NTIA/BTOP: Providing Broadband Services to Cais That Receive E-Rate Funding

NTIA/BTOP: “Providing Broadband Services to CAIs that Receive E-Rate Funding”

Thursday, July 21, 2011

Bill McGuire leads -

These regular calls convened by the NTIA provide an opportunity for BTOP awardees to learn from one another and share best practices, plus Q&A
This call is relevant to BTOP awardees providing service to CAIs that receive or are eligible to receive NTIA funding.
CAIs, schools and libraries primarily, are potential customers for many orgs receiving BTOP funding.
Because E-Rate dollars are federal dollars, there are compliance issues and special considerations for BTOP awardees.
Two special guests: Gina Spade, Deputy Div. Chief from the FCC; and Aimee Meacham, Director of Compliance for BTOP; overview of E-Rate FAQ sheet [not sure where this is available?].

Amy Meacham, NTIA/BTOP:

NTIA offers guidelines on where we think duplication of funds may occur between BTOP and E-Rate. Also wants to thank Gina Spade for putting FAQ together, what it takes to bid on a project, etc.
Often gets question whether providing service to a CAI with E-Rate funding is considered duplicating federal funds. Generally, where discounted portion of service, is NOTconsidered a duplication of federal funds.
Providing service to CAI is different from building out infrastructure.
Where could there be duplication? In places where you’ve agreed to pay for inside wiring and CAI is getting reimbursed for inside wiring; E-rate paying for lateral and BTOP awardee is building lateral, etc. Providers must be careful in these situations!
For example… If you’re building a lateral to a CAI and the CAI is getting reimbursed by E-Rate,don’t use BTOP funds and document that accordingly.
Document ALL decisions very carefully in grant filings.
Two BTOP awardees are also sharing tips on today’s call: Dennis Sampson and Sabrina Scott from the Utah Education Network (UEN). UEN received BTOP award for 130 CAIs including schools, libraries and head start centers.

Dennis Sampson, UEN:

UEN is funded through state appropriations. [UEN] doesn’t charge CAIs for broadband services. Because UEN is authorized in state statutes, they are charged by state’s legislature to work with private telecom providers (e.g., Qwest -> CenturyLink) and Utopia (sp?) to provide optimal service and value to CAIs in the state of Utah. Quite a mix of partners.
It is important to foster economic and business development through public expenditures.
UEN has been successful in promoting fiber interconnection agreements among providers in terms of both last-mile and middle-mile services; important for CAIs. This provides great efficiencies to the state as well.
UEN is currently working through an amendment process to connect about 150 more CAIs through their BTOP grant.
State appropriation process and E-Rate undergird this growth.
Dennis: “We were able to buy down MRCs for CAIs combined with E-Rate model make project more sustainable.” – see Q&A section below.

Sabrina Scott, State E-Rate Coordinator for Utah:

UEN provides a large number of E-Rate eligible services. Over time, these services have been integrated into operations and strategic planning goal of increasing participation.
Utah state appropriations, over time, and E-Rate have enabled UEN to keep pace with demand and build out their network leading up to BTOP. Now E-Rate is critical to ongoing operations and sustainability to CAIs where UEN provides service.
When UEN procures services, try to qualify all resulting contracts for E-Rate. In the event that an eligible entity is added to a contract, the initial contractor will qualify. Try to leave no contract ‘orphaned’.
The procurement model for E-Rate has been useful in allowing UEN to reduce our ongoing MRCs. UEN regularly revisits contracts with vendors – resulting contracts initiated for BTOP specifically will work hand-in-hand with E-Rate applications going forward for E-Rate eligible services that are not duplicative.
UEN typically executes 5-year term contracts and look out as far as 10 years when negotiating contracts. E-Rate reimbursements have allowed UEN to provide E-Rate training and assistance for other organizations needing help.
Can’t underemphasize the importance of E-Rate for long-term sustainability for our BTOP project.

