Applicant-Owned Fiber E-rate Eligible for FY 2016
July 30, 2015
~ Contact Julie if you are seriously considering ~
Beginning in FY 2016, the FCC has added a MAJOR new item to the Category 1 eligibility list — “self-provisioned fiber” which means the purchase/ownership of fiber. Such “purchased/owned” fiber is eligible if the applicant can show that it is the most cost effective option. At the same time, they also have loosened some other E-rate rules pertaining to leased lit and leased dark fiber service. If you are considering a self-provisioned fiber project, please read this message carefully and e-mail me (email@example.com) to express your interest and describe your project. USAC and the FCC are trying to identify all potential self-provisioned fiber projects so they can provide special one-on-one attention to those applicants as early as possible to ensure their projects are E-rate compliant.
What costs are E-rate eligible?
The costs of constructing and installing the fiber facilities are eligible for E-rate. These costs include one-time charges for design and engineering, project management, and construction of the network facilities. The equipment to light the fiber also may be purchased and paid for from Category 1 funding.
Also, there is no longer any requirement to amortize non-recurring costs of more than $500,000 over at least three years; E-rate will pay for the full construction cost in year 1.
What are the bidding requirements?
Applicants must issue a detailed RFP along with a Form 470, seeking bids for both lit fiber service and self-provisioned fiber (unless the applicant already posted a Form 470 for broadband services for this same funding year and received no service provider bids). RFPs must provide service providers with specific details and descriptions of the services needed and exact locations to be served. Although the minimum bidding period is 28 days, for self-constructions/lit fiber RFPs, the FCC strongly suggests that a longer bidding period be allowed for these projects.
What are the bid evaluation requirements?
Applicants must compare the cost of lit fiber service to the ‘total cost of ownership’ over the life of the facility for self-construction option, including all aspects of installing, operating and maintaining the network facilities. I understand that a “total cost of ownership” tool is being developed to assist applicants in evaluating all relevant costs. During PIA review, USAC will pull out these applications to be reviewed separately and the review will focus on verifying the bidding process and cost effectiveness analysis. When applicants add up the total anticipated costs over a reasonable, defensible time period, the most cost effective option will be clear in most cases.
Can I bid self-provisioned fiber to just a few buildings?
Yes. Self-construction can be as large as putting together a state-wide or regional fiber network, or as simple as installing fiber between buildings on your campus.
If I already own my own fiber, can I bid a contract just to maintain and operate that fiber?
Yes, provided that you issue an RFP in addition to posting a Form 470.
If self-provisioned fiber only eligible if lit fiber service is NOT available?
No. Even if lit fiber service is available, self-provisioned fiber is E-rate eligible if it is the most cost effective option, proven through your bid evaluation.
What rules changed related to leased dark fiber?
1) Previously, E-rate would only pay special construction costs from the applicant’s property line to the building and modulating electronics were not eligible in Category 1. The new E-rate rules will pay for special construction costs beyond an applicant’s property line (just the same as leased lit fiber), and the modulating electronics to light dark fiber will be eligible for Category 1 support.
2) Applicants seeking bids for dark fiber must also seek bids for lit fiber service over comparable time period to ensure the most cost-effective option is chosen. To the extent an applicant intends to seek support for equipment and maintenance costs associated with lighting dark fiber, those costs must be included in the same application with the dark fiber lease. Applicants will not receive support for excess capacity and may only receive special construction support for dark fiber lit in the same funding year.
What rules changed related to the non-discounted applicant payments of special construction costs?
Previously, applicants were required to pay the non-recurring cost of special construction costs within 90 days of the start of service (the same payment requirement as all other E-rate eligible services/equipment). Under the new rules, applicants are allowed to pay their share (the non-discounted amount) of those up-front costs in installment payments over up to four years, if the vendor is willing to extend such a payment option. Applicants interested in an installment payment plan option must indicate their interest on Form 470 where it asks this question.
If you have any questions, please contact me at firstname.lastname@example.org and please let me know if you would like to pursue a self-provisioned fiber option.
Julie Tritt Schell
PA E-rate Coordinator
717-730-7133 – o
717-730-9060 – f