E-Rate Modernization Order FCC Released July 23, 2014 Pamela Jacobs Iowa E-Rate Coordinator

E-Rate Modernization Overview Focuses funding on broadband TO and INSIDE schools and libraries Sets funding limits for category 2 (i.e. internal WiFi) funding Phases out funding for voice services and eliminates entirely services like webhosting Institutes other measures to ensure cost effectiveness

E-Rate Modernization Focuses funding on broadband TO and INSIDE schools and libraries Sets performance goals – Schools: Internet at 100 MBPS per 1,000 students short term and 1 GBPS per 1,000 students long term – Libraries: Internet at 100 MBPS for pops under 50,000 and 1 GBPS for larger pops – WAN connectivity “scalable” to 10 GBPS

E-Rate Modernization Focuses funding on broadband TO and INSIDE schools and libraries New category designations (no more P1/P2) – Category 1: Services that enable broadband to the school /library – Category 2: Services and goods that enable broadband inside the school/library Category 1 is funded first and remaining funds go to category 2.

E-Rate Modernization Focuses funding on broadband TO and INSIDE schools and libraries Funding – “Cap” remains at $2.25 billion (plus inflation post 2011) – Category 1 is funded first for all discount levels – $1 billion additional funding targeted for category 2 for each of two funding years (2015 and 2016) – What is NOT yet clear is whether the $1 billion becomes part of the “cap.”

E-Rate Modernization Focuses funding on broadband TO and INSIDE schools and libraries Discount calculations – Discounts are calculated at the district level for both C1 and C2 # eligible for NSLP district-wide divided by # students district-wide Discount matrix for C1 will then be 90%, 80%, 70%, etc with no discounts such as 63% Discount matrix for C2 is similar except max. is 85% (all other discount levels at 70%, 60%, etc)

E-Rate Modernization Focuses funding on broadband TO and INSIDE schools and libraries Discount calculations (cont). – Urban/Rural classifications have changed – Relies on 2010 census data – “Urban” will be those district with majority of schools in “urbanized area” or “urban cluster” Appears that more Iowa districts will be “urban” than in previous years – District urban/rural will reflect status of majority of schools (if equal number of schools are urban and rural, then the district is “urban”)

Percent of Eligible Students UrbanRural Less than 1%20%25% 1% - 19%40%50% 20% - 34%50%60% 35% - 49%60%70% 50% -74%80% 75% -100%90% Category 1 Discount Matrix

Category 2 Discount Matrix Percent of Eligible Students UrbanRural Less than 1%20%25% 1% - 19%40%50% 20% - 34%50%60% 35% - 49%60%70% 50% -74%80% 75% -100%85%

E-Rate Modernization Other measures to ensure cost effectiveness Community Eligibility Provision (CEP) Districts and schools participating in CEP will determine their discount percentage by using the same approach as that for NSLP eligibility under CEP (i.e. number of direct certified children times the CEP multiplier-presently 1.6-not to exceed 100% student eligibility) If applicant adjusts calculation of CEP, change must also apply to E-rate discount

E-Rate Modernization Focuses funding on broadband TO and INSIDE schools and libraries Eligible Services List: Category 1 (previously called priority 1) – Broadband services including Internet access and digital transmission service (digital data circuits) – Broadband services also include “the telecommunications component of a distance learning capability, video, interactive television, and video conferencing” – All eligible C1 services will be merged into one category “Eligible data transmission and Internet access”

E-Rate Modernization Focuses funding on broadband TO and INSIDE schools and libraries Ineligible starting in funding year 2015 – Category 1: webhosting, voic , , 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)

E-Rate Modernization Focuses funding on broadband TO and INSIDE schools and libraries Likely ineligible starting in funding year 2015 – Category 1: Data cards: “ 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.” – In other words, any request for wireless data via air cards will be subject to intense scrutiny in PIA and will denied if deemed duplicative service.

E-Rate Modernization Phases out funding for voice services and eliminates entirely services like webhosting Eligible Services List (Category 1) – Voice service phase out (starts in 2015) Applies to ALL eligible voice service: local phone service, long distance phone service, plain old telephone (POTS), 800 service, Centrex, cellular voice service Phase out schedule: 20 discount percentage points will be deducted each funding year beginning in funding year 2015

Voice Discount will be: If your district or library’s discount is FY 2015FY 2016FY 2017FY 2018FY %No funding 25%5%No funding 40%20%No funding 50%30%10%No funding 60%40%20%No funding 70%50%30%10%No funding 80%60%40%20%No funding 90%70%50%30%10%No funding Voice Service Phase out Schedule

E-Rate Modernization Sets funding limits for category 2(i.e. internal WiFi) funding Funding for category 2 – Each school shall be eligible for support of category 2 services/goods up to a pre-discount price of $150 per student over a 5-year funding cycle (new schools may estimate #s but must repay if over-estimates occur) – Each library shall be eligible for support up to $2.30 per square foot – Minimum pre-discount floor of $9,200 over 5 years (pre-discount minimum)

