The Joint Commenters now suggest that board minutes
approving a contract
[[Page 53843]]
offer should be evidence of an applicant's acceptance, demonstrating a
legally binding agreement. The Commission seeks comment on this
proposal and whether there are additional examples that USAC should
consider as evidence of a legally binding agreement. Conversely, ALA
suggests removing the legally binding agreement requirement and
suggests that E-Rate applicants be allowed to rely on a price quotation
before submitting their E-Rate applications. In the Emergency
Connectivity Fund program, applicants were allowed to rely on price
quotations due to the emergency nature of the program and the lack of
significant advance notice before the first application filing window
opened. The Commission also seeks comment on this request and how
accepting a price quotation would streamline the application process.
The Commission also seeks comment on whether modifying this
requirement, and allowing a price quotation to be used, may lead to
greater potential of waste, fraud, and abuse, and the Commission
invites comments on how to minimize that risk.
20. Ensuring Our Rules Recognize Tribal Law. The Commission seeks
comment on whether the E-Rate program rules should be updated to
recognize that competitive bidding regulations are often imposed by
Tribal as well as state and local governments. For example, the
Commission's competitive bidding rules state that the program-specific
rules ``apply in addition to state and local competitive bid
requirements and are not intended to preempt such state or local
requirements.'' Recognizing that Tribal governments may also have
procurement rules in place, should the Commission add Tribal to this
list? Are there other areas of the Commission's program rules that
should be updated to recognize the Tribal government role?
21. Finally, the Commission seeks comment on other competitive
bidding-related requirements the Commission should consider updating or
otherwise modifying. For example, the Commission seeks comment on how
product demonstrations are conducted for applicants in the E-Rate
program. Should the Commission modify or provide guidance related to
its gift rules to provide additional clarity around product
demonstrations? What safeguards should the Commission adopt to ensure
applicants are not ultimately receiving free equipment through a
product demonstration that would impact conducting a fair and open
competitive bidding process? In considering any such changes to the
competitive bidding rules, the Commission is mindful of its commitment
to protect E-Rate funds. As the Commission continues its efforts to
safeguard the program and assess fraud risks to the E-Rate program,
should the Commission consider how to sequence any potential
modifications to its rules in light of its ongoing work to protect the
program's integrity?
22. Streamlining the E-Rate Program Forms. The Commission seeks
comment on a number of proposals to modify the E-Rate program forms to
streamline the application process. First, the Commission seeks comment
on what modifications to FCC Form 470 (Description of Services
Requested and Certification Form), which opens the competitive bidding
process for E-Rate applicants, would reduce confusion for both
applicants and service providers. Second, the Commission seeks comment
on reducing the number of E-Rate forms by moving the information
currently collected on FCC Form 486 (Receipt of Service Confirmation
and Children's internet Protection Act Certification (CIPA) Form),
which notifies USAC that services have started and that the applicant
is in compliance with CIPA requirements, to other E-Rate forms.
23. Creating an ``EZ'' Application Form. In comments to the Tribal
E-Rate NPRM, E-Rate participants explained that small library entities
often require technical assistance to complete the FCC Form 471
application. ALA suggests that the Commission ``create an `EZ' form
with simple to understand language that also includes context-sensitive
guidance and best practices to support applicants, such as including
checklists and prompts to help users navigate and raise any flags for
potentially incorrect entry of information.'' The Commission seeks
comment on this proposal and how to implement it effectively. Would
such a form be available to all applicants, or would it be preferable
to have a form targeted to Tribal entities or libraries? Is there any
language on the FCC Form 471 application in particular that should be
changed? Is any information collected on the form no longer needed? Is
there additional information that should be collected to help
streamline the application process? For example, should the Commission
add the information currently collected on FCC Form 486 to FCC Form 471
instead? What questions are confusing to small entities, and what type
of questions do small applicants require technical assistance with?
Would additional system pop-ups and guidance within the online
application form make a significant difference in encouraging new,
small entities to apply and request funding through the E-Rate program?
24. Simplifying the FCC Form 470 Drop-Down Menu Options. In 2014,
the Commission required all applicants and service providers to
electronically file all E-Rate-related documents with USAC, adopted
changes to the competitive bidding requirements for certain category
one services, and amended the category two rules to fund additional
services, such as managed internal broadband services (MIBS). As a
result of those changes, FCC Form 470 currently has drop-down menu
options that allow applicants to pick the services for which they are
seeking bids in order to make it easier for service providers to search
and locate relevant FCC Forms 470 to submit bids for. Despite efforts
to improve the drop-down menu options, applicants and service providers
continue to request changes to the drop-down menu options, and express
concerns that selecting the wrong drop-down menu option(s) can result
in a funding denial. Under the E-Rate program rules, applicants must
conduct a fair and open competitive bidding process, seeking bids on
FCC Form 470 with, at a minimum, a list of specified services for which
the entity is requesting bids and sufficient information to enable
bidders to reasonably determine the needs of the applicant. Under this
rule, the Bureau has denied requests for review from petitioners denied
funding for failing to seek competitive bids on their FCC Forms 470 for
services requested on the FCC Forms 471. In addition, the Commission
has established certain competitive bidding requirements for certain
services, like managed internal broadband services and self-provisioned
networks, in order to ensure applicants select the most cost-effective
service option. The Commission therefore seeks comment on proposals
from the Joint Commenters for changes to the drop-down menu options.
