[Federal Register Volume 79, Number 47 (Tuesday, March 11, 2014)]
[Proposed Rules]
[Pages 13599-13607]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-05433]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[WC Docket No. 13-184; DA 14-308]


Wireline Competition Bureau Seeks Focused Comment on E-Rate 
Modernization

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: In this document, the Wireline Competition Bureau seeks 
focused comment on three issues raised in the E-rate Modernization NPRM 
that merit further inquiry as the Commission moves towards the goal of 
meeting schools' and libraries' broadband connectivity needs. The E-
rate Modernization NPRM sought broad comment on modernizing the E-rate 
program and proposed three goals for the program: ensuring that schools 
and libraries have affordable access to 21st Century broadband that 
supports digital learning; maximizing the cost-effectiveness of E-rate 
funds; and streamlining the administration of the program.

DATES: Comments are due on or before April 7, 2014 and reply comments 
are due on or before April 21, 2014.

ADDRESSES: Interested parties may file comments on or before April 7, 
2014 and reply comments on or before April 21, 2014. All pleadings are 
to reference WC Docket No. 13-184. Comments may be filed using the 
Commission's Electronic Comment Filing System (ECFS) or by filing paper 
copies, by any of the following methods:
     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.
     People with Disabilities: To request materials in 
accessible formats for people with disabilities (Braille, large print, 
electronic files, audio format), send an email to [email protected] or 
call the Consumer & Governmental Affairs Bureau at (202) 418-0530 
(voice), (202) 418-0432 (tty).
    For detailed instructions for submitting comments and additional 
information on the rulemaking process, see the SUPPLEMENTARY 
INFORMATION section of this document.

FOR FURTHER INFORMATION CONTACT: Regina Brown at (202) 418-0792 or 
James Bachtell at (202) 4182694, Telecommunications Access Policy 
Division, Wireline Competition Bureau or TTY (202) 418-0484.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's 
document in WC Docket No. 13-184; DA 14-308, released March 6, 2014. 
The full text of this document is available for inspection during 
regular business hours in the FCC Reference Information Center, Portals 
II, 445 12th Street SW., Room CY-A257, Washington DC 20554. This 
document may also be purchased from the Commission's duplicating 
contractor, Best Copy and Printing, Inc., Portals II, 445 12th Street 
SW., Room CY-B402, Washington, DC 20554, telephone 202-488-5300, 
facsimile 202-488-5563, or via email at [email protected]. It is also 
available via the Internet in the Commission's Electronic Document 
System (EDOCS) at http://www.fcc.gov/documents under WC Docket No. 13-
184.

Synopsis

    1. The Wireline Competition Bureau (Bureau) seeks focused comment 
on three issues raised in the E-rate Modernization NPRM, 78 FR 51597, 
August 20, 2013, that merit further inquiry as the Commission moves 
towards modernizing the E-rate program to meet schools' and libraries' 
broadband connectivity needs. The E-rate Modernization NPRM sought 
broad comment on and proposed three goals for the program: (1) Ensuring 
that schools and libraries have affordable access to 21st Century 
broadband that supports digital learning; (2) maximizing the cost-
effectiveness of E-rate funds; and (3) streamlining the administration 
of the program. The Commission has received more than 1,500 comments 
and ex parte filings in response to the E-rate Modernization NPRM 
including numerous comments from individual educators and school 
administrators; school districts and consortia; librarians and library 
systems; E-rate vendors and educational content providers; and other 
interested public and private organizations.
    2. The record in this proceeding demonstrates overwhelming 
agreement among stakeholders that the E-rate program has been a crucial 
part of helping our nation's schools and libraries connect to the 
Internet. The record also shows a strong commitment to ensuring that 
the E-rate program quickly evolve to meet the ever-growing need for 
high-capacity broadband so our students and communities have access to 
21st Century educational tools. The record is replete with support and 
suggestions for how to meet the goals for the E-rate program proposed 
in the E-rate Modernization NPRM.
    3. Based on the extensive input the Commission has received, it 
appears that meeting the Commission's proposed goals for the E-rate 
program will require that, in the near term, the program focus on 
providing the support necessary to ensure schools and libraries can 
afford high-speed connectivity to and within schools and libraries, 
even as the Commission develops a long-term approach that allows 
applicants to scale up capacity while driving down costs. More 
specifically, the record underscores the importance of providing 
consistent and broadly available support for the equipment and services 
needed to enable high-capacity wireless broadband within schools and 
libraries; greater support, at least in the short term, for last-mile 
deployments needed to connect schools and libraries that do not 
currently have access to high-speed connections; a support methodology 
that allows applicants to capture the long-term cost-efficiencies 
associated with access to scalable, high-speed connections; less 
support for voice services, as the cost of voice services transition in 
the long run to the marginal cost of packet-based voice services 
provided over high-capacity broadband connections; incentives for 
making cost-effective purchasing decisions, including incentives and 
opportunities for schools and libraries to benefit from economies of 
scale in purchasing supported services; and as much administrative 
simplicity as possible, while protecting against waste, fraud and 
abuse.
    4. In light of these themes that emerge from the record, as the 
Commission seeks to modernize the E-rate program, there are three 
issues raised in the E-rate Modernization NPRM that merit further 
focused inquiry at this time: (1) How best to focus E-rate funds on 
high-capacity broadband, especially high-speed Wi-Fi and internal 
connections; (2) whether and how the Commission should begin to phase 
down or phase out support for traditional voice services