E-Rate Modernization Sets funding limits for category 2 (i.e. internal WiFi) funding Category 2 funding – If all allowable C2 funding for a school or library is not utilized in first (or second) year(s), then the remainder may be requested/used in subsequent years – Five years for C2 funding is dependent upon FCC review and a new order is needed after funding years 2015 and 2016 – C2 funding are allocated to highest discount bands first (i.e. 85% discount) until all available funds are expended – Discounts are calculated at the district level – May apply for C2 funding for some schools one year and other schools in a different year

E-Rate Modernization Sets funding limits for category 2 (i.e. internal WiFi) funding Non-instructional buildings for C2 funds – Support is not available for C2 services/goods in non-instructional buildings unless those C2 services are essential for the effective transport of information to or within one or more instructional buildings

E-Rate Modernization Sets funding limits for category 2 (i.e. internal WiFi) funding Category 2 predictability? – Not all applicants will be funded in the year they apply – There is no provision for applicants to buy C2 equipment in one year and get funded in a future year (i.e. if you purchase in 2015 but do not get funding approval until 2017, you cannot retroactively get reimbursed for previous/2015 purchase) – FCC has established a goal to connect an additional 10 million students in each funding year – FCC Chair has stated his goal to have each school receive C2 funding once during five years ( ) – If an applicant requests and is funded for less than the maximum per school budget in a funding year, applicant may request remaining budget funding in a future year

E-Rate Modernization Focuses funding on broadband TO and INSIDE schools and libraries Eligible Services List: Category 2 Three “flavors” which combined are all subject to limit of $150 per student pre-discount cap over 5 years (or $9200 per school pre-discount floor over 5 years) – Purchase and installation of internal WiFi equipment (permanently eligible) – Managed internal broadband service (eligible in FY 2015 and 2016; future eligibility TBD) – Maintenance of eligible internal broadband equipment (eligible in FY 2015 and 2016; future eligibility TBD)

E-Rate Modernization Focuses funding on broadband TO and INSIDE schools and libraries Eligible services list: Category 2 (previously priority 2) Flavor 1: Purchase and installation of – 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 (NEW! May be limited to FY 2015 and 2016 only; continued eligibility TBD) – Firewalls used to ensure the continued operation of eligible equipment by protecting equipment from security hazards – Network switches More (next page)

E-Rate Modernization Eligible Services List: Category 2 (cont.) – 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

E-Rate Modernization Eligible Services List (Category 2): Flavor 2: Eligible Managed Internal Broadband Services (e.g.,managed Wi-Fi) Eligible in FY 2015 and 2016; future eligibility TBD -Services provided by a third party for the operation, management, and/or monitoring of eligible broadband internal connections components. -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.

E-Rate Modernization Eligible Services List: Category 2 Flavor 3: Basic Maintenance of Eligible Broadband Internal Connections Components Eligible in FY 2015 and 2016; future eligibility TBD 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

E-Rate Modernization Other measures to ensure cost effectiveness Tech plans no longer required for any services Expedited review of contracts after first year in effect Beginning in funding year 2017, all forms must be filed electronically (form 471 for 2015 and beyond must be filed electronically) Beginning in funding year 2017, applicants using BEAR process will receive direct reimbursement All appeals must be made to USAC first (exception: waiver requests may go directly to FCC) Document retention will be extended from 5 years to 10 years

E-Rate Modernization Further Notice of Proposed Rulemaking (FNPRM) Order contained over 130 questions or requests for comments, such as: – Meeting future E-rate funding needs (i.e. should cap be raised?) – Ensuring efficiency of multi-year contracts – Standardizing collection of NSLP data (i.e. should applicants rely upon Iowa Dept of Ed data?) – Encouraging consortium applications – Ensuring sufficient support for schools and libraries that lack connectivity TO their facilities Comments were due September 15; reply comments were due September 30

E-Rate Modernization Other pending changes Final eligible services list for funding year 2015 Changes to the form 471 Follow-up order to Further Notice of Proposed Rule-Making (FNPRM) Possible clarification or errata orders Second modernization order to focus on C1 issues (like affordable broadband TO schools and libraries)

E-Rate Modernization Upcoming dates/reminders Funding year 2015 – Phase out of voice services; elimination of eligibility for webhosting, etc. plus limited eligibility of data cards – New 10 year document retention requirements – Start planning for C2 applications – Form 470 and 471 deadlines not yet known

E-Rate Modernization Upcoming dates/reminders Funding year 2014 – Deadline to file form 486 is 120 days after date of funding commitment decision letter OR October 28, 2014 (whichever is later) Funding year 2013 – File form 472 (aka BEAR) including service provider certification no later than October 28, 2014; no automatic extension; if needed, file extension request before October 28 Funding year 2012 – File form 472 (aka BEAR) no later than October 28, 2014 (an automatic 1-year extension was already granted by FCC for this funding year only)