Scott Sherman, Hardy Telecommunications Virginia):

Hardy directly connects 35 CAIs in West Virginia.
If not familiar with E-Rate, recommends visit This web site is very informative. Process outlines for E-Rate participation. In Rural Health Care (RHC) area, not just schools and libraries, RHC is also part of E-Rate.
USAC provides on-site applicant and provider training is very good as well.
Wouldn’t hurt to get applicant training even as a provider – to learn the rules from their perspective.
Provider training is less frequent (annual), but highly recommends its value.
Timing is critical – for those not familiar with E-Rate, can’t just show up and expect to take service. Lots of documentation involved.
E-Rate Applicants must have a technology plan – schools and libraries (applicants) need this.
Also aim for a 5-year contract with CAIs.
E-Rate is a competitive bid process – just because you build to a CAI, doesn’t mean they have to take your service. Technology plan is critical.

Questions?

Q1 (to UEN): When a CAI is eligible for E-rate, but not supported by service but UEN has been able to assist them? How does this work?
A1: A number of CAIs in Utah were not participating in E-Rate prior to working with UEN. UEN has an E-Rate staff. Critical to sustainability of project that they apply for E-Rate. UEN does heavy lifting on this for CAIs – compliance, bidding, etc. –all that comes throughout the year.
E-Rate is a full-time job, year-round. There have been cases where a small rural library pursued E-Rate, but realized it was a burden for their staffing. UEN is now their representative for application purposes. Another rural library system, as they have grown, have developed their own IT expertise and are pursuing E-Rate for larger projects on their own; UEN assists as needed.
UEN can relieve burden totally for applicant or help them be successful on their own.

Q2:Regarding Dennis’s earlier statement re UEN using BTOP funds to buy down MRCs for CAIs – do you leverage federal dollars in lowering MRCs?
A2: Providers can pay for capital expenditures up front with BTOP, which in turn lowers MRCs in contracts. Made for long-term sustainable project… combining E-Rate and BTOP.

Q3: How early should you let CAIs know that your network is coming into their area? [Have there been any] tough questions from the CAIs you serve?
A3: The sooner, the better… given time it can take an applicant to get through E-Rate process, at least a year cycle should be considered. Prepare as far in advance as possible. Providers should always ask [applicants] the question: Are they currently participating in E-rate and, if so, who is current provider and term of current contract? How much ($)… need quote… be careful with that due to competitive bidding situation. Hardy is purely a provider… we can’t give advice and counsel on E-Rate rules. Important that applicant understands process for E-rate if they haven’t already participated. Rules are clear about role of provider in assisting an applicant – various things can affect provider and applicant if they don’t follow the rules. Seek the USAC training if possible to keep in compliance with E-Rate program.

Q4: With school districts already in E-Rate contracts, how soon should a February applicant can you be ready for July turn-up?
A4:At least a year in advance if possible to meet February deadline.

Q5Regarding fiber or dark fiber eligible services – what will happen in 2012 program rules?
A5 (Gina Spade, FCC): We don’t anticipate any major changes to the eligible services list for 2012 (next funding year). Currently, proposed eligible services list is out for comment – see go to old page (linkto old page – “Previous FCC.gov” on right-hand side of page). Under “Bureaus and Offices” (right hand navigation), go to Wireline Competition Bureau link, then to‘Universal Service’ link under “Areas of Interest” (left hand navigation), ‘Schools and Libraries’ with chronological list -> eligible services list at:
Comment is open until next Friday, July 29 [TBC]. The FCC will also take comments after that, but the sooner they come in, the FCC will have more time to review and discuss (with submitter). Go to the FCC web page and look at changes. Most are organization changes or clarifications vs. more substantive changes. More substantive changes are done through a more formal rule making process where the FCC seeks comment from public on what’s being proposed. Last year, added dark fiber back to eligible services list. Still potential open question about paying for some installation charge beyond a minimal amount – this question may come up again in the future (i.e., pay for build-out from school to the network).

Q6The Rule in past has been no more than 30% of project is eligible for reimbursement under E-Rate. What about when capacity is shared among entities in a BTOP project?
A6 (Gina Spade, FCC): Not sure that the restriction of 30% of projects is really applicable in the way that Shaun described. May be what people were told in the past. There is an FCC rule that you can’t apply if your application includes more than 30% ineligible services, then USAC can deny application. Just cost allocate services – if 10% is schools and libraries, then cost allocate 90% and get eligible funding for the 10% costs that are applicable. If you’re hearing other than that from USAC, contact Gina by phone at 202-418-7400 and we’ll work through that together. The FCC is very supportive of shared networks and would encourage sharing any further ideas from the community.