FCC Drastically Eases Rules for Changing Service Providers
Message Posted March 29, 2000
On March 16, the FCC issued one of their most E-rate applicant-friendly
rulings to date -- a decision that makes major changes to the current rules
concerning how and when an applicant may switch service providers in
mid-funding year. I have been waiting for official guidance from the SLD
concerning how they intend to implement the new rules, but it appears that
there are numerous operational issues they first must confront before they
can release such guidance.
In the meantime, I have made an attempt to summarize the FCC's ruling.
Please understand that this is all that we know at this point and that until
the SLD releases official guidance, no SPIN change requests should be
submitted to them. If after reading my summary you have general questions
that you would like answered, please e-mail them to me and I will be sure
the SLD includes the answers in their official release. -- Julie
Service Provider Change Decision Summary
Prior to the FCC appeal decision, applicants were permitted to change
service providers for three very narrow reasons: when a provider refused to
participate in the program, had gone out of business, or had breached its
contract with the applicant. Further, the new service provider selected had
to have participated in the original 470 competitive bidding process.
E-rate applicant, Copan, OK Public Schools had a service provider move to
another city and therefore was not able to continue providing service. The
district submitted a SPIN change request to the SLD in April 1999, but the
SLD rejected it saying that the situation did not qualify under the
program's existing rules. The district then appealed the decision to the
FCC.
In it's appeal decision, the FCC said it could not anticipate the variety of
circumstances under which it may be reasonable for an applicant to
substitute service providers, and that it would let an E-rate applicant
switch service providers if the change was permissible under its state and
local procurement regulations, if had notified its original provider of its
intent to change, and if it was allowed out of the original contract.
In its decision, the FCC wrote: "Although we do not wish to encourage
service provider substitutions, we recognize that circumstances for
applicants and providers may change over the course of a relationship, as
appears to have been the case in Copan. Accordingly, where an applicant
determines that a SPIN change is allowed under its state and local
procurement rules and under the contract between the applicant and its
original provider, we will not limit the applicant's ability to substitute
providers or otherwise deny the applicant the benefits of universal services
support." The policy, the commission concluded, "is consistent with the
commission's express goal of
affording schools and libraries maximum flexibility to choose the offering
that meets their needs most effectively and efficiently."
And in the most surprising statement of the appeal decision, the FCC
acknowledged that applicants could sometimes get a better deal outside of
the Form 470 posting process by stating, "If the applicant discovers a
provider offering more competitive prices, then we believe that the
applicant should have the flexibility to select the provider whose service
offering best meets the applicant's needs." Again, if state and local
procurement laws permitted the switch, and the applicant could get out of
its current contract, the FCC would not bar it from switching vendors, even
if the new vendor did not respond when the original Form 470 was posted.
Summary:
If the FCC does not reconsider its decision, and if the SLD finds a way to
make it work operationally, it appears that E-rate applicants may switch
service providers at any time, even if it's just to get a better price, as
long as it's allowed under state law and their current contract. As a
result, you should anticipate that from now on, service providers will be
pushing schools and libraries for severe contract termination clauses in
their contracts.
The FCC's decision can be found at:
www.fcc.gov/Bureaus/Common_Carrier/Orders/2000/fcc00100.txt
Julie L. Tritt
Executive Policy Specialist
Pennsylvania Department of Education
333 Market Street, 10th Floor
Harrisburg, PA 17126
(717) 705-4486
(717) 787-7222 - fax
jtritt@state.pa.us
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