[[Page 13600]]

in order to focus more funding on broadband; and (3) whether there are 
demonstration projects or experiments that the Commission should 
authorize as part of the E-rate program that would help the Commission 
test new, innovative ways to maximize cost-effective purchasing in the 
E-rate program. We seek further comment on how the issues below relate 
to the goals for the E-rate program that the Commission proposed in the 
E-rate Modernization NPRM and how they comport with relevant statutory 
requirements.
    5. At the same time, the Commission continues to evaluate all of 
the input received in response to the E-rate Modernization NPRM. The 
issues we raise in this document do not define the full universe of 
possible changes the Commission could make in an order modernizing the 
E-rate program.

I. Focused Funding for High-Capacity Broadband

    6. Commenters to this proceeding have made clear the importance of 
focusing E-rate support on high-speed connectivity to and within 
schools and libraries. As educational technology has improved in recent 
years, equipment and cabling used to deploy the interior pieces of 
broadband networks have become increasingly important, yet the E-rate 
program has provided less support and funded fewer applicants seeking 
support for such internal connections. Numerous commenters have 
identified support for internal connections as one of the program areas 
where modernization is most urgent and most important. Accordingly, in 
this section we ask about methods to improve this funding going 
forward. We also take this opportunity to ask about improvements to the 
existing priority one funding system for last-mile deployments for 
high-capacity broadband.
    7. In seeking further comment on how best to focus E-rate funding 
on high-capacity broadband, we note that an initial review by 
Commission staff has found that the Commission can free up an 
additional $2 billion over the next two years to help support broadband 
networks in our nation's schools and libraries, offering an opportunity 
to assess better ways to prioritize and distribute program funding at 
support levels higher than the current program cap. We seek comment on 
how best to use such additional funds to support the Commission's 
efforts to provide high-capacity broadband within and to schools and 
libraries, as described in more detail below.

