Newsletter
October 2010
New E-rate Rules & the Annual E-Rate Seminar/Workshop
I attended the E-rate Seminar and workshop in Kansas City, Missouri on Tuesday, October 19th, 2010, where various administrators of the E-rate program discussed new rules of e-rate and re-confirmed old rules, and discussed their plans and objectives for the upcoming year 14 of E-rate (services from July 1, 2011 through June 30, 2012).
Highlights of the workshop included the following:
- No Technology Plan will be required for Priority 1 recurring charges
- “Dark” Fiber will be allowed on a leased basis
- Web-hosting survives, but with increased E-rate vigilance
- Changing service providers during E-rate year will be severely curtailed
- E-mail Audits – More will occur, saving money for the E-rate program.
- More Emphasis on Fair and Open bidding processes
- Free Services – Need to be Removed
1. No Technology Plan needed for Priority 1 monthly services, but needed for Priority 2 services.
The E-rate program has always required school districts to have a written and active Technology Plan for both Priority 1 monthly recurring charges and for Priority 2 Equipment. During audits and reviews, E-rate auditors would ask for Technology Plan creation dates and documentation, the Technology Plan approval letters from the State, and a copy of the actual Technology Plan – with an emphasis on details on the E-rate form 470 mirroring the Technology Plan.
In short, the E-rate program was interested in making sure each school district applicant had a plan to use E-rate eligible services –rather than “seat of the pants” decision-making.
Technology Plans are no longer required for Priority 1 services.
One caveat is that the Fed says State and Local rules apply. A Technology Plan and all applicable rules are required IF Priority 2 Equipment is being sought. Priority 2 Equipment is available for poorer school districts with generally over 50% of its students participating in or eligible students in the Federal Free and Reduced lunch program.
Many of our clients are still filing a Technology Plan, as a plan is required for other Federal and State grant programs and it is generally not a bad idea to have one for your Board of Education.
2. “Dark Fiber” – Traditionally, E-rate has paid for only “managed” Fiber Optic or Wireless Wide Area Networks or WANs with managed services, meaning , the vendor leased the Fiber Optics to the school district applicant and is responsible for servicing any outages or services and maintaining speed levels.
Providers of the Fiber Optic WANs typically are telephone companies, cable companies and “build to suit” E-rate approved companies.
E-rate now allows other non-traditional Fiber Optic vendors or organizations to provide cost-effective/competitive quotes in competition with the traditional carriers or companies.
So, if there is a municipality or consortium or other provider of Fiber Optics in a community – and they are willing to lease the school district Fiber Optics, then they can be considered in the E-rate mix.
Where “Dark Fiber” really comes to play is in rural areas – where there might only be one provider of Fiber Optics. There also are many Consortia building networks in metropolitan and rural areas that would be viable. Competition is key in E-rate.
3. Web-Hosting or Website Management – In our workshop, the Fed admitted that web-hosting was NOT going to be considered in 2011/2012 due to many ineligible services and the difficulty in policing the various offerings.
About 300+ groups protested to the FCC to revive it and when used properly, it is a vital service for school districts to communicate within their communities.
Web-hosting is back in 2011/2012 with increased audit review, scrutiny, and self-policing by the vendors to ensure that it continues to be viable in the future.
4. Service Provider Changes – In the past, many of our school district clients would decide in the summer – after the E-rate deadline – to look at new vendors of cell-phones and local services or Internet services. We would place a 470 form, wait 28 days and then advise the client to compare vendors using the E-rate Decision Matrix and make a decision.
Once a decision was made to change vendors, then we could file a service provider name change. E-rate is not allowing that flexibility any more.
Decisions to change vendors are being taken very seriously and can be done only in extenuating circumstances and a change can be made to the next highest point value vendor on a school district’s Decision Matrix.
The lesson here (please) is to let us know: a) IF you are planning any changes, b) we can place a new 470 form anytime, and c) we can discuss the E-rate ramifications of any changes.
5. E-mail Audits – A vice-president of Audits for USAC/E-rate discussed the efficiencies of e-mails audits versus on-site “over the top” audits.
More audits can be accomplished via e-mail, and the Federal Improper payment rules can be adhered with and problems can be found via the Internet versus sending teams out to hunt for bills and contracts.
Program Quality Assurance or PQAs will be the name of the audits.
There will still be more on-site visits but they will be less time consuming and more focused then the two or three week engagements of the past.
So, bottom line, still be compliant by: keeping good documentation, saving all Decision Matrixes, saving all winning and losing bids, keeping all forms in your E-rate file, and continuing to update your Technology Plan where applicable (for Priority 2 services or where the state requires it).
6. More Emphasis on Fair and Open Bidding Processes – E-rate emphatically stated that they are going to monitor and penalize/punish those who don’t conduct fair and open bidding competitions.
Punishment probably could be loss of your funding (and bandwidth or services) for the year audited.
What they are looking for is the school district to NOT include select vendors to write RFPs or to be privy to information (also called inside information) that others might not have – and, certainly don’t be pre-meditated in your selection.
Keep an open mind and an open process. Treat everyone alike. Be fair. Be honest with everyone.
I have seen some crazy pricing from reputable vendors for, as an example, Internet Access where my school district received 100 MBPS of bandwidth for a very low cost compared to other providers.
The E-rate process allows vendors to present and provide their goods and services and let competition rule the process.
Monitoring could be the Fed inserting a vendor (under contract) to participate in the process from start to finish. You should not be worried about that if you professionally approached the process.
7. Gifts – There are Federal guidelines in place for the amounts of money that can be accepted by the school districts from vendors – generally no more than $25 per occurrence and $50 per year per vendor.
E-rate is following Federal gift guidelines.
That means no fancy lunches or dinners (donuts are okay!), no football or sports games tickets, certainly no trips or payments by vendors for speaking engagements.
There are a bunch of examples but the bottom line is some school districts have lost and other will lose funding if these “gift” rules are broken.
Have a NO lunch or dinner policy and avoid any potential conflicts that could jeopardize your funding (or the appearance of impropriety).
8. Free Services – Any free service, such as a free cell-phone/smart phone/laptop or iPads or contribution to a “free service”, e.g. $20 for a $200 cell-phone, must be backed out for E-rate purposes AND considered in your Decision Matrix.
As an example, if you go with ten new cell-phone sand they are $50 per month or $500 per month total and the cell-phones were free (normally $100 per phone) then $1,000 would need to be subtracted from E-rate application and compared with other vendors.
The biggest item is we, at Telesolutions Consultants LLC, need to know if/when you are receiving anything free, such as cell-phones or laptops – so that we can back it out. And be careful in your overall selection to subtract the “freebies” from your overall cost.
There was a lot discussed at the annual E-rate conference and the ones listed above were the highlights.
Please let me know of any questions.
Jerry
Jerry Steinberg
Senior Consultant| Telesolutions Consultants LLC
108 3rd Street, Suite 3|Bloomingdale, IL 60108-2912
P: 630.351.6200|F: 630.351.4162|jstele1@aol.com
September 2010
YEAR 14 OF E-RATE IS HERE!
It seems like yesterday, but E-rate is moving into its 14th year of existence and changes appear to be coming to improve and streamline the program.
Some things that will NOT change:
- The need for a Technology Plan that includes all of your E-rate related services need to be active
- The need for CIPA or Children’s Internet Protection through software filtering of harmful images on ALL school district computers
- The need to competitively bid (or RFP) all E-rate related services for at least 28-days before signing a contract, and comparing vendors using the E-rate Decision Matrix as a guide
- The need to keep a good E-rate filing system with all forms, contracts, decision matrixes, correspondences, and E-rate related correspondences
It appears that the Inspector General audits, of the past few years, which were very time consuming may morph into more desk-type audits – called Payment Quality Assurances or PQAs. The PQAs, which basically are similar to on-site audit reviews, but use more technology to upload information to the E-rate auditors.
There may be some relevant adjusting of the basic E-rate forms, updating them from E-rate’s inception in 1997 to today’s needs in 2010.
There is talk of changing web-hosting type of services, possibly adding dark fiber to the list of eligible services and making equipment (Priority 2 Services) more available to school districts( (or not).
Conclusion – I look forward to meeting with you this Fall to discuss all areas of E-rate, including any changes that might occur.
All we ask is the following:
- Keep Compliant within the E-rate System.
- Always contact us when considering changes in your services, so we can file the appropriate paperwork
- Keep your technology plans current to include all E-rate related services
- Keep a “working” E-rate filing system.
We appreciate your business and look forward to successful E-rate year 14!
Do not hesitate to contact me anytime with any questions.
Jerry
Jerry Steinberg
Senior Consultant| Telesolutions Consultants LLC
108 3rd Street, Suite 3|Bloomingdale, IL 60108-2912
O: 630.351.6200|F: 630.351.4162|jstele1@aol.com