25. First, for category two services, the Joint Commenters propose
that the three separate Service Types: (1) Internal Connections; (2)
Managed Internal Broadband Services; and (3) Basic Maintenance of
Internal Connections be combined or revised in order to reduce the
likelihood that applicants select the wrong Service Type by accident.
The Commission seeks comment on this approach from both applicants and
service providers. Are the category two services subcategories useful
in determining the needs of the applicant? Or would a category two
services narrative section be sufficient to ensure that applicants are
providing sufficient information regarding the specified
[[Page 53844]]
equipment and services requested? For software-based services and
licenses, as explained, the Commission understands that it is sometimes
challenging for new applicants to determine which subcategory to use
for the software or licenses needed for the category two internal
connections equipment. However, if an applicant is seeking bids for
specific pieces of equipment or for basic maintenance in the form of
physical repair of the equipment, is information included in a
narrative box sufficient for service providers to find and understand
precisely what service(s) are being requested? Should the Commission
consider a method for applicants to tag requests as potentially one
particular type of service to assist service providers in finding the
relevant requests for bids? How does the Commission weigh the benefits
of a drop-down menu to service providers in finding and responding to
FCC Forms 470 against the burden on applicants to determine the correct
menu option(s) to use for the requested equipment and services?
26. Second, the Joint Commenters propose that the Commission again
modify the FCC Form 470 drop-down menu options for category one
services. Over the last several funding years, the Bureau and USAC have
taken steps to improve the category one drop-down menu options to
reduce applicant confusion. In funding year 2022, after seeking comment
from E-Rate participants, the drop-down menu options specifically
listing ``Leased Lit Fiber'' were modified as a result of continued
confusion. The Joint Commenters now seek new drop-down menu options for
``internet service over fiber facilities'' and ``data transmission over
fiber facilities.'' For instance, the Joint Commenters state that the
USAC guidance on seeking bids for data transmission without internet
access over fiber is unclear. The Commission seeks comment on this
proposal. Based on the continued confusion from changes to FCC Form
470, the Commission is concerned that further changes to the drop-down
menu options could result in greater applicant confusion. Are there
ways to capture concerns about the drop-down options language without
making additional changes? For example, can USAC add more guidance
within the online FCC Form 470 or in trainings? Finally, are there any
other ways the Commission could improve existing drop-down menu options
for E-Rate applicants or participants?
27. Modifying or Eliminating FCC Form 486. The Commission seeks
comment on whether to eliminate FCC Form 486 and move the information
collected on that form to FCC Form 471 or remove some of the
information collected on the form. FCC Form 486 notifies USAC that
services have started for the recipients of service included on an
approved funding request and the status of compliance with CIPA for the
recipients of service for the funding requests. It must be filed after
USAC issues a funding commitment decision letter, but no later than 120
days after the service start date or 120 days after the funding
commitment decision letter, whichever date is later. Invoicing cannot
begin until FCC Form 486 is filed by the applicant.
28. FCC Form 486 has included a number of program certifications
over the years, such as whether technology plans are in place, but
currently only collects information related to the services' start
dates and CIPA compliance. These certifications now occur in the middle
of the application cycle and can result in funding reductions due to
ministerial or clerical errors. The Commission seeks comment on moving
the CIPA certifications to FCC Form 471 and removing the requirement to
notify USAC that services have started. The Joint Commenters explain
that this would be a ``simple, yet effective way to streamline the
program for all applicants and the Administrator, but particularly for
small and new applicants.'' For the vast majority of applicants that
are already in compliance with CIPA, the location of this CIPA
certification should make no difference. While removing the requirement
to notify USAC that services have started removes one possible check
for USAC, the certifications on the requests for reimbursement forms
already require services to have been delivered in order to seek
funding, potentially making the additional notification about the start
of services duplicative. If FCC Form 486 is removed for future funding
years, how should the Commission modify the certifications on FCC Form
472 or FCC Form 474 to ensure services and/or equipment were delivered
to and used by eligible entities? If the Commission makes changes to
FCC Form 486, should it also make changes to the invoice filing
deadline to link the deadline to the date of the funding commitment
decision letter? The rules currently reference the date of the FCC Form
486 Notification Letter. Alternatively, the Joint Commenters suggest
that the CIPA certifications be moved to FCC Form 471 but allow FCC
Form 486 to remain as an option. While the Commission may need to
retain FCC Form 486 for prior funding years where the certifications
were not included on that funding year's FCC Form 471, the Commission
seeks more detailed comment about the benefits of keeping FCC Form 486
as an optional form for future funding years.
29. Are there other E-Rate form changes that could help streamline
application and reimbursement processes for the program? The Commission
seeks comment on other E-Rate form modifications, particularly those
that would help a new entity or a small or Tribal entity to apply for
and receive E-Rate support. The Commission encourages commenters to
provide sufficient detail for us to adopt changes to the E-Rate forms
in upcoming funding years.
30. Validating Discount Rate. The Commission next seeks comment on
potential ways to streamline the discount rate validation for E-Rate
applicants. Eligible schools and libraries may receive discounts
ranging from 20% to 90% of the pre-discount price of eligible equipment
and services, based on indicators of need. Schools and libraries in
areas with higher percentages of students eligible for free or reduced
price lunch through the National School Lunch Program (NSLP) or an
alternative mechanism qualify for higher discounts for E-Rate eligible
services and equipment than applicants with lower levels of eligibility
for such programs. For example, the most disadvantaged schools, where
at least 75% of students are eligible for free or reduced price school
lunch, receive E-Rate support for 90% of the cost of their eligible
category one purchases (that is referred to as a 90% discount).