A. Broadband Deployment Within Schools and Libraries

    8. Stakeholders in this proceeding contend that the deployment of 
equipment inside school and library facilities is as essential to 
comprehensive broadband service at a given location as the high-speed 
connectivity to that facility. For example, Wi-Fi has transformed 
computing and education, creating the possibility of one-to-one 
learning in classrooms and libraries, and freeing desks and work 
stations from wired connections. A survey of school district leaders 
conducted by the Consortium for School Networking (CoSN) and Market 
Data Retrieval in 2013, however, showed that 57 percent of district 
leaders do not believe that their schools' wireless networks have the 
capacity to handle a one-to-one student-to-device deployment.
    9. Internal connections essential to extend broadband throughout 
schools and libraries are currently eligible for support in the E-rate 
program as priority two services. However, some commenters have 
expressed concern because, in most funding years, there have only been 
sufficient funds to provide priority two support to schools and 
libraries in the highest bands of the discount matrix. Commenters 
generally agree that the rule that the Commission adopted limiting any 
school or library to two years of priority two support in every five 
year period (the two-in-five rule) does not appear to have achieved its 
intended goal of substantially spreading the available funds. Moreover, 
as demand for priority one funding continues to grow, the ability to 
provide any priority two support is an increasing challenge.
    10. Therefore, to address the need for funding for the services and 
equipment necessary to ensure high-capacity broadband within schools 
and libraries, we seek comment on whether the Commission should change 
the current priority two funding category (including no longer 
supporting legacy services that are currently eligible for priority two 
funding), by allocating annually a set amount of E-rate funds to 
provide schools and libraries with funding for LANs and Wi-Fi networks, 
which are essential to ensuring high-capacity broadband reaches 
students and library patrons.
1. Scope of Services To Be Funded
    11. Under this approach, only equipment and supporting software 
that is essential to getting high-capacity broadband from the 
building's front door to the computer, tablet, or other learning 
devices in schools and libraries would be eligible for internal 
connection support. We seek comment on what equipment is essential for 
such purposes. Some commenters have suggested that such equipment 
includes internal wiring, switches and routers, wireless access points, 
and the software supporting these components. We seek comment on 
whether these are the right categories of equipment and software to 
fund for this purpose.
    12. Other commenters have suggested other technology that improves 
the efficiency of the broadband networks and should therefore also 
receive E-rate support. For example, several commenters have argued 
that E-rate should support caching through content servers because 
caching can allow schools to reduce their broadband demand by as much 
as half. Another commenter noted that slow firewall processing, 
outdated content filtering, and other similar internal network problems 
create significant speed bottlenecks on school and library networks. We 
now seek further focused comment on what services, software, or 
equipment are necessary to enable high quality, high-capacity networks 
inside schools and libraries, and whether such services, software and 
equipment should qualify for support?
2. Access to Funding
    13. The Commission has acknowledged that under the current system 
only a small percentage of E-rate recipients receive the bulk of the 
internal connection funding. We seek comment on ways to provide more 
widespread access to funding for internal connections in order to 
enable schools and libraries nationwide to take advantage of high-
capacity broadband to their buildings with robust internal networks. We 
seek particular comment on three potential ways to prioritize 
applications for deployment costs in the event that the demand for 
internal connection funds exceeds availability.
a. Five-Year Upgrade Cycle
    14. Consistent with the method used to prioritize priority two 
funding today, the Commission could prioritize funding by discount 
level, with rotating eligibility to provide as many schools and 
libraries as possible access to funding over a five-year upgrade cycle. 
Information in the record demonstrates that basic Wi-Fi and LAN 
equipment has a useable lifespan of five to seven years. Given this 
information, we seek comment on limiting an applicant's ability to 
receive internal connections funding to once every five years while

[[Page 13601]]

