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<p class="MsoNormal"><b><i><span style="font-size:10.0pt;font-family:&quot;Cambria&quot;,&quot;serif&quot;;color:#5F497A">Today on the</span></i></b><b><i><span style="font-family:&quot;Cambria&quot;,&quot;serif&quot;;color:#5F497A"> ETNews Listserv<o:p></o:p></span></i></b></p>
<p class="MsoNormal"><b><span style="font-size:10.0pt;color:#76923C">ITEM:&nbsp; </span>
</b><b><span style="font-size:10.0pt;color:#E46C0A">FCC Releases Further Notice of Proposed Rulemaking on E-Rate Modernization Order</span></b><b><span style="font-size:10.0pt;color:#E46C0A"><o:p></o:p></span></b></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:&quot;Trebuchet MS&quot;,&quot;sans-serif&quot;;color:#0F243E"><o:p>&nbsp;</o:p></span></p>
<p class="MsoNormal" style="text-align:justify"><b><i><span style="font-size:12.0pt">From the August 4, 2014 Edition of the E-Rate Central Newsletter<o:p></o:p></span></i></b></p>
<p class="MsoNormal" style="text-align:justify"><span style="font-size:12.0pt"><o:p>&nbsp;</o:p></span></p>
<p class="MsoNormal" style="text-align:justify"><span style="font-size:12.0pt">Accompanying the recently released first E-rate modernization Order (<a href="http://www.e-ratecentral.com/FCC/FCC-14-99A1.pdf">FCC 14-99</a>) was a Further Notice of Proposed Rulemaking
 (&#8220;FNPRM&#8221;) seeking comment on future funding needs and on several other issues not fully addressed in the Order.&nbsp; In total, the FNPRM includes almost 130 questions or requests for comments on the five topics discussed further below.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align:justify"><span style="font-size:12.0pt"><o:p>&nbsp;</o:p></span></p>
<p class="MsoNormal" style="text-align:justify"><span style="font-size:12.0pt">FNPRM comments are due September 15<sup>th</sup>; reply comments are due September 30<sup>th</sup>.&nbsp; A subsequent order, based on this FNPRM and expected later this year, may expand
 or modify provisions of this initial E-rate modernization Order discussed in the E-Rate Central
<a href="http://www.e-ratecentral.com/archive/News/News2014/weekly-news-2014-0728.asp">
newsletter of July 28<sup>th</sup></a>.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align:justify"><span style="font-size:12.0pt"><o:p>&nbsp;</o:p></span></p>
<p class="MsoNormal" style="text-align:justify"><i><span style="font-size:12.0pt"><o:p>&nbsp;</o:p></span></i></p>
<p class="MsoNormal" style="text-align:justify"><b><i><span style="font-size:12.0pt">Future E-Rate Funding Needs</span></i></b><i><span style="font-size:12.0pt">:<o:p></o:p></span></i></p>
<p class="MsoNormal" style="text-align:justify"><i><span style="font-size:12.0pt"><o:p>&nbsp;</o:p></span></i></p>
<p class="MsoNormal" style="margin-bottom:10.0pt;text-align:justify"><span style="font-size:12.0pt">One of the contentious points in the approval of the Order was the position taken by two Commissioners that the annual cap for E-rate funding needed to be increased,
 at least to reflect inflation since the program&#8217;s inception (i.e., by perhaps $800 million).&nbsp; The FNPRM asks for information regarding:<o:p></o:p></span></p>
<ol style="margin-top:0in" start="1" type="1">
<li class="MsoNormal" style="margin-bottom:4.0pt;text-align:justify;mso-list:l0 level1 lfo1">
<span style="font-size:12.0pt">The gap between current levels of connectivity and the specific targets adopted.<o:p></o:p></span></li><li class="MsoNormal" style="margin-bottom:4.0pt;text-align:justify;mso-list:l0 level1 lfo1">
<span style="font-size:12.0pt">How much money is needed to bridge that gap.<o:p></o:p></span></li><li class="MsoNormal" style="margin-bottom:4.0pt;text-align:justify;mso-list:l0 level1 lfo1">
<span style="font-size:12.0pt">The per-student and per-square-foot budgets adopted.<o:p></o:p></span></li><li class="MsoNormal" style="margin-bottom:4.0pt;text-align:justify;mso-list:l0 level1 lfo1">
<span style="font-size:12.0pt">The sufficiency of funding freed up by the reforms already adopted.<o:p></o:p></span></li><li class="MsoNormal" style="text-align:justify;mso-list:l0 level1 lfo1"><span style="font-size:12.0pt">The reduction in E-rate purchasing power since the creation of the program.<o:p></o:p></span></li></ol>
<p class="MsoNormal" style="text-align:justify"><span style="font-size:12.0pt"><o:p>&nbsp;</o:p></span></p>
<p class="MsoNormal" style="text-align:justify"><b><i><span style="font-size:12.0pt">Efficiency of Multi-Year Contracts</span></i></b><i><span style="font-size:12.0pt">:<o:p></o:p></span></i></p>
<p class="MsoNormal" style="text-align:justify"><i><span style="font-size:12.0pt"><o:p>&nbsp;</o:p></span></i></p>
<p class="MsoNormal" style="text-align:justify"><span style="font-size:12.0pt">The FNPRM poses a number of questions concerning the wisdom of limiting the duration of multi-year contracts.&nbsp; It notes the apparent trade-off between longer-term contracts, presumably
 with lower prices initially, versus the ability to take advantage of lower-trending prices for broadband service in the future.&nbsp; It asks about alternatives to maximum duration contracts and about the need for longer-term contracts for new fiber connections.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align:justify"><span style="font-size:12.0pt"><o:p>&nbsp;</o:p></span></p>
<p class="MsoNormal" style="text-align:justify"><b><i><span style="font-size:12.0pt">NSLP Data Collection</span></i></b><i><span style="font-size:12.0pt">:<o:p></o:p></span></i></p>
<p class="MsoNormal" style="text-align:justify"><i><span style="font-size:12.0pt"><o:p>&nbsp;</o:p></span></i></p>
<p class="MsoNormal" style="text-align:justify"><span style="font-size:12.0pt">The FCC proposes, and the FNPRM explores, a requirement that schools participating in the NSLP program must use state-reported NSLP data, even if this data is typically a year out-of-date.&nbsp;
 This section of the FNPRM also addresses the proper use of Community Eligibility Provision data and Provision 1, 2, or 3 data.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align:justify"><span style="font-size:12.0pt"><o:p>&nbsp;</o:p></span></p>
<p class="MsoNormal" style="text-align:justify"><b><i><span style="font-size:12.0pt">Encouraging Consortium Participation</span></i></b><i><span style="font-size:12.0pt">:<o:p></o:p></span></i></p>
<p class="MsoNormal" style="text-align:justify"><i><span style="font-size:12.0pt"><o:p>&nbsp;</o:p></span></i></p>
<p class="MsoNormal" style="text-align:justify"><span style="font-size:12.0pt">The FNPRM discusses a number of proposals for further encouraging applicant participation in consortia and/or changing consortium rules.&nbsp; One proposal is to change the calculation
 of a consortium&#8217;s discount rate from a simple average to a student-weighted average to better reflect the discounted funding attributed to each member.&nbsp; For libraries, which do not have students, one proposal is to attribute one student to each 50 square feet
 of library space.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align:justify"><span style="font-size:12.0pt"><o:p>&nbsp;</o:p></span></p>
<p class="MsoNormal" style="text-align:justify"><span style="font-size:12.0pt">The FNPRM also discusses various approaches to addressing the thorny issue of assuring that each member receives its proportional discount-weighted share of the consortium&#8217;s total
 discount (as opposed to just receiving its consortium average share).&nbsp; The underlying problem is that the consortium discount mechanism is based on an average, however determined, that may not match the average prices paid by the various members for different
 levels of service.&nbsp; As a result, the total discount will not accurately match nominal discounts that the members would receive on their share of the prices they pay.&nbsp; It could be more or less.&nbsp; Our view, originally discussed in the Consortium Discount Allocation
 section of E-Rate Central <a href="http://www.e-ratecentral.com/archive/News/News2008/weekly_news_2008_1027.asp">
newsletter of October 27, 2008</a>, is that the equitable way to distribute discount reimbursements is to use a proportional factor.&nbsp; We have yet to see a consortium audit that examines the ultimate distribution of discounts to consortium members.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align:justify"><span style="font-size:12.0pt"><o:p>&nbsp;</o:p></span></p>
<p class="MsoNormal" style="text-align:justify"><span style="font-size:12.0pt">Other aspects considered in this section of the FNPRM request comments on proposals to increase the discounts on consortium applications by 5% and/or to permit private-sector members.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align:justify"><span style="font-size:12.0pt"><o:p>&nbsp;</o:p></span></p>
<p class="MsoNormal" style="text-align:justify"><b><i><span style="font-size:12.0pt">Library Support</span></i></b><i><span style="font-size:12.0pt">:<o:p></o:p></span></i></p>
<p class="MsoNormal" style="text-align:justify"><i><span style="font-size:12.0pt"><o:p>&nbsp;</o:p></span></i></p>
<p class="MsoNormal" style="text-align:justify"><span style="font-size:12.0pt">The FNPRM also requests comments on the adequacy of, and alternatives to, the per-square-foot Category 2 budget for libraries.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:&quot;Trebuchet MS&quot;,&quot;sans-serif&quot;;color:#0F243E"><o:p>&nbsp;</o:p></span></p>
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