Libraries receive funding at the discount level of the school district
in which they are located. Schools and libraries located in rural areas
also may receive an additional 5% to 10% discount compared to entities
located in urban areas. During the application review, USAC may seek
data to validate an entity's discount rate, which is typically based on
student enrollment and NSLP data as of October 1 prior to the filing of
the application.
31. The Commission now seeks comment on how to streamline the
discount rate validation process for E-Rate applicants. For the
majority of applicants, their discounts do not change from funding year
to funding year. Absent a request for an increase in an entity's
discount rate, should the Commission adopt a presumption that discount
rates do not require validation for a certain period of time (e.g.,
three or five funding years)? Under such a
[[Page 53845]]
presumption, the Commission would still need to occasionally check for
certain aspects of the calculation, like when new rurality data becomes
available from the U.S. Census. How does the Commission factor in such
changes? Alternatively are there other changes to the discount rate the
Commission should consider? The Commission also seeks comment on any
relevant changes to the Community Eligibility Provision (CEP), how it
may impact the E-Rate program discounts, and whether any procedures
should be changed. Are there any changes the Commission should consider
for states and schools in states with statewide CEP or statewide free
lunch calculating their discount?
32. Seeking Information on Other College Libraries Acting as Public
Libraries. The Commission also seeks comment on whether there are other
college or university libraries, similar to the TCU libraries, that act
as the public library in their community. While the Commission
continues to monitor whether TCU libraries participate successfully in
the E-Rate program, it seeks data and examples from stakeholders about
whether this is common in other types of college or university
libraries and whether it should consider further changes to its
eligibility rules for libraries. One commenter suggested expanding
eligibility to other college libraries that serve as public libraries
in their communities. If the Commission does, what other additional
restrictions or limitations should be considered? Are colleges that
specifically serve communities that have been historically underserved,
marginalized, or adversely affected by persistent poverty or
inequality, such as Historically Black Colleges and Universities
(HBCUs) or Hispanic-Serving institutions (HSIs), also serving as public
libraries in any instances?
33. Modifying E-Rate Invoice and Disbursement Standards. Modifying
the Invoice Filing Deadline Rule. Before 2014, invoice filing deadlines
were procedural, and applicants or service providers could request and
receive a 120-day invoice filing extension under certain conditions.
USAC granted invoice filing extension requests that met the criteria,
including requests made up to a year after the original invoice filing
deadline. In the First 2014 E-Rate Order, 79 FR 49160 (8/19/2014), the
Commission codified the invoice filing deadline, and adopted a strict
standard for waiving the rule and granting extensions of the applicable
invoice filing deadline. Specifically, the Commission's rules only
permit USAC to grant a single 120-day extension of an invoice filing
deadline, provided that the applicant or service provider submits the
request on or before the invoice filing deadline for that request. USAC
will automatically grant timely filed invoice filing deadline extension
requests. In the interest of efficient program administration, however,
the Commission prohibited USAC from granting any additional invoice
filing deadline extensions. As a result, if applicants and service
providers require more time than the single 120-day extension to
complete the invoicing process, they may only obtain it by seeking a
waiver of the invoice filing deadline extension rule from the
Commission. The Commission concluded, however, that ``it is generally
not in the public interest to waive [the] invoicing rules,'' and the
Bureau should grant waivers of the invoice filing deadline rules only
under ``extraordinary circumstances.''
34. As a result of this standard, applicants and service providers
have filed large numbers of waivers related to invoicing errors. Under
the extraordinary circumstances standard, the Bureau has denied many of
those waiver requests. The Commission now seeks comment on the Joint
Commenters' proposal to slightly modify the invoice filing deadline
extension rule. Specifically, they propose that applicants be allowed
to seek an extension of the original invoice deadline from USAC when
the request is made within 15 days of the original invoice filing
deadline date. This change would allow applicants or service providers
to request a one-time 120 day extension if they realize they just
missed an invoice filing deadline, reducing the number of denied
requests for reimbursements and waiver requests, while maintaining the
codified invoice filing deadline, as the new invoice filing deadline
would remain 120 days from the original invoice filing deadline, and
not based on the date the extension request was filed with USAC.
Because the Commission is revisiting its overall approach to the
invoice filing deadline, the Commission also modifies, on an interim
basis, the prior guidance provided to the Bureau regarding waivers of
the existing deadline. In particular, the Bureau remains free to grant
waivers that would have been granted under the prior Commission
guidance as meeting the extraordinary circumstances standard. The
Commission directs the Bureau to leave pending any waiver requests
related to applicants or service providers that were filed within 15
days of the original invoice filing deadline for now, and it will
provide further guidance regarding the disposition of those waiver
requests at the resolution of this proceeding. While the Commission
declines to waive the invoice deadline rule during the pendency of the
rulemaking, it seeks comment on the extraordinary circumstances
standard.