retaining the existing prioritization method.
    15. If the Commission were to adopt a one-in-five rule to replace 
the current two-in-five rule, how much funding would be needed to 
ensure that funds were available to meet the needs of all eligible 
schools and libraries? Would the Commission need to front-load support 
for eligible internal connections in the first funding years to meet 
the existing needs of schools and libraries? Is five years the right 
amount of time for such a funding cycle? If the Commission were to 
adopt this approach, should the one-in-five limitation apply at the 
level of applicants or, as it does today, at the level of individual 
school and library buildings?
    16. If available funding is insufficient to fund all applicants at 
a particular discount level in a given funding year, how should the 
Commission decide which applicants to fund? Should it for example, 
prioritize funding for applicants within a discount level by giving 
preference to the applicants with the highest percentage of students 
receiving free and reduced school lunches?
b. Rotating Eligibility
    17. Alternatively, we seek comment on limiting an applicant's 
ability to receive funding for internal connections that support high-
capacity broadband to a single funding year until all other applicants 
have received support or declined the opportunity to seek funding in at 
least one funding year, starting in funding year 2015. This approach is 
consistent with one proposed by the State E-rate Coordinators Alliance 
(SECA) and supported by other commenters. This approach would ensure 
that all applicants are able to receive funding over time, but once 
they receive funding, applicants could not be certain about when they 
might next be eligible for internal connections funding. We seek 
comment on this tradeoff. If the Commission were to adopt this 
approach, applicants could have an incentive to inflate their original 
requests in their first year of eligibility. What safeguards should we 
adopt to address this problem?
    18. If the Commission were to use available funds to front-load 
support for eligible internal connections in funding years 2015 and 
2016, would this obviate some of the drawbacks to this approach? If so, 
how much support should the Commission provide in funding years 2015 
and 2016, and how much should it provide annually after that to ensure 
all schools and libraries have robust internal connections? If the 
Commission were to adopt this approach, should the rotating eligibility 
limitation apply at the level of applicants or, as the two-in-five rule 
does today, at the level of individual schools and library buildings?
    19. If the Commission were to adopt this rotating eligibility 
approach, how should it prioritize funding for internal connections? 
Should it continue to fund eligible applications at the highest 
discount level first? If funding is insufficient to fund all eligible 
applications at a particular discount level in a given funding year, 
should the Commission give preference to the applicants with the 
highest percentage of students receiving free and reduced school 
lunches?
c. Annual Allocation for Internal Connections
    20. As a third option, we seek comment on adopting a funding method 
that would provide some support for internal connections that support 
high-capacity broadband to all eligible applicants in each funding 
year, as opposed to the cyclical funding methods discussed above. By 
making at least some funding available annually for each applicant, 
this approach would prevent a small number of applicants from 
disproportionately using available funding and give all schools and 
libraries an opportunity to upgrade at least some of their facilities 
each year. In the E-rate Modernization NPRM, the Commission sought 
comment on a similar allocation of funds that would apply for the 
entire E-rate program. Many commenters were supportive, but many others 
expressed concern that this funding approach would not fully capture 
the diversity of costs faced by applicants across the country. Are 
these concerns mitigated in the context of internal connections, and 
particularly LAN and Wi-Fi deployments? In particular, unlike the costs 
of broadband connectivity to schools, we expect that the prices of many 
parts of LAN and Wi-Fi deployments (e.g., switches, routers, and 
wireless access points) should vary little based on the geographic 
location of schools and should generally scale proportionally with the 
size of the student body. We seek comment on these expectations.
    21. More specifically, we seek comment on using the following 
simplified version of the formula proposed by Funds for Learning and a 
coalition of schools and school groups to set available funding levels 
for each applicant.
[GRAPHIC] [TIFF OMITTED] TP11MR14.012

    By identifying available funds and estimating the total pre-
discount requests that could be supported with those funds, the 
Commission would arrive at an amount to be allocated to each applicant. 
Applicants would be entitled to receive funds, applying their usual 
discounts, towards the purchase of eligible internal connections up to 
the pre-discount allocation. Under this approach if, in order to ensure 
that small schools and libraries would receive sufficient funding, the 
Commission were to adopt a per-applicant or per-building minimum 
allocation as part of the formula, what should that minimum per-
building or per-applicant support level be? If the Commission adopts 
such an approach for school applicants, how should it calculate the 
annual allocation for libraries?
    22. In addition to ensuring that all applicants have the 
opportunity to receive at least some internal connection funding each 
year, adopting this annual allotment could have the benefit of 
providing applicants certainty about the amount of funding that would 
be available to them each year. We seek comment on this consideration. 
Would funding certainty over a multi-year period create new 
opportunities for up-front financing to cover equipment upgrades in a 
given year? We also seek comment on how to best utilize any remaining 
funding if some applicants request less than their allocated amount. 
Should such funding be made available

[[Page 13602]]

to increase the allocation to other applicants in the same funding 
year? Should it be held over to subsequent funding years? Or should we 
adopt another approach? Finally, how should the Commission allow these 
funds to be spent by the applicants? Should district or library systems 
be required to spend those funds at specific schools or libraries in 
certain proportions? Or should each applicant have the flexibility to 
spend the funds as it decides across its district or library system?
d. Other Methods To Prioritize Internal Connections Funding
    23. Are there variations on the options described above or other 
methods the Commission should consider employing to prioritize funding 
for high-capacity internal connections? Should it, for example, 
prioritize projects by the number of students impacted per dollar of 
funding? Should the Commission prioritize consortia applications?

B. Broadband Deployment to Schools and Libraries

    24. The record reflects that some schools and libraries do not have 
access to high-capacity broadband connections to their buildings, and 
commenters have suggested that the Commission undