PUBLIC NOTICE Federal Communications Commission 445 12 th St., S.W. Washington, D.C. 20554 News Media Information 202 / 418-0500 Internet: http://www.fcc.gov TTY: 1-888-835-5322 DA 14-1130 Released: August 4, 2014 WIRELINE COMPETITION BUREAU SEEKS COMMENT ON DRAFT ELIGIBLE SERVICES LIST FOR SCHOOLS AND LIBRARIES UNIVERSAL SERVICE PROGRAM CC Docket No. 02-6; GN Docket No. 09-51; WC Docket No. 13-184 Comment Date: September 3, 2014 Reply Comment Date: September 18, 2014 The Wireline Competition Bureau (Bureau) seeks comment on a draft eligible services list (ESL) for the schools and libraries universal support mechanism (also known as the E-rate program) for funding year 2015. 1 In the E-rate Modernization Order, among other things, the Commission restructures the ESL into category one and category two services, streamlines the list of eligible internal connections components to focus support on those services and components needed for broadband connectivity within schools and libraries, and eliminates other services and components beginning in funding year 2015. 2 The draft ESL we release with this public notice implements the changes required by the E-rate Modernization Order. We seek comment on the draft ESL for funding year 2015. Commenters should highlight whether the draft manifests the Commission’s decisions and intent in the E-rate Modernization Order, and to the extent that they find additional changes are necessary, we encourage commenters to be as detailed as possible with their recommendations. The following summarizes the changes we propose. ? Consistent with the Commission’s first goal in the E-rate Modernization Order – ensuring affordable access to high-speed broadband 3 – the proposed ESL implements the Commission’s decisions by streamlining the list of supported services from the former priority one category into a new category one section to better tailor support towards high-capacity broadband, and eliminate support for outdated, legacy, and other services that do not provide broadband. 1 See 47 C.F.R. § 54.502 (detailing the procedures for seeking comment on a draft ESL for the E-rate program for the upcoming funding year). The E-rate program was established pursuant to section 254 of the Communications Act of 1934, as amended. 47 U.S.C. § 254. See Attachment, Draft Schools and Libraries Eligible Services List for Funding Year 2015. 2 Modernizing the E-rate Program for Schools and Libraries, WC Docket No. 13-184, Order, FCC 14-99, paras. 67- 75, 77, 119-124, 130, 135-153 (rel. Jul. 23, 2014) (E-rate Modernization Order). 3 The Commission’s first goal in the E-rate Modernization Order is to ensure affordable access to high-speed broadband sufficient to support digital learning in schools and robust connectivity for all libraries. Id. at para. 26. 2o The proposed ESL removes web hosting, voice mail, and email because the Commission determined that these services use broadband as a delivery mechanism but do not connect schools and libraries to high-speed broadband themselves. 4 o The proposed ESL removes paging, directory assistance charges, text messaging, custom calling services, direct inward dialing, 900/976 call blocking, and inside wire maintenance plans (grouped as “Telephone Components” in past ESLs) because the Commission determined that these services are outdated, and continuing to fund these components diverts funding away from the high-speed broadband services that have become essential to schools and libraries. 5 o The proposed ESL reflects the Commission’s decision to phase down support for voice services and that individual data plans will meet the E-rate program’s cost-effectiveness requirements only in special circumstances as described in more detail in the E-rate Modernization Order. 6 ? As required by the E-rate Modernization Order, the proposed ESL limits internal connections to those broadband internal connections components and services needed to enable high-speed broadband connectivity. Category two services include LAN/WLAN (local area networks/wireless local area networks)-focused components (broadband internal connections components), basic maintenance of eligible broadband internal connections components, and managed internal broadband services. Category two services exclude equipment that is dedicated to the category one services that are being eliminated or phased down beginning in funding year 2015, and exclude equipment that is unnecessary for the deployment of LANs/WLANs. 7 ? Pursuant to the E-rate Modernization Order, the proposed ESL also includes caching as an eligible broadband internal connections component. As directed by the Commission, we seek comment on how to define caching, including comment on the necessary software or equipment the E-rate program should support as part of supporting caching, such as caching servers, and on whether the program should support caching as a service. 8 ? The proposed ESL removes phrasing from the “Installation, activation, and initial configuration” description indicating that installation must be part of a contract or bid for the components. As suggested by commenters from prior proceedings, schools and libraries, especially rural schools and libraries that do not have local or regional equipment manufacturers that both sell networking equipment and perform installation, may need flexibility to contract with local firms to provide 4 Id. at para. 150 (eliminating E-rate support for e-mail, web hosting, and voicemail beginning in funding year 2015 and deleting the reference to “electronic mail services” in section 54.5). 