– Framework For Reform– Connectivity Goals– Discount Calculation Changes– Priority 1 Changes– Priority 2 Changes– Invoice Changes– Program Streamlining Measures– Cost Effectiveness Efforts– Increased Accountability– Tribal Outreach– Further Notice of Proposed Rulemaking

OVER VIEW OF CHANGESE-RATE 2.0

20132014HISTORY

Tom Wheeler became FCC Chairman, vowing to modernize E-rate

DECEMBER 2013

FCC voted 3-2 to adopt proposed reforms

JULY 11, 2014

FCC released Notice of Proposed Rule Making (NPRM):• seeks proposed reform comments

JULY 2013

FCC issued public notice seeking more comments on proposed E-rate reforms

MARCH 2014

162+ page order was released• Provides details on E-rate program changes

JULY 23, 2014

– E-Rate now focused on funding broadband connectivity to buildingsPhase out voice services and end funding of other services • begins FY 2015– Establish P2 budgets per student (minimum amount per building) • allows all applicants to receive funding for equipment inside buildings– P2 funding limited to broadband infrastructure and equipment • no more voice or video equipment eligibility– Issue funding approval letters faster

FOOT VIEW50,000

The Disadvantage:– In 2015, some Priority 1 services will no longer be eligible • (not essential for broadband connectivity)– In 2015, Voice Services will start to phase out • 20 discount percentage points per year– Very narrow Wireless data plans eligibility

Bigger Benefits:– All schools will have access to Priority 2– $1 Billion annual fund for Wi-Fi equipment– Apply minimum budget amounts of $150 per student/$9200 per building • so no district/library receives disproportionate funding– Projected costs of $5 Billion over 5 years • to fund all applicants’ Wi-Fi equipment projects– Reorganization procedures to ease application process

SMALL DISADVANTAGES BIG BENEFITS

Schools– Long Term: • Internet access of at least 100 Mbps per 1,000 users– Short Term: • 1 Gbps Internet access per 1,000 users – Measurement will be at the district level for school districts and school level for schools not part of a district

INTERNET CONNECTIVITY GOALSHIGH SCHOOL MIDDLE SCHOOL ELEMENTARY SCHOOL

INTERNET 20 MEG

FIBER 10 GIG

– Library systems multiple branches in one public school district: • Use the address of the central outlet or main administrative o�ce to determine which public school district the system is in– When applying as a library system: • Use school district’s discount application to central outlet or main o�ce

INTERNET CONNECTIVITY GOALS DISCOUNT CALCULATION: LIBRARIES

– Name Change– Ineligible Services– Phase out of Voice Services– Wireless Data Plans– Bidding Exemption for Certain Bundled Internet Service– Bundled End-User Equipment

CHANGESCATEGORY 1

CATEGORY 1 – Beginning FY2015: • paging, webhosting, telephone service components and e-mail will no longer be available • all voice services will begin to be phased out by 20 discount percentage points/year • This includes cellular voice, local and long distance, PRI service, and hosted VOIP service

– No voice services will be eligible beginningFY2019– Cellular data and mobile cellular broadband services subject to cost-e�ective inquiry

SERVICE ELIGIBILITY CHANGES

CATEGORY 1 VOICE PHASE OUT SCHEDULE

If Your District Discount is:

FY 2015 FY 2016 FY 2017 FY2018 FY2019

20% No Funding No Funding

No Funding

No Funding

No Funding

25% 5% No Funding

No Funding

No Funding

No Funding

40% 20% No Funding

No Funding

No Funding

No Funding

50% 30% 10% No Funding

No Funding

No Funding

60% 40% 20% No Funding

No Funding

No Funding

70% 50% 30% 10% No Funding

No Funding

80% 60% 40% 20% No Funding

No Funding

90% 70% 50% 30% 10% No Funding

– Buildings with Wi-Fi access: • No longer eligible for cellular data plans and mobile broadband services (such as wireless services to an iPad or aircards) – In buildings without Wi-Fi: • These services are only eligible upon showing that the individual data plans are the most cost e�ective option for providing internal broadband access • Must prove either that installing a WLAN is not physically possible, or provide a comparison of the costs of individual data plans vs. installing a WLAN solution

– Be prepared for extensive cost e�ectiveness review from PIA– Library bookmobiles are an exception to additional review

WIRELESS DATA PLANS

– Ineligible as of FY2015– Directory assistance charges– Text messaging– Custom calling services– Direct inward dialing (DID’s)– 900/976 call blocking– Inside wire maintenance plans– All such charges must be deducted from both the pre-discount cost included on the Form 471 and all associated vendor or ap plicant reimbursement invoices (SPIs and BEARs) for 2015 invoices– Such charges do NOT have to be deducted for FY2013 or FY2014 BEARs of SPIs

VOICE TELEPHONE SERVICE COMPONENTS

– Commercial Broadband/Internet packages costing less than $300/month/building (pre-discount): • now exempt from the Form470 competitive bidding requirements for FY 2015– Minimum speed must be 100 Mbps downstream and 10 Mbps upstream– Cost must be based per building • (cannot be averages of multiple buildings)– Annual cost of $3,600 must include all equipment and installation charges, and monthly recurring charges– Applicants must submit a Form 471 application for funding each year

BIDDING EXEMPTION FOR BUNDLED INTERNET

Beginning FY 2015, equipment is not allowed to be bundled at no cost with an eligible service.– This includes: • free cellular phones • iPads/tablets • VOIP equipment– Applicants required to perform a cost allocation to remove the value of the ineligible equipment from the pre-discount price– Previously signed contracts not grandfathered • This rule resulted from an FCC Order in May 2014 and is not technically in the July Reform Order

BUNDLED EQUIPMENT LIMITATIONSCATEGORY 1

– Name Change– National Funding Amounts– Discount Matrix Change– Budgets for Funding Requests– Service/Equipment Eligibility Changes– April 1 Installations– Preferred Master Contracts– Technology Plans

CHANGESCATEGORY 2

CATEGORY 2 – Priority 2 will now be called Category 2– Category 2 will fund: • Wi-Fi and related infrastructure and equipment • Category 1 services will be funded �rst – If not enough funding is available to cover an entire discount band, pro-ration will be applied • using the NSLP percentage (100% NSLP funded �rst, then 99%, 98%, etc– Annual budget target is $1 Billion each year at minimum

OVERVIEW

Schools– Long Term: • Internet access of at least 100 Mbps per 1,000 users– Short Term: • 1 Gbps Internet access per 1,000 users – Measurement will be at the district level for school districts and school level for schools not part of a district

CATEGORY 2 • Maximum Category 2 discount will change from 90% to 85%• All other discount bands will remain the same

DISCOUNT MATRIXCHANGES

NSLP Eligibility

Urban Rural

Less than 1% 20% 25% 1 – 19 % 40% 50% 20 – 34% 50% 60% 35 – 49% 60% 70% 50 – 74% 80% 80% 75 – 100% 85% 85%

CATEGORY 2 – Not all applicants will be funded in the year they apply– No provision to allow applicants to spend funds and be reimbursed in a later year– Intent of FCC to connect 10 million students each year (FY2015-FY2019)

“All schools and libraries will have access to P2 funding once every 5 years.” –FCC Chairman

PREDICTABILITY

CATEGORY 2 – Each school building can apply for a pre-discount cap • $150 per student • minimum building cap of $9200 • (over a rolling �ve-year basis)– Money is allocated per building (not on a district-wide basis)– Applicants cannot move funding from one school to an other– Funding may be requested over 5 years, or applied for in a single year– Annual application is required • funding approval is subject to available funds each year

FUNDING BUDGETS

CATEGORY 2 FUNDING BUDGETS

– If applicant requests less than maximum budget for a building in a single year, the applicant may request remaining balance in following years of the �ve-year cycle– No look-back provision for applicants funded in years prior to FY2015– All competitive bidding requirements will continue to apply – Applicants can still only apply for what they need • Possible Preferred Master Contract bidding exemption

