Year 2 Demand Estimated at $2.435 Billion;
Year 3 Task Force Releases Recommendations To Improve Program
Message Posted April 20, 1999
Yesterday, the Schools and Libraries Division released two very important pieces of information -- their estimated Year 2 demand and the Year 3 Task Force Recommendations to improve the program. I have included detailed information on both in this message. -- Julie
Estimated Demand
The Schools and Libraries Division projecting a total of $2.435 billion as the demand estimate for e-rate support in 1999. This forecast was based on an analysis of a large percentage of the 36,000 applications received during the application filing window which closed April 6, 1999. The Federal Communications Commission is expected to seriously consider this demand level when it proposes universal service collection levels.
The SLD projected that $931 million, or 39 percent of the total, was requested for (priority 1) telecommunications services and Internet access - services that are funded no matter what the applicant's discount rate is. Another $1.5 billion, or 61 percent of the total, was requested for (priority 2) internal connections, which are supported with the remaining funds for the neediest (highest discount) applicants.
Year 3 Task Force Recommendations
Below is the full text of the Year 3 Applicant/Service Provider Task Force Executive Summary (of which PA is a member) that soon will be submitted to the FCC. Although there were parameters to what we were allowed to change, I think you will be very pleased with the concepts and changes that we suggested. It is important to note that every position taken in this report was adopted unanimously by the 16 member task force -- including service providers. I encourage you to read the remainder of this
message, but if you don't have time, it basically makes the following changes:
* The FCC should use the first 2 year's demand estimates to establish the funding level as early as possible without waiting until all applications have been filed.
* The FCC needs to fund the program to the $2.25 billion cap annually.
* Applicants only would be required to submit one Form 470 for each new contract signed, at whatever point the competitive bidding process begins instead inside a designated window. There would be no "existing contract" 470. Applicants only will be required to submit the Form 471 before a certain deadline submission of applications, which should be late enough to allow applicants to be purchasing up-to-date services and hardware, but early enough to have Funding Commitment Letters mailed before May 1 so schools and libraries can include discounts in their budgets, and so service providers have enough time to post discounts on bills.
* Applicants would be able to check a box on their 471 that tells the SLD that they authorize the payments to service providers upon invoicing (thus the applicant would not need to submit a Form 486). There also would be another box telling the SLD that the applicant does NOT authorize payment to service providers (thus the applicant will have to file a 486 after service is received.)
* All of the forms would be simplified, that is, if the Task Force has its way. The Task Force has submitted draft forms that are being finalized in the next few weeks.
* We will be meeting in the next few weeks to draft recommendations on eligible services, including redefining eligible uses, cost allocations, site specific/shared services, etc.
YEAR 3 APPLICANT AND SERVICE PROVIDER TASK FORCE
First Report and Recommendations: Executive Summary
The Schools and Libraries Division (SLD) of the Universal Service Company (USAC) has created a Year 3 Task Force to review current policies, procedures and application processes associated with the administration of the program for providing discounted telecommunications services for schools and libraries. Participating on the Task Force are members of the
American Library Association (ALA), Council of Chief State School Officers (CCSSO), and National Association of State Telecommunication Directors (NASTD), along with individuals representing private schools, libraries, urban and rural school districts, and the telecommunications, Internet, and internal connections service provider communities. This report is the
first of several through which we hope to provide advice and guidance to the SLD and the Federal Communications Commission (FCC) as to the implementation of the program for July 1, 2000 to June 30, 2001.
The Task Force was mindful of these program goals:
· meet the statutory requirements of the Telecommunications Act of 1996;
· provide universal access for all schools and libraries;
· ensure a competitive environment to obtain the best possible pre-discount price for services;
· ensure that service providers can cost-effectively place discounts on customer bills;
· minimize the cost and workload associated with completing the process by schools and libraries;
· reduce SLD/USAC administrative costs in order to maximize funds available for discounts to applicants;
· ensure that the amount of funding for schools and libraries be available, up to the annual cap of $2.25 billion;
· offer a clearly defined array of eligible services for applicants.
