1. E-rate 2.0 Reforms Preview of Possible Changes February 11, 2014 Presented by: Julie Tritt Schell PA E-rate Coordinator jtschell@comcast.net

2. Agenda History of E-rate Reform - 2010 Summary of Major NPRM Topics – 2013 Details of FCC Chairman Wheeler’s E-rate Blueprint – Feb 2014 What It All Means... 2

3. In September 2010, FCC adopted these E-rate reform measures:  Allowed applicants to lease fiber from any provider (not just telecommunications carriers)  Allowed applicants to lease unlit existing fiber  Allowed the community to use E-rate eligible services after hours – on school campus  Allowed E-rate funded services to be provided to most dorms  Create a 1-yr pilot competitive pilot program that provided funding for off-campus wireless connectivity through mobile devices  Increased the E-rate funding cap to annual inflation (it is currently capped at $2.25 billion)  Eliminated the E-rate tech plan requirement for Priority 1 services 2010 E-rate Reforms 3

4. ConnectED In June 2013, President Obama introduced the ConnectED initiative:  Within 5 years, connect 99% of schools to 100 mbps, with a target of 1 Gbps  Provide high-speed wireless connectivity within their schools and libraries Called on the FCC to make this happen  FCC can change E-rate without Congressional approval  We know they are working closely on reform and funding efforts 4

5. E-rate 2.0 NPRM In July 2013, FCC released E-rate 2.0 Notice of Proposed Rulemaking (NPRM). Massive - 175 pages, 616 questions and 357 ideas on which comments were requested 17 major topics identified Sought comments from stakeholders Initial Comments were due September 2013; replies due November 2013 1250+ initial comments; 94 replies submitted 5

6. Major NPRM Topics Change E-rate priorities so that high-capacity broadband and the associated equipment needed to disseminate that broadband to and within those buildings becomes Priority 1 Phase out support for paging, text messaging, directory assistance, custom calling features, inside wiring maintenance plans, call blocking, 800 number services Consider phasing out, de-prioritizing or eliminating: ◦ All voice services (presumably basic telephone service, local and long distance ◦ Internet access provided via cellular data plans, including aircards ◦ Web hosting and hosted e-mail services ◦ Basic maintenance of internal connections 6

7. Major NPRM Topics  CIPA-related questions  Streamline the administration of the E-rate program  Consider increasing $2.25 billion funding cap  Consider reforming the competitive bidding process  Encourage consortium purchasing  Increase the transparency of prices for E-rate supported services  Provide direct BEAR reimbursement to applicants  Consider extending document retention requirements from five to ten years 7

8. Major NPRM Topics Possible Funding Distribution Options: 1)Revise the discount matrix?* 2)Incorporate a per-student or per-building cap on funding into the discount matrix? 3)Provide more equitable access to Priority 2 funding? 4)Allocate funds through a fixed dollar amount before the funding year begins? 8

9. ConnectED On February 4th, President Obama announced major corporate contributions of over $750 million to his ConnectEd initiative that aims to connect 99% of the nation's schools to high-speed broadband technology within five years. The contributions will not be part of the E-rate program but instead will be coordinated by the US Department of Education – No details on when this separate initiative will be rolled out 9

10. FCC Chairman, Tom Wheeler, Speech On February 5, 2014, FCC Chairman Wheeler gave major speech about E-rate reform in which he announced it was one of his top priorities Some details given, but most details will come in a Public Notice (PN) that will be released in the next few weeks, seeking comment on a very targeted set of issues (unlike the broad NPRM) 10

11. Funding Double the amount of E-rate funds available to support broadband to $1 billion per year over the next 2 years – Unknown whether this is additional money or a redistribution of existing funds He is open to a future funding increase but noted, “any funding change must be preceded by an assessment of the use of current funds along with a fact-base analysis of the needs of the program.” 11

12. Immediate Changes All Priority 1 requests will be funded for FY 2014 No program changes to FY 2014 Acceleration of broadband consortia application reviews 12

13. Future Changes Public Notice being released in next few weeks that will propose specific changes – How to prioritize broadband services Increase focus (prioritization) of WIFI equipment and broadband wiring needed to support WIFI – How to appropriate phase out legacy services Low-bandwidth connections, dial-up, e-mail, paging Unknown what this means for voice – Long-term modernization including fundamental structural and administrative changes to make program more user- friendly 13

14. Timing Public notice to be released in the next month – Short comment cycle – May not be a reply comment cycle Order will then be released announcing final changes – Chairman wants it issued over the summer – Some changes will become effective for FY 2015; others will become effective for FY 2016 – Some hints at a possible fall 2014 window Don’t know if this would be for FY 2015 or would be a special ‘broadband’ or ‘wifi-only’ window 14

15. What About Priority 2 for FY 2014? No funding available for Priority 2 in FY 2013 FCC staff specifically said this does not mean that P2 is gone forever If no additional money is added to cap, it is unlikely if there will be much, if any, P2 money available for FY 2014 – FCC ‘rolled-over’ $450 billion just to fund all Priority 1 requests for FY 2013 15

16. What About Priority 2 for FY 2014? But if they DO identify additional funding, they could... – A) Use it to fund some P2 for FY 2014 – B) Establish a separate pilot program or application window (perhaps in fall 2014) that focuses on WIFI 16

17. What Should You Do Now Never hurts to apply for P2 – Especially if you need WIFI equipment or broadband equipment PEPPM not eligible for FY 2014 – Post your own 470 before February 26 Be sure to include the words “or equivalent” – Bid in local newspapers – Sign E-rate contingent contract Can be as little as signing/dating the vendor quote – File 471 before March 26 File P2 on separate Form 471 than P1 requests Make sure your technology plan is approved 17

18. Summary Changes coming for FY 2015, maybe 2016 Much will depend on stakeholder comments to Public Notice Priorities will be changing, if they exist at all Eligible services and eligible equipment will be changed More applicants will qualify for equipment purchases Unknown what happens to voice services Program will be more applicant friendly FCDLs will come much faster (starting with FY 2014) Major emphasis on consortia (starting with FY 2014) 18

19. Questions? 19