FUNDING BUDGETS

CATEGORY 2 FUNDING BUDGETS

Beginning in 2015:– Priority 2 eligible services will become focused on Wi-Fi, building infrastructure, and networking– Certain equipment and services will be permanently eligible– Other equipment and services will be eligible for FY2015 and 2016 and may end unless FCC extends eligibility– Other equipment currently eligible will no longer be eligible • Voice components • Video components • Most servers

ELIGIBILITYCHANGES

CATEGORY 2 ELIGIBILITYCHANGES

– Routers – Switches – Wireless Access Points – Internal Cabling – Racks – Wireless Controller Systems – Firewall Services – UPS Equipment – Software to Support Eligible Equipment – Cloud Based Functionality of this Equipment

PERMANENTLYELIGIBLE ITEMS

– Buildings with Wi-Fi access: • No longer eligible for cellular data plans and mobile broadband services (such as wireless services to an iPad or aircards) – In buildings without Wi-Fi: • These services are only eligible upon showing that the individual data plans are the most cost e�ective option for providing internal broadband access • Must prove either that installing a WLAN is not physically possible, or provide a comparison of the costs of individual data plans vs. installing a WLAN solution

– Be prepared for extensive cost e�ectiveness review from PIA– Library bookmobiles are an exception to additional review

PERMANENTLYELIGIBLE ITEMS

– Caching functionality • necessary software or equipment- such as caching servers

– Managed Internal Broadband Services (MIBS) (including managed Wi-Fi) • covers the operation, management, or monitoring of a LAN or WLAN • Obtain LAN’s/WLANs as a service (usually for a period of three to �ve years) from third party that manages operations and maintains network • Own the equipment, but have a third party manage it for applicant

– Basic Maintenance Services for eligible equipment– Applicants are allowed to apply for up to $30 per year per student for these services and agree to a 5 year budget– Unless eligibility is extended, these items will lose eligibility at the end of 2016 • Exception: Applicants that received funding approval in 2015 and/or 2016 will continue to obtain funding for 2017-2019

ELIGIBILITY IN FY2015 &2016CATEGORY 2

– Ineligible as of FY2015– Directory assistance charges– Text messaging– Custom calling services– Direct inward dialing (DID’s)– 900/976 call blocking– Inside wire maintenance plans– All such charges must be deducted from both the pre-discount cost included on the Form 471 and all associated vendor or ap plicant reimbursement invoices (SPIs and BEARs) for 2015 invoices– Such charges do NOT have to be deducted for FY2013 or FY2014 BEARs of SPIs

CATEGORY 2 – New schools may estimate the number of students who will be attending the new school • Receive funding based on the estimate– However, if an applicant overestimates the number who enroll in the school, they must return to USAC by the end of the next funding year

NEW SCHOOLS

CATEGORY 2 – Eligible equipment may be purchased and/or installed on or after April 1 • (prior to the beginning of the funding year)– provides maximum amount of time during the summer to complete installation– Disbursements will not be made until on or after July 1– Applicants cannot apply for retroactive funding for equipment purchased and installed in years prior to the funding year

EARLY INSTALLATION

– Beginning in 2015, the technology plan requirement will be repealed– Meaning there is no federal technology plan requirement for Category 1 or Category 2 funding

REQUIREMENT CHANGESTECHNOLOGY PLANEARLY

INSTALLATION

DIRECT INVOICINGBeginning in 2015:– applicants can submit BEARs directly to USAC without ser vice provider approval– USAC will send funds directly to applicants via electronic funds transfer • Applicants will need to provide bank account information to USAC – Payments will be made only to school and libraries- not to consultants– Unknown whether direct payments to applicants is an option or a requirement

– Multi-Year Contract Streamlines PIA Review– Electronic Forms Filing– September 1 deadline for FCDLs for fundable applications

RESTRUCTURING MEASURES

RESTRUCTURING MEASURES– USAC will try to issue all FCDLs for workable FRNs by September 1st of each funding year • Workable FRN means that all information has been submitted there is no investigation or audit of the applicant, service provider or • consultant associated with the FRN– IT systems overhaul will be done as a long-term project • Includes online portal with pre-populated information for forms completion • Electronic access to non-con�dential information • Includes both form information and supporting documentation submitted the USAC