SUMMARY OF ACTIONS
We believe these initial Task Force recommendations (detailed on pages 3-4) will considerably streamline both the application process and forms while remaining faithful to the considerations noted above. Some of the modifications will require changes in FCC policies, others may be accomplished through action by the FCC's Common Carrier Bureau, and still others may be immediately implemented by the Schools and Libraries Division.
Application Processes and Forms
The Task Force examined the primary purpose of each of the Forms 470, 471, and 486 to ensure that they were designed to serve that purpose. As we worked through the various forms, the Task Force separated approval process from data gathering. We recognize that data gathering is important and necessary to provide both federal and state/local entities information
about the program and the applicants. We then focused on when and where in the application process are the best points for gathering the necessary data. Our discussions on these fronts generated substantive changes in the look of the forms and what information is required on each form.
The most important change we recommend, at this time, is disconnecting the filing of the Form 470 from the window. Such a change would allow applicants greater flexibility in initiating procurement processes while still complying with E-rate competitive bidding requirements. A large percentage of applicants depend on state-procured contracts for the lowest pre-discount price. These procurement actions undertaken by large school and library networks, consortia, and state networks do not fit neatly in a
90- or even 120-day window.
It is important to note that the Task Force looked at the processes and forms as an integrated package. Many of the changes we recommend are interrelated and dependent upon changing both form and process. The Task Force strongly encourages the SLD staff, USAC/SLD Board, and the FCC staff to review them, keeping in mind their integrated nature.
Program Funding
The Task Force recognized that the intent of Congress, the creation of the Order by the FCC, and the implementation by the SLD was predicated on sufficient dollars to a cap of $2.25 billion to fund eligible services for applicants. While this was not possible in the first program year, the Task Force recognized that many of the processing problems resulted from insufficient dollars, and therefore unanimously recommends that the funding be collected to the $2.25 billion cap.
Eligible Services
We believe that improvements in the application process and forms should be accompanied by an examination of the framework for eligible services. While the Task Force so far has not had adequate time to consider all the issues encompassed in this topic, there appears to be a strong consensus that more work needs to be done to reduce confusion regarding the program's current
interpretations available to applicants and providers. In general, there is concern about systemic lack of clarity and flexibility in three areas: the types of services, sites of services and uses of those services available for discount in the E-rate program. The Task Force will be meeting next month to thoroughly review the issues and concerns expressed during the Task Force's previous meetings. Subsequent recommendations will follow.
Discount Criteria
The Task Force has been made aware that the current method of determining eligibility for discounts based on the National School Lunch Program has proven less than optimal for certain categories of applicants, particularly libraries. Currently, the library community is analyzing the pros and cons of the current calculation systems versus alternatives that would continue
to meet program needs. The Task Force encourages these discussions and is willing to review any recommendations that may emerge from them.
CONCLUDING COMMENTS
These recommendations are made in the spirit of providing constructive advice for improving this extremely important national endeavor. They are intended to assist the administrators of the program to successfully achieve the intent of Congress and to provide useful suggestions for the FCC as it develops policies that assure widespread participation by schools and libraries and service providers throughout the entire nation. Proposals that are outlined below, therefore, should not be construed as criticism of current or previous administrative program practices, nor do they reflect unfavorably on the efforts of the many dedicated individuals at the FCC and USAC/SLD that have contributed to the program's success to date.
Throughout the process of developing our recommendations, the Task Force functioned in an exceptionally collegial manner and achieved a high degree of unanimity. In fact, all of the recommendations of this report were passed unanimously by the Task Force. Considering the various communities represented in the Task Force, we consider this an important statement on the necessity for these recommendations to ensure the future success of the Program. The Task Force stands ready to assist the SLD staff and the FCC staff in understanding our recommendations and assist in presenting them to the FCC senior leadership and the Commission itself.
TASK FORCE RECOMMENDATIONS: APPLICATION PROCESS AND FORMS
1. The Universal Service Program for Schools and Libraries should be funded at $2.25 billion per year. If estimated demand for a program year-as measured by previous years' demand and other means-falls short of this funding cap, collections can be adjusted downward for subsequent quarters.