35. Consistent with this proposal, the Commission also seeks
comment on other ways to simplify or streamline the E-Rate invoicing
and disbursement process. Should the Commission consider a 30-day grace
period for applicants or service providers to resubmit invoices that
were timely filed before the invoice filing deadline, but rejected in
whole or part after the deadline has passed? Currently, applicants and
service providers may appeal a rejected or denied invoice, but cannot
resubmit the invoice filing if the deadline has passed. Applicants and
service providers are encouraged to provide examples of why filing an
appeal after the invoice filing deadline is not the most
straightforward approach. Are there processes and requirements in the
program that the Commission should consider changing in order to reduce
the amount of work required by small applicants regarding the E-Rate
reimbursement process? Are there particular situations where one
extension is insufficient for requesting reimbursement from the E-Rate
program?
36. The Commission also seeks comment on a billing issue that could
complicate service provider invoicing for some applicants. E-Rate
applicants may select one of two ways to seek reimbursement of the
costs of eligible E-Rate equipment and services. If an applicant pays
the full cost of the equipment and services upfront, then the applicant
must submit an FCC Form 472, the Billed Entity Applicant Reimbursement
(BEAR) form, to request reimbursement for the discounted share of the
costs from USAC. If an applicant only pays its service provider the
non-discounted share of the cost of the eligible equipment and
services, then the service provider must file an FCC Form 474, the
Service Provider Invoice (SPI) form, to receive reimbursement of the
discounted share of the costs directly from USAC. Although the BEAR
invoicing rules were modified in the First 2014 E-Rate Order, to allow
applicants to receive direct reimbursement from USAC, service providers
have continued invoicing 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
[[Page 53846]]
equipment and services through SPI invoicing from USAC.
37. This practice by certain service providers of requiring the
applicant to pay the full cost of the E-Rate services upfront when the
applicant has elected SPI billing and is only required to pay the
service the non-discounted share of costs is contrary to the clear
intent of allowing SPI billing and the Commission's rules. As the
Commission explained in the Second Report and Order, ``requiring
schools and libraries to pay in full could create serious cash flow
problems for many schools and libraries and would disproportionately
affect the most disadvantaged schools and libraries.'' The Commission
explained that ``many applicants cannot afford to make the upfront
payments that the BEAR method requires'' and concluded ``the potential
harm to schools and libraries from being required to make full payment
upfront, if they are not prepared to, justifies giving applicants the
choice of payment method.'' The Commission therefore seeks comment on
amending its rules and certifications 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.
38. Seeking Comment on Program Recoveries. In 2000, the Commission
set up a framework for recovering funds committed or disbursed in
violation of the Act and the Commission's rules. USAC implemented a
process for recovering funds disbursed in violation of statutory and
rule violations and, in 2004, as part of the Fifth Report and Order, 69
FR 55097 (09/13/2004), the Commission largely affirmed and further
refined USAC's approach when determining what amounts should be
recovered by USAC and the Commission when funds have been disbursed in
violation of the Commission's E-Rate program rules. In particular, the
Commission amended its rules to apply the red light rule to E-Rate
applicants and service providers. Commenters note that the recovery
process can be confusing, leading to untimely appeals and applications
being dismissed. Specifically, commenters raised challenges with USAC
dismissing pending ``requests for funding commitments'' if a delinquent
debt is not paid within 30 days of the notice provided for in the
commitment adjustment procedures.'' The Commission therefore seeks
comment on whether deferring action on pending E-Rate submissions
without dismissing them would be appropriate while participants are on
red light status. If so, what limits should be imposed to ensure timely
action on the delinquent debt?
39. Updating E-Rate Program Definitions. Finally, the Commission
seeks comment on changes to some of the program's definitions that may
be causing confusion or no longer be as relevant to the current
program. The Commission also encourages E-Rate participants to provide
other cleanup suggestions for the program rules.
40. Wiring Between Buildings. The Commission next 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. In funding year 2017, the Bureau modified the Eligibles
Services List to provide guidance on the classifications of connections
between buildings of a single school. In that guidance, the Bureau
noted that ``[c]onnections between different schools with campuses
located at the same property (e.g., an elementary school and middle
school located on the same property) are considered to be category one
digital transmission services.'' In funding year 2018, the Bureau
further clarified that connections between two schools in a single
building may be classified as a category two service, but rejected
requests to allow the term ``single school campus'' in the definition
of ``internal connections'' as allowing for a single campus containing
multiple schools. Applicants remain frustrated that cabling between two
schools (e.g., a high school and an elementary school) in the same
location be considered category one services, which under current
rules, has separate competitive bidding requirements.
41. The Joint Commenters suggest that applicants should be
permitted to use their category two funding to pay for cabling between
two different schools located in the same contiguous area, if desired.
The Commission therefore proposes to modify the definitions of
``internal connections'' and ``wide area network'' to allow multiple
schools (e.g., a high school and a middle school) to share a campus by
removed the word ``single'' from each definition. The Commission seeks
comment on this proposal or on alternative ways to modify the rules
governing which category of service wiring should be considered. Would
this raise new issues for these types of connections? Are there simpler
ways to handle this issue? For instance, would it be more
straightforward to draw the line between Internal Connections and WANs
at the building? The issue identified by the Joint Commenters would
remain, but the overall policy determination would be simpler. The
Commission also seeks comment on removing references to ``voice'' in
the definition of ``wide area network.''