– Plain language communications in a simple, direct, and user-friendly manner

USAC CAPABILITIES

– USAC will try to issue all FCDLs for workable FRNs by September 1st of each funding year • Workable FRN means that all information has been submitted there is no investigation or audit of the applicant, service provider or • consultant associated with the FRN– IT systems overhaul will be done as a long-term project • Includes online portal with pre-populated information for forms completion • Electronic access to non-con�dential information • Includes both form information and supporting documentation submitted the USAC

– Plain language communications in a simple, direct, and user-friendly manner

– All forms submitted to USAC- and all noti�cations sent by USAC- are required to be �led electronically • Starting in 2017– Some forms may be required to be electronically submitted in 2015/2016– USAC now undertaking an IT Modernization Process to upgrade and enrich online experience: • 471 changes for FY2015 • Integration of Item 21 into From 471 for 2015 • Major overhaul for Fy2016/17 including Applicant Portal • Support for multiple web browsers

– ELECTRONIC FILING REQUIREMENT FOR FORMS

– ELECTRONIC FILING REQUIREMENT FOR FORMS

– All appeals (excluding requests of waiver of FCC rules) must be �led with USAC �rst.– Requests for rule waivers will continue to be �led directly with the FCC • USAC does not have authority to waive FCC rules– Considered a streamlining measure because there will be fewer appeals submitted to the FCC • creates shorter wait time for appeal decision– USAC metric is to process 90% of appeals within 90 days

APPEALS

– Form 471 will be modi�ed to require applicants to report information • measures progress towards meeting connectivity goals– The Order is not speci�c • However, WAN circuit information will be required per building and potentially per circuit– All data collected will be made publicly available– FCC also will work with schools and libraries to develop net work measurement methods • gather statistics on network usage and performance– FCC and USAC will develop best practices and benchmarks: • network utilization, network architectures, network performance, net work optimization and management, etc.

FORM COLLECTION

– Item 21 information will be standardized info that is easy to compare across applicants • Will be made public in electronic format in bulk data �les and/or • through publicly available application processing interfaces– This data will be considered non-con�dential • unless an applicant can certify that the disclosure of price information violates a statute, regulation or court order– New contracts cannot contain self imposed prohibition on price disclosure • unless required by state law or court order

PRICING TRANSPARENCY

– Caching functionality • necessary software or equipment- such as caching servers

– Managed Internal Broadband Services (MIBS) (including managed Wi-Fi) • covers the operation, management, or monitoring of a LAN or WLAN • Obtain LAN’s/WLANs as a service (usually for a period of three to �ve years) from third party that manages operations and maintains network • Own the equipment, but have a third party manage it for applicant

– Basic Maintenance Services for eligible equipment– Applicants are allowed to apply for up to $30 per year per student for these services and agree to a 5 year budget– Unless eligibility is extended, these items will lose eligibility at the end of 2016 • Exception: Applicants that received funding approval in 2015 and/or 2016 will continue to obtain funding for 2017-2019

What is LPC?– The price charged to non-residential customers who are similarly situated to a school, library, rural health care provider – consortium that purchase directly from service provider– Service providers required to o�er their bids LCP and to charge applicants the LCP for such services and equipment • makes sure prices paid for E-rate services and equipment are as low a possible– Applicants encouraged to verify that the service provider’s bid complies with LCP requirements– Services providers are encouraged to ensure that the price charged applicants complies with LCP– FCC’s Enforcement Bureau plans to increase LCP enforcement

LOWEST CORRESPONDING PRICE

– The document retention requirement has been expanded from 5 years to 10 years • from the last date to receive service or service delivery deadline (whichever deadline is later)– For multi-year contracts, contract documentation and bids must be kept for 10 years • (from the last date of service under contract)– Amend E-rate document retention policy– Vendor bills must be kept for 10 years- from the end of the funding year– Electronic record storage is permitted

DOCUMENT RETENTION

DOCUMENT RETENTIONUnder present rules:– Applicants are required to allow auditors, investigators, attorneys or anyone appointed by a state education department, USAC, the Commission or any local, state or federal agency with jurisdiction over the entity on-site to conduct E-rate compliance inspections

AUDITS