5 Id. at paras 146-147. 6 Id. at paras. 135-143 and 151-153 (describing the voice phase down and deciding that E-rate funding for individual data plans or air cards for individual users is not cost effective when users of those services can already access the Internet through internal wireless broadband networks on wireless-enabled devices without the help of stand-alone data plans or air cards). 7 Id. at paras.119-121 (deciding that the following internal connections components will no longer be eligible for E- rate funding: Circuit Cards/Components; Interfaces, Gateways, Antennas; Servers; Software; Storage Devices; Telephone Components; Video Components; Voice over IP or video over IP components). 8 Id. at paras.130-131 (designating caching functionality as a supported service for funding years 2015 and 2016). 3installation as part of a contract that is separate from the equipment. 9 We seek comment on this change to allow E-rate funding for installation from vendors that do not supply the eligible equipment to be installed. ? Finally, consistent with the Commission’s third goal in the E-rate Modernization Order – to simplify the E-rate application process and other E-rate processes 10 – the proposed ESL includes the following presentation and formatting changes: o The proposed ESL changes the structure of the former priority one section by merging the list of eligible “Digital Transmission Services” with the list of eligible Internet access services into a single category one list described as “Eligible data transmission and Internet access” because many of the services on these lists were identical. 11 Applicants are still required to identify the category one service type on the FCC Form 471, as Telecommunications services, Internet access, or voice. o The proposed ESL eliminates the list of ineligible services that had been posted at the end of each category of service. Although there are instances where these lists could prove helpful, providing applicants long lists of examples to review and understand has not been a fast, simple, or efficient aspect of the application process. Also, rather than examining long lists of ineligible services, it will be more efficient for applicants to assume that any service or component not listed in the ESL is ineligible for E-rate support. 12 o The proposed ESL removes descriptions of E-rate program requirements that may be related to eligibility but do not directly name or describe the services that are eligible, and descriptions that provide extra information pertaining to certain services. The proposed ESL removes the reference to components required as an integral part of a digital transmission service; the explanation that the telecommunications component of a distance learning capability, video, interactive television, and voice or video conferencing is eligible; the broad reference to the features provided as a standard component of Internet access; and the reference to the types of payment options that can be used for eligible voice services, including phone calling cards. 13 We remove these statements because they were either overly broad, could potentially mislead applicants into thinking there are other services that are eligible but not mentioned on the list, or do not provide meaningful assistance to applicants. Instead of providing complex explanations that could potentially confuse applicants, we want to provide a clear list of eligible services that applicants may seek to use for eligible purposes. The explanation, for example, that the telecommunications component of a distance learning capability, video, interactive television, and video conferencing is eligible may be helpful to applicants because it notifies them that they may use broadband telecommunications for these purposes; however, the non-telecommunications components of the services themselves, such 9 See, e.g., Comments of State E-rate Coordinators Alliance to Public Notice (DA 13-1513) Draft Eligible Services List for Schools and Libraries Universal Service Program, CC Docket No. 02-6, at 5 (filed Aug. 2, 2013) (stating that schools and libraries often purchase the equipment from the manufacturer or reseller online and have it drop- shipped, and then contract with a local firm to perform the installation). 10 The Commission’s third goal in the E-rate Modernization Order is to make the E-rate application process and other E-rate processes fast, simple and efficient. E-rate Modernization Order, FCC 14-99, at para. 187. 11 See USAC, Schools and Libraries Universal Service Support Mechanism, Eligible Services List (rel. Oct. 22, 2013), http://www.usac.org/_res/documents/sl/pdf/ESL_archive/EligibleServicesList-2014.pdf, at 2-4 (2014 ESL). 12 47 C.F.R. § 54.502(a) (stating that all supported services are listed in the ESL). 13 2014 ESL at 2-5. 4as fees to subscribe to such services, are not eligible for E-rate funding. 14 We remove this and similar explanations from the ESL because we find them to be unnecessary and potentially misleading for applicants. We seek comment on these proposed changes. o The proposed ESL also removes the “Special Eligibility Conditions” section of the ESL because the requirements therein are already explained in the Commission’s rules or in Commission or Bureau orders and USAC provides information about these requirements on its website. 15 o Finally, the proposed ESL eliminates the ESL Glossary. Instead, we propose that USAC post a glossary of terms on its website as a reference tool. 16 This glossary on USAC’s website would not be part of the ESL and would not be used to determine eligibility for E-rate discounts. Applicants and service providers would be free to refer to it, but just for informal guidance. Pursuant to sections 1.415 and 1.419 of the Commission’s rules, 17 interested parties may file comments on or before September 3, 2014 and reply comments on or before September 18, 2014. All comments are to referenceWC Docket No. 13-184; CC Docket No. 02-6 and GN Docket No. 09-51 and may be filed by paper or by using the Commission’s Electronic Comment Filing System (ECFS). 18 ? Electronic Filers: Comments may be filed electronically using the Internet by accessing the ECFS: http://fjallfoss.fcc.gov/ecfs2/. ? Paper Filers: Parties who choose to file by paper must file an original and one copy of each filing. If more than one docket or rulemaking number appears in the caption of this proceeding, filers must submit two additional copies for each additional docket or rulemaking number. Filings can be sent by hand or messenger delivery, by commercial overnight courier, or by first-class or overnight U.S. Postal Service mail. All filings must be addressed to the Commission’s Secretary, Office of the Secretary, Federal Communications Commission. ? All hand-delivered or messenger-delivered paper filings for the Commission’s Secretary must be delivered to FCC Headquarters at 445 12 th St., SW, Room TW-A325, Washington, DC 20554. The filing hours are 8:00 a.m. to 7:00 p.m. All hand deliveries must be held together with rubber bands or fasteners. Any envelopes and boxes must be disposed of before entering the building. 14 Id. at 2-3, 6. 15 See, e.g., USAC, Before You Begin, Cost Allocations for Services, http://www.usac.org/sl/applicants/beforeyoubegin/eligible-services/cost-allocations.aspx (last visited Jul. 29, 2014). Other than the ESL, documents on USAC’s website should not be used to determine eligibility for E-rate discounts, but such documents may be used for guidance. 16 This is similar to what USAC does for its list of E-rate program “Acronyms and Terms” which is currently posted in the Reference Area of the Schools and Libraries portion of its website. See USAC website, Reference Area, Acronyms and Terms, http://www.usac.org/_res/documents/sl/pdf/handouts/SL-Glossary-of-Terms.pdf (last visited Jul. 21, 2014). 17 47 C.F.R. §§ 1.415, 1.419. 18 See Electronic Filing of Documents in Rulemaking Proceedings, 63 FR 24121 (1998). 5? Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority Mail) must be sent to 9300 East Hampton Drive, Capitol Heights, MD 20743. ? U.S. Postal Service first-class, Express, and Priority mail must be addressed to 445 12 th Street, SW, Washington DC 20554. In addition, we request that one copy of each pleading be sent to each of the following: (1) Cara Voth, Telecommunications Access Policy Division, Wireline Competition Bureau, 445 12th Street, SW, Room 6-A365, Washington, DC 20554; e-mail: Cara.Voth@fcc.gov; (2) Charles Eberle, Telecommunications Access Policy Division, Wireline Competition Bureau, 445 12th Street, SW, Room 5-B530, Washington, DC 20554; e-mail: Charles.Eberle@fcc.gov; (3) Charles Tyler, Telecommunications Access Policy Division, Wireline Competition Bureau, 445 12th Street, SW, Room 5-B521, Washington, DC 20554; e-mail: Charles.Tyler@fcc.gov. People with Disabilities. To request materials in accessible formats for people with disabilities (braille, large print, electronic files, audio format), send an e-mail to fcc504@fcc.gov or call the Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-418-0432 (tty). Availability of Documents. Comments, reply comments, and ex parte submissions will be publically available online via ECFS. 19 These documents will also be available for public inspection during regular business hours in the FCC Reference Information Center, which is located in Room CY-A257 at FCC Headquarters, 445 12 th Street, SW, Washington, DC 20554. The Reference Information Center is open to the public Monday through Thursday from 8:00 a.m. to 4:30 p.m. and Friday from 8:00 a.m. to 11:30 a.m. The proceeding this Notice initiates shall be treated as a “permit-but-disclose” proceeding in accordance with the Commission’s ex parte rules. 20 Persons making ex parte presentations must file a copy of any written presentation or a memorandum summarizing any oral presentation within two business days after the presentation (unless a different deadline applicable to the Sunshine period applies). Persons making oral ex parte presentations are reminded that memoranda summarizing the presentation must (1) list all persons attending or otherwise participating in the meeting at which the ex parte presentation was made, and (2) summarize all data presented and arguments made during the presentation. If the presentation consisted in whole or in part of the presentation of data or arguments already reflected in the presenter’s written comments, memoranda or other filings in the proceeding, the presenter may provide citations to such data or arguments in his or her prior comments, memoranda, or other filings (specifying the relevant page and/or paragraph numbers where such data or arguments can be found) in lieu of summarizing them in the memorandum. Documents shown or given to Commission staff during ex parte meetings are deemed to be written ex parte presentations and must be filed consistent with rule 1.1206(b). In proceedings governed by rule 1.49(f) or for which the Commission has made available a method of electronic filing, written ex parte presentations and memoranda summarizing oral ex parte presentations, and all attachments thereto, must be filed through the electronic comment filing system available for that proceeding, and must be filed in their native format (e.g., .doc, .xml, .ppt, searchable .pdf). Participants in this proceeding should familiarize themselves with the Commission’s ex parte rules. 19 Documents will generally be available electronically in ASCII, Microsoft Word, and/or Adobe Acrobat. 20 47 C.F.R. §§ 1.1200 et seq. 6For further information, please contact Cara Voth or Charles Eberle, Telecommunications Access Policy Division, Wireline Competition Bureau at (202) 418-7400 or TTY (202) 418-0484. - FCC - (Draft) Schools and Libraries Eligible Services List – Funding Year 2015 1 ATTACHMENT Schools and Libraries Universal Service Support Mechanism – Eligible Services List (DRAFT) (WC Docket No. 13-184; CC Docket No. 02-6; GN Docket No. 09-51) The Federal Communications Commission’s (FCC’s) rules provide that all services that are eligible to receive discounts under the Schools and Libraries Universal Service Support Mechanism (otherwise known as the E-rate program or “E-rate”) are listed in this Eligible Services List (ESL). The E-rate program is administered by the Universal Service Administrative Company (USAC). The E-rate program provides eligible schools and libraries discounts for eligible services and internal connections. This ESL identifies those services and internal connections for which eligible applicants may seek E-rate support. The first category of supported services, Category One, includes the services needed to support broadband connectivity to schools and libraries. The second category of supported services, Category Two, includes the services and internal connections needed for broadband connectivity within schools and libraries. Services and components not listed on the ESL are not eligible for funding. Additional guidance from USAC about the E-rate application process and about eligible services is available at USAC’s website at http://www.usac.org/sl/ including a glossary of terms. Those documents on USAC’s website are not incorporated by reference into the ESL and do not bind the Commission. Thus, they will not be used to determine whether a service or product is eligible. Applicants and service providers are free to refer to those documents, but just for informal guidance. This ESL, dated [[Month xx, 2014]], implements changes adopted in the E-rate Modernization Order (FCC 14-99), and therefore represents a change from prior funding years. This ESL applies to funding requests for Funding Year 2015. (Draft) Schools and Libraries Eligible Services List – Funding Year 2015 2 Category One Category One includes the telecommunications services, telecommunications, and Internet access services for which E-rate applicants may seek discounts. This category consists of the services that provide broadband to eligible locations including data links that connect multiple points, services used to connect eligible locations to the Internet, and services that provide basic conduit access to the Internet. Maintenance and technical support appropriate to maintain reliable operation are eligible for support when provided as a component of these services. Voice services, as described below, are subject to a phase down of support beginning in funding year 2015. Applicants must identify the Category One service type on the FCC Form 471, as Telecommunications services, Internet access, or voice. The eligible services in Category One are: Eligible Data transmission services and Internet access -Asynchronous Transfer Mode (ATM) -Broadband over Power Lines -Cable Modem -Digital Subscriber Line (DSL) -DS-1, DS-2, and DS-3 -Ethernet -Fiber (Lit and Dark) -Frame Relay -Integrated Services Digital Network -OC-1, OC-3, OC-12, OC-n -Satellite Service -Switched Multimegabit Data Service -Telephone dial-up -T-1, T-3, Fractional T-1 -Wireless services (e.g., microwave) -Wireless Internet access and mobile hotspot service plans for portable devices are eligible if used for educational purposes and cost effective as required in FCC 14-99. Off-campus use, even if used for an educational purpose, is ineligible for support and must be cost allocated out of any funding request. Eligible voice services -Centrex -Circuit capacity dedicated to providing voice service -Interconnected voice over Internet protocol (VoIP) -Local, long distance, and 800 service, e.g., a toll-free telephone number for students to contact school regarding questions about homework -Plain old telephone service (POTS) -Radio loop -Satellite telephone service -Shared telephone service (only the portion of the shared services relating to the eligible use and location may receive discounts) -Wireless telephone service including cellular voice and excluding data and text messaging (Eligible voice services are subject to a phase down of support beginning in funding year 2015, as described in FCC 14-99). (Draft) Schools and Libraries Eligible Services List – Funding Year 2015 3 Eligibility limitations for certain Category One services: Fiber – E-rate support is available for leased lit and dark fiber as described in the Schools and Libraries Sixth Report and Order (FCC 10-175) and the subsequent “Frequently Asked Questions” (DA 10-2356). ? Leased Lit Fiber – Monthly charges, special construction and maintenance charges are eligible. When lit fiber is leased as a Category One service, the modulating electronics can be included as a part of that eligible service. ? Leased Dark Fiber – Within the eligible entity’s property line, maintenance and special construction costs to connect the fiber to the eligible entity’s facilities are eligible. Beyond the eligible entity’s property line, special construction charges are not eligible, but monthly charges and maintenance provided as a component of leased dark fiber to maintain reliable operation are eligible. Re-routing of fiber is considered construction, not maintenance. If other customers are served by the leased dark fiber, only the pro rata costs of maintenance incurred by the eligible entity will be eligible for E-rate support. The purchase and ownership of modulating electronics associated with lighting dark fiber and modulating electronics on applicant-leased dark fiber leaving the eligible entity’s premises are not eligible. ? IRUs – An Indefeasible Rights of Use (IRU) purchase arrangement will be considered a lease of dark fiber for E-rate program purposes. If the IRU contains significant upfront charges, the charges may need to be amortized. Internet access – Eligible Internet access may include basic firewall protection, domain name service and dynamic host configuration when these features are provided as a standard component of a vendor’s Internet access service. Firewall protection may not be provided by a vendor other than the Internet access provider and may not be priced out separately. Examples of items that are ineligible components of Internet access include applications, filtering, content, e-mail, and equipment such as computers, laptops, tablets and all other end-user devices. Wireless services and wireless Internet access services – For clarification, wireless services and wireless Internet access services in Category One do not include managed internal broadband services, such as managed Wi-Fi. Managed internal broadband services distribute bandwidth wirelessly throughout a school or library building, and as described below, are eligible only for Category Two support. (Draft) Schools and Libraries Eligible Services List – Funding Year 2015 4 Category Two The second category of equipment and services eligible for E-rate support is Category Two. Category Two support is limited to the internal connections equipment or services necessary to bring broadband into, and provide it throughout, schools and libraries. Connections are limited to broadband connections used for educational purposes within, between or among instructional buildings that comprise a school campus or library branch, and basic maintenance of these connections, as well as services that manage and operate owned or leased broadband internal connections (e.g., managed internal broadband services or managed Wi-Fi). Support for components and services in this category are subject to the funding, budgetary, and other requirements and limitations set forth in the E-rate Modernization Order (FCC 14- 99) and the Commission’s rules. The eligible components and services in this category are: Eligible Broadband Internal Connections Components -Access points used in a local area network (LAN) or wireless local area network (WLAN) environment -Cabling, connectors, and related components used for internal broadband connections -Caching -Firewalls used to ensure the continued operation of eligible equipment by protecting equipment from security hazards -Network switches -Routers -Racks that support eligible internal connections components -Uninterruptible Power Supply (UPS)/Battery Backup necessary for basic power protection for eligible equipment -Wireless LAN Controllers -Software necessary to support this list of eligible broadband internal connections components, including Client Access Licenses for LAN/WLAN networks -Improvements and upgrades to components on this list of eligible broadband internal connections Notes: (1) Functionalities listed above that can be virtualized, and equipment that combines eligible functionalities, like routing and switching, are also eligible. (2) A manufacturer’s multi-year warranty for a period up to three years and provided as an integral part of an eligible component, without a separately identifiable cost, may be included in the cost of the component. Eligibility limitations for broadband internal connections - When eligible components have modules or features that are not eligible, (e.g., content filtering), the cost of the ineligible feature must be subtracted from the amount eligible for E-rate support. Similarly, if eligible components are used for both eligible and ineligible purposes, the cost of the ineligible portion of use must be cost allocated. (Draft) Schools and Libraries Eligible Services List – Funding Year 2015 5 Eligible Managed Internal Broadband Services (e.g., managed Wi-Fi) -Services provided by a third party for the operation, management, and/or monitoring of eligible broadband internal connections components. For example, managed internal broadband services may include services necessary to manage and repair the LAN/WLAN network, such as diagnostic services, 24-hour network monitoring, or helpdesk support. -In some managed services models, the third party manager owns and installs the equipment and school and library applicants lease the equipment as part of the managed services contract. In other cases, the school or library may own the equipment, but have a third party manage it for them. Eligibility limitations for managed internal broadband services - The equipment eligible for support as part of a managed internal broadband service may include only equipment listed as a broadband internal connections component above. Upfront charges that are part of a managed service contract are eligible for E-rate support except to the extent that the upfront charges are for any ineligible internal connections components (e.g., content filtering) which, if included in the contract, must be cost allocated out of any funding request. Basic Maintenance of Eligible Broadband Internal Connections Components E-rate support is available for basic maintenance and technical support appropriate to maintain reliable operation when provided as a component of eligible broadband internal connections. The following basic maintenance services are eligible: -Repair and upkeep of eligible hardware -Wire and cable maintenance -Configuration changes -Basic technical support including online and telephone based technical support -Software upgrades and patches including bug fixes and security patches Eligibility limitations for basic maintenance – Basic maintenance is eligible for support only if it is a component of a maintenance agreement or contract for eligible broadband internal connections components. The agreement or contract must specifically identify the eligible components covered, including product name, model number, and location. Support for basic maintenance will be paid for the actual work performed under the agreement or contract. Basic maintenance does not include: ? Services that maintain ineligible equipment ? Upfront estimates that cover the full cost of every piece of eligible equipment ? Services that enhance the utility of equipment beyond the transport of information, or diagnostic services in excess of those necessary to maintain the equipment’s ability to transport information ? Network management services, including 24-hour network monitoring (Draft) Schools and Libraries Eligible Services List – Funding Year 2015 6 ? On-site technical support (i.e., contractor duty station at the applicant site) unless applicants present sufficient evidence of cost-effectiveness ? Unbundled warranties Miscellaneous As described below, various miscellaneous services associated with the eligible services and components above are eligible for support. Applicants should request miscellaneous services in the same category as the associated service being obtained or installed. Fees Fees and charges that are a necessary component of an eligible product or service are eligible including: -Change fees -Contingency fees are eligible if they are reasonable and a regular business practice of the service provider. Contingency fees will be reimbursed only if the work is performed. -Freight assurance fees -Lease fees to rent or lease eligible components -Per diem and, or travel time costs are eligible only if a contract with a vendor for the eligible product or services specifically provides for these costs -Shipping charges -Taxes, surcharges, and other similar, reasonable charges incurred in obtaining an eligible product or service are eligible. This includes customer charges for universal service fees, but does not include additional charges for universal service administration. Installation, activation, and initial configuration Installation, activation, and initial configuration of eligible components are eligible. These services may include: -Basic design and engineering costs if these services are provided as an integral component of the installation of the relevant services -Basic project management costs if these services are provided as an integral component of the installation of the relevant services -On-site training is eligible as a part of installation services but only if it is basic instruction on the use of eligible equipment, directly associated with equipment installation, and is part of the contract or agreement for the equipment. Training must occur coincidently or within a reasonable time after installation.