42. Definition of Consortium. The Commission also seeks comment on
amending the definition of ``consortium'' and whether to align it with
the definition of ``consortium'' used in the Emergency Connectivity
Fund program. The Commission's E-Rate rules only allow ineligible
private sector entities to join consortia if the pre-discount prices
for interstate services are at tariffed rates. Given that many services
have been de-tariffed over the years, the Commission seeks comment on
whether this language should be removed from the E-Rate definition of
consortium and the definition be aligned with the ECF definition of
consortium. If so, should the Commission continue to allow private
entities to be in an E-Rate consortium? If the Commission were to allow
ineligible entities to remain in E-Rate consortia should the limitation
of ``pre-discount prices for interstate services are at tariffed
rates'' be changed to another limitation as many services continue to
be de-tariffed? The Commission also seeks comment on the potential
advantages and disadvantages of permitting private sector entities to
join E-Rate consortia. Is there any data or other information showing
the impact on connectivity or pricing by allowing private sector
entities to be in E-Rate consortia? What safeguards would the
Commission have to put in place to ensure that the E-Rate program does
not support services used by ineligible entities and to ensure
ineligible entities are paying for their share of the consortium's
costs? The Commission seeks comment on its proposal to remove this
language and align the E-Rate definition of consortium with the ECF
definition of consortium. If the Commission is to continue to include
ineligible entities as member of E-Rate consortia, what limitations and
restrictions should be adopted to ensure E-Rate funding is not being
used to pay for the services of the ineligible consortia members? The
Commission seeks comment on these questions.
43. The Commission, as part of its continuing effort to advance
digital equity for all, including people of color,
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persons with disabilities, persons who live in rural or Tribal areas,
and others who are or have been historically underserved, marginalized,
or adversely affected by persistent poverty or inequality, invites
comment on any equity-related considerations and benefits (if any) that
may be associated with the proposals and issues discussed herein.
Specifically, the Commission seeks comment on how its proposals may
promote or inhibit advances in diversity, equity, inclusion, and
accessibility, as well the scope of the Commission's relevant legal
authority.
III. Procedural Matters
A. Paperwork Reductions Act Analysis
44. The Further Noticed of Proposed Rulemaking seeks comment on
possible modified information collection requirements. The Commission,
as part of its continuing effort to reduce paperwork burdens, invites
the general public and the Office of Management and Budget (OMB) to
comment on the information collection requirements contained in this
document, as required by the Paperwork Reduction Act of 1995, Public
Law 104-13. In addition, pursuant to the Small Business Paperwork
Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4), the
Commission seeks specific comment on how to further reduce the
information collection burden for small business concerns with fewer
than 25 employees.
45. Ex Parte Rules--Permit but Disclose. Pursuant to Sec.
1.1200(a) of the Commission's rules, the Further Notice of Proposed
Rulemaking shall be treated as a ``permit-but-disclose'' proceeding in
accordance with the Commission's ex parte rules. Persons making ex
parte presentations must file a copy of any written presentation or a
memorandum summarizing any oral presentation within two business days
after the presentation (unless a different deadline applicable to the
Sunshine period applies). Persons making oral ex parte presentations
are reminded that memoranda summarizing the presentation must (1) list
all persons attending or otherwise participating in the meeting at
which the ex parte presentation was made, and (2) summarize all data
presented and arguments made during the presentation. If the
presentation consisted in whole or in part of the presentation of data
or arguments already reflected in the presenter's written comments,
memoranda or other filings in the proceeding, the presenter may provide
citations to such data or arguments in his or her prior comments,
memoranda, or other filings (specifying the relevant page and/or
paragraph numbers where such data or arguments can be found) in lieu of
summarizing them in the memorandum. Documents shown or given to
Commission staff during ex parte meetings are deemed to be written ex
parte presentations and must be filed consistent with rule Sec.
1.1206(b) of the Commission's rules. In proceedings governed by the
Commission's rules Sec. 1.49(f) or for which the Commission has made
available a method of electronic filing, written ex parte presentations
and memoranda summarizing oral ex parte presentations, and all
attachments thereto, must be filed through the electronic comment
filing system available for that proceeding, and must be filed in their
native format (e.g., .doc, .xml, .ppt, searchable.pdf). Participants in
this proceeding should familiarize themselves with the Commission's ex
parte rules.
46. In light of the Commission's trust relationship with Tribal
Nations and its commitment to engage in government-to-government
consultation with them, the Commission finds the public interest
requires a limited modification of the ex parte rules in this
proceeding. Tribal Nations, like other interested parties, should file
comments, reply comments, and ex parte presentations in the record to
put facts and arguments before the Commission in a manner such that
they may be relied upon in the decision-making process consistent with
the requirements of the Administrative Procedure Act. However, at the
option of the Tribe, ex parte presentations made during consultations
by elected and appointed leaders and duly appointed representatives of
federally recognized Indian Tribes and Alaska Native Villages to
Commission decision makers shall be exempt from the rules requiring
disclosure in permit-but-disclose proceedings and exempt from the
prohibitions during the Sunshine Agenda period. To be clear, while the
Commission recognizes consultation is critically important, the
Commission emphasizes that the Commission will rely in its decision-
making only on those presentations that are placed in the public record
for the proceeding.
B. Initial Regulatory Flexibility Analysis
47. As required by the Regulatory Flexibility Act of 1980, as
amended (RFA), the Commission has prepared this Initial Regulatory
Flexibility Analysis (IRFA) of the possible significant economic impact
on a substantial number of small entities by the policies and rules
proposed in the FNPRM. Written public comments are requested on this
IRFA. Comments must be identified as responses to the IRFA and must be
filed by the deadlines for comments in the FNPRM. The Commission will
send a copy of the FNPRM, including this IRFA, to the Chief Counsel for
Advocacy of the Small Business Administration (SBA). In addition, the
FNPRM and IRFA (or summaries thereof) will be published in the Federal
Register.
48. The Commission's E-Rate program, formally known as the schools
and libraries universal service support mechanism, provides support to
schools and libraries allowing them to obtain affordable, high-speed
broadband services and internal connections, which enables them to
connect students and library patrons to critical next-generation
learning opportunities and services. In the Tribal E-Rate NPRM, the
Commission's primary objectives were to address the underrepresentation
of Tribal applicants and increase participation of Tribal libraries. To
achieve these objectives, the Tribal E-Rate NPRM explored ways to
further simplify the E-Rate program rules, reduce program barriers and
burdens, and encourage greater Tribal participation and community
representation.
49. In response to the Tribal E-Rate NPRM, the Commission received
several comments suggesting ways to streamline or simplify aspects of
the E-Rate program overall for all schools and libraries. In order to
develop the record further on those comments, the Commission is now
seeking further comment on a series of proposed ways to improve the
program for schools and libraries. First, the Commission seeks comment
on updating the eligible services list by modifying the distinction
between two types of eligible software, Internal Connections, such as
the license to access software, and Basic Maintenance of Internal
Connections (BMIC), which includes bug fixes, security patches, and
technical assistance. The modification would allow applicants to
receive full funding for BMIC services in the first year of the
contract, instead of splitting it across multiple years. The Commission
also seeks comment on the best method to aid applicants that are
transitioning between two service providers during the same funding
year. The Commission requests comment on ways applicants may seek
services from multiple suppliers without being deemed duplicative
services. The Commission also seeks information on other changes to
help simplify the program, particularly for new and smaller applicants,
such as revising the list of
[[Page 53848]]
eligible services to the same terms used on FCC Forms 470 or 471. The
Commission also seeks comment on changing or clarifying the competitive
bidding requirements in order to streamline aspects of the application
process.
50. In addition, the Commission requests comment on creating a
competitive bidding exemption for E-Rate funding requests under
$10,000. In an effort to allow applicants flexibility in anticipating
changes in bandwidth needs, the Commission seeks comment on how to
increase bandwidth during the school year without requiring competitive
bidding for the service. The Commission also seeks comment on when an
applicant's change to FCC Form 470 or a related request for proposals
(RFP) will require it to restart the competitive bidding process. The
Commission requests information on automated bid and spam bid
responses, and bid deadlines, and whether to expand evidence of a
legally binding agreement to include board minutes approving a
contract.
51. To streamline the E-Rate program forms, the Commission requests
comment on modifications such as creating an ``EZ'' application form in
plain language, adding navigation prompts that alert for potential
entry errors, and updating drop down menu options on FCC Form 470,
which is used to seek competitive bids, to reduce applicant confusion.
The Commission also seeks comment on modifying FCC Form 470, or
eliminating FCC Form 486, which is used to notify the Universal Service
Administrative Company (USAC) that services have started and collect a
certification of compliance with the Children's internet Protection Act
Certification (CIPA).
52. The Commission seeks comment on streamlining how often it
calculates and validates discount rates for applicants, and on
modifying the deadline for requesting an invoice deadline extension, in
order to reduce the number of applicants that are unable to get a
program disbursement due to small errors near the invoice deadline. The
Commission also requests information on amending its rules to address
billing issues that would change requiring applicants to make full, up-
front payments under certain billing methods. Finally, the Commission
seeks comment on updating E-Rate program definitions to make it easier
to build local networks in areas where two schools share a location,
and reflect Tribal procurement rules.
53. The proposed action is authorized pursuant to sections 1
through 4, 201-202, 254, 303(r), and 403 of the Communications Act of
1934, as amended, 47 U.S.C. 151-154, 201-202, 254, 303(r), and 403.
54. The RFA directs agencies to provide a description of and, where
feasible, an estimate of the number of small entities that may be
affected by the proposed rules, if adopted. The RFA generally defines
the term ``small entity'' as having the same meaning as the terms
``small business,'' ``small organization,'' and ``small governmental
jurisdiction.'' In addition, the term ``small business'' has the same
meaning as the term ``small business concern'' under the Small Business
Act. A small business concern is one that: (1) is independently owned
and operated; (2) is not dominant in its field of operation; and (3)
satisfies any additional criteria established by the Small Business
Administration (SBA).
55. The Commission's actions, over time, may affect small entities
that are not easily categorized at present. The Commission therefore
describes, at the outset, three broad groups of small entities that
could be directly affected herein. First, while there are industry
specific size standards for small businesses that are used in the
regulatory flexibility analysis, according to data from the Small
Business Administration's (SBA) Office of Advocacy, in general a small
business is an independent business having fewer than 500 employees.
These types of small businesses represent 99.9% of all businesses in
the United States, which translates to 33.2 million businesses.
56. Next, the type of small entity described as a ``small
organization'' is generally ``any not-for-profit enterprise which is
independently owned and operated and is not dominant in its field.''
The Internal Revenue Service (IRS) uses a revenue benchmark of $50,000
or less to delineate its annual electronic filing requirements for
small exempt organizations. Nationwide, for tax year 2020, there were
approximately 447,689 small exempt organizations in the U.S. reporting
revenues of $50,000 or less according to the registration and tax data
for exempt organizations available from the IRS.