2. Funding for each program year should be set prior to the application window for that year. To make rational planning and budgeting decisions, applicants need to know the program funding level before the opening of the Form 471 window (see #6, below).
3. Applicants should be allowed to file Form 470 at any time to coincide with the beginning of their procurement process for a service. Form 470 must be filed at least 28 days before filing Form 471, and must be filed each year for tariffed telecommunications services to be received in the following program year.
4. Applicants need file Form 470 just once for each new contract, and once each year for each tariffed service. Multi-year contracts require only one Form 470 to be filed when procurement begins. Each Form 470 has a unique number, which applicants will refer to in their annual Forms 471 (see #5).
5. Applicants file Form 471 each year to request discounts for services. For many applicants in future years (see #2 and 3 above, and 7 below), Form 471 will be the only form they must file to participate in the E-rate in a given year.
6. An annual application "window" will be established for filing Form 471. The window should be timed to be as close as possible to the beginning of the relevant program year, but should also allow funding commitment letters to be issued enough in advance of the program start date so service providers can integrate discounts into customer bills and applicants can integrate discounts into their budgets. The opening and closing dates for the window should be consistent and predictable from year to year.
7. Form 471 will include a mechanism for applicants to indicate "okay to reimburse service providers as of the service start date," thus eliminating need for Form 486 for those services. Form 486 will remain available as a tool for applicants who want more control over service provider reimbursements, and will be required for any applicant who must have an approved technology plan to participate in the program but does not yet have one at the time Form 471 is filed.
8. Form 486 will become a start payment/stop payment/restart payment tool. If they choose not to indicate "okay to reimburse" via Form 471, applicants can file Form 486 to signal the fund administrator to begin paying service provider invoices for a service-and to stop payment if necessary. In addition, unlike today, Form 486 could be used to restart payment.
9. All forms should be streamlined, simplified, and improved. The Task Force has carefully considered a number of changes to Forms 470 and 471 to make them easier for applicants to complete while also gathering essential data for both the fund administrator and service providers. SLD staff will now work with the Task Force to complete mock-ups of the improved forms and may conduct additional research to assure their benefits to applicants and vendors. In addition, the Task Force may yet, after further development of streamlined forms, recommend an "EZ" form approach for applications of limited scope.
10. The Schools and Libraries Division should implement any operational improvements necessary to assure broad and successful participation in the program by applicants and service providers. The Task Force has recommended a number of improvements SLD should make in its current outreach, communications, customer service, and application review operations. Implementing the recommendations outlined above will require even more strategic attention to these areas to assure a smooth transition to Year 3.
SLD staff is encouraged to provide a full report to the Task Force on its plans for making these improvements.
YEAR 3 TASK FORCE MEMBERS
Phyllis Albritton, Colorado State Library
Jose Alvarado, Fresno (CA) Unified School District
Jeff Burnett, National Association of Independent Schools
Ted Burr, Deming (NM) Public Schools
Marty Fancy, AT&T
Jackie Lamb, California State Department of Education
Jeff Ogden, Merit Networks
Winston Pierce, Florida Department of Management Services
Gary Rawson, Mississippi State Network
Dwayne Schuster, IBM
Jackie Shrago, Tennessee State Department of Education
Barbara Smith, Montgomery Co. (MD) Library System
Mike Stauffer, BellSouth Telecommunications
Julie Tritt, Pennsylvania State Department of Education
Tony Wening, Missouri Research and Education Network
*Ellen Wolfhagen, Washington State Department of Information Services
*Since being named to the Task Force, Ellen has joined the Schools and
Libraries Division staff.
Julie L. Tritt
Executive Policy Specialist
Office of Educational Technology
Pennsylvania Department of Education
333 Market Street, 10th Floor
Harrisburg, PA 17126
Tel: (717) 705-4486
Fax: (717) 787-7222
00jtritt@psupen.psu.edu
www.L2L.org
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