57. Finally, the small entity described as a ``small governmental
jurisdiction'' is defined generally as ``governments of cities,
counties, towns, townships, villages, school districts, or special
districts, with a population of less than fifty thousand.'' U.S. Census
Bureau data from the 2017 Census of Governments indicate there were
90,075 local governmental jurisdictions consisting of general purpose
governments and special purpose governments in the United States. Of
this number, there were 36,931 general purpose governments (county,
municipal, and town or township) with populations of less than 50,000
and 12,040 special purpose governments--independent school districts
with enrollment populations of less than 50,000. Accordingly, based on
the 2017 U.S. Census of Governments data, the Commission estimates that
at least 48,971 entities fall into the category of ``small governmental
jurisdictions.''
58. Small entities potentially affected by the rules herein include
Schools, Libraries, Wired Telecommunications Carriers, All Other
Telecommunications, Wireless Telecommunications Carriers (except
Satellite), Wireless Telephony, Wired Broadband internet Access Service
Providers (Wired ISPs), Wireless Broadband internet Access Service
Providers (Wireless ISPs or WISPs), internet Service Providers (Non-
Broadband), Vendors of Infrastructure Development or Network Buildout,
Telephone Apparatus Manufacturing, and Radio and Television
Broadcasting and Wireless Communications Equipment Manufacturing.
59. The potential rule changes discussed in the FNPRM if adopted,
could impose some new or modified reporting, recordkeeping or other
compliance requirements on small entities. However, since the purpose
of the FNPRM is to streamline and simplify procedures, and improve the
E-Rate program processes, the Commission anticipates that the rule
modifications that may result from the matters upon which the
Commission is seeking comment should reduce the economic impact of
current compliance obligations on small entities. For example,
modifications to funding for BMIC services would allow applicants that
are small entities to receive full funding for these services during
the first year of the contract, instead of splitting funding across
multiple years, reducing operational costs. Revising the list of
eligible services to the same terms used on FCC Forms 470 or 471 could
simplify the application process for new and small applicants.
Exempting small libraries from the competitive bidding process when
requested funding is less than $10,000 would ease compliance burdens
for these small entities. The Commission also seeks comment on
eliminating the need to file a form before beginning to invoice the
program.
60. In the FNPRM the Commission inquires whether there are other
rule changes to the application, invoicing, or other administrative
processes in the E-Rate program that could be made to specifically help
new and smaller
[[Page 53849]]
schools and libraries. For example, creating an ``EZ'' application form
in plain language and navigation prompts that alert for potential entry
errors, as well as updating drop down menu options on FCC Form 470, may
reduce operational and implementation costs for small applicants.
Moving CIPA certifications to FCC Form 471 and removing USAC
notification through FCC Form 486 would reduce reporting obligations
for small entities. In response to comments to the FNPRM or this IRFA,
the Commission may simplify and change the forms that applicants use to
apply for the E-Rate program as well as modify filing and other
administrative requirements, which should ease reporting,
recordkeeping, and other compliance requirements for small entities.
61. In assessing the cost of compliance for small entities, at this
time the Commission cannot quantify the cost of compliance with any of
the potential rule changes that may be adopted. Additionally, the
Commission is not in a position to determine whether, if adopted, the
proposals and matters upon which the Commission seeks comment in the
FNPRM will require small entities to hire professionals to comply.
However, consistent with the Commission's objectives to streamline and
simplify the E-Rate program processes and procedures, the Commission
does not anticipate that small entities will be required to hire
professionals to comply with any rule modifications it adopts. The
Commission expects the information it receives in comments including
where requested, cost information, will help the Commission identify
and evaluate relevant compliance matters for small entities, including
compliance costs and other burdens that may result from potential
changes discussed in the FNPRM.
62. The RFA requires an agency to describe any significant,
specifically small business, alternatives that it has considered in
reaching its proposed approach, which may include the following four
alternatives (among others): ``(1) the establishment of differing
compliance or reporting requirements or timetables that take into
account the resources available to small entities; (2) the
clarification, consolidation, or simplification of compliance and
reporting requirements under the rule for such small entities; (3) the
use of performance rather than design standards; and (4) an exemption
from coverage of the rule, or any part thereof, for such small
entities.''
63. In the FNPRM, the Commission takes steps to minimize the
economic impact on small entities from the changes to the E-Rate
program on which it seeks comment. Specifically, each of the subjects
on which the Commission seeks comment was identified by an E-Rate
participant as a potential way to simplify the program in large or
small ways and should lessen the economic impact on small entities. The
Commission expects the comments received in response will allow us to
consider ways to minimize the economic impact and explore alternatives
to improve and simplify how small entities participate in the E-Rate
program.
64. For example, in the FNPRM, the Commission explores ways to
improve the process for applicants that have struggled with
distinguishing how to apply for two different types of eligible
software in the program, Internal Connections and BMIC, which is
administratively more burdensome to request. If the applicant fails to
file the competitive bidding forms for the right type of software, it
can be denied funding even if the applicant otherwise applies
correctly. If adopted some of the competitive bidding changes, such as
exempting certain funding requests below $10,000, could result in less
paperwork for small entities making low-cost purchases, and some of the
form changes, such as creating the ``EZ'' application and adding plain-
language to FCC Forms 470 and 471, while eliminating filing FCC Form
486, could reduce the number of forms that must be filed for all
applicants, as well as reduce the number of applicants penalized for
filing such forms past their deadline.
65. The Commission considered and seeks comment to the invoice
deadline extension rule, beyond the single 120-day extension, in order
to reduce the number of applicants and service providers that have
invoices denied because they missed the deadline by a short period of
time. All of these, and the other proposals on which the Commission
seeks comment, would reduce costs for small entities.
66. None.
IV. Ordering Clauses
67. Accordingly, it is ordered, that pursuant to the authority
contained in sections 1 through 4, 201-202, 254, 303(r), and 403 of the
Communications Act of 1934, as amended, 47 U.S.C. 151-154, 201-202,
254, 303(r), and 403, this Further Notice of Proposed Rulemaking IS
ADOPTED effective September 8, 2023.
68. It is further ordered that the Office of the Secretary,
Reference Information Center, SHALL SEND a copy of the Further Notice
of Proposed Rulemaking, including the Initial Regulatory Flexibility
Act Analysis, to the Chief Counsel for Advocacy of the Small Business
Administration.
List of Subjects in 47 CFR Part 54
Communications common carriers, internet, Libraries, Reporting and
recordkeeping requirements, Schools, Telecommunications, Telephone.
Federal Communications Commission.
Marlene Dortch,
Secretary.
Proposed Rules
For the reasons discussed above, the Federal Communications
Commission proposes to amend 47 CFR part 54 as follows:
PART 54--UNIVERSAL SERVICE
0
1. The authority citation for part 54 continues to read as follows:
Authority: 47 U.S.C. 151, 154(i), 155, 201, 205, 214, 219, 220,
229, 254, 303(r), 403, 1004, 1302, 1601-1609, and 1752, unless
otherwise noted.
0
2. Section 54.500 is amended by revising the definitions of
``Consortium,'' ``Internal Connections,'' and ``Wide Area Network'' to
read as follows:
Sec. 54.500 Terms and definitions.
* * * * *
Consortium. A ``consortium'' is any local, statewide, regional, or
interstate cooperative association of schools and/or libraries eligible
for E-rate support that seeks competitive bids for eligible services or
funding for eligible services on behalf of some or all of its members.
A consortium may also include health care providers eligible under
subpart G of this part, and public sector (governmental) entities,
including, but not limited to, state colleges and state universities,
state educational broadcasters, counties, and municipalities, although
such entities are not eligible for support.
* * * * *
Internal Connections. A service is eligible for support as a
component of an institution's ``internal connections'' if such service
is necessary to transport or distribute broadband within one or more
instructional buildings of a school campus or within one or more non-
administrative buildings that comprise a single library branch.
* * * * *
Wide Area Network. For purposes of this subpart, a ``wide area
network'' is a data network that provides connections from one or more
computers within an eligible school or library to one or more computers
or
[[Page 53850]]
networks that are external to such eligible school or library. Excluded
from this definition is a data network that provides connections
between or among instructional buildings of a school campus or between
or among non-administrative buildings of a single library branch.
0
3. Section 54.503 is amended by revising paragraph (b) to read as
follows:
Sec. 54.503 Competitive bidding requirements.
* * * * *
(b) Competitive bid requirements. Except as provided in Sec.
54.511(c), an eligible school, library, or consortium that includes an
eligible school or library shall seek competitive bids, pursuant to the
requirements established in this subpart, for all services eligible for
support under Sec. 54.502. These competitive bid requirements apply in
addition to state, local, and Tribal competitive bid requirements and
are not intended to preempt such state, local, or Tribal requirements.
* * * * *
0
4. Section 54.504 is amended by revising paragraphs (d)(1)(iv) and
(d)(2) to read as follows:
Sec. 54.504 Requests for services.
* * * * *
(d) * * *
(1) * * *
(iv) The applicant certifies that the requested change is either
within the scope of the controlling FCC Form 470, including any
associated Requests for Proposal, for the original services, or is the
result of an unanticipated need for additional bandwidth and the
applicant will seek competitive bids prior to the next funding year.
(2) Except for documented cases of transitioning from one service
provider to another service provider, in the event that a service
substitution results in a change in the pre-discount price for the
supported service, support shall be based on the lower of either the
pre-discount price of the service for which support was originally
requested or the pre-discount price of the new, substituted service.
* * * * *
0
5. Section 54.514 is amended by revising paragraphs (a)(2), (b), and
(c) to read as follows:
Sec. 54.514 Payment for discounted services.
(a) * * *
(2) 120 days after the date of the Funding Commitment Decision
Letter; or
* * * * *
(b) Invoice deadline extension. Service providers or billed
entities may request a one-time extension of the invoicing filing
deadline if such request is filed within 15 days after the deadline
calculated pursuant to paragraph (a) of this section. The Administrator
shall grant a 120-day extension of the invoice filing deadline, if it
is timely requested.
(c) Choice of payment method. Service providers providing
discounted services under this subpart in any funding year shall, prior
to the submission of the FCC Form 471, permit the billed entity to
choose the method of payment for the discounted services from those
methods approved by the Administrator, including by making a full,
undiscounted payment and receiving subsequent reimbursement of the
discount amount from the Administrator or by making a discounted
payment and the service provider receiving subsequent reimbursement of
the remaining amount from the Administrator.
[FR Doc. 2023-16985 Filed 8-8-23; 8:45 am]
BILLING CODE 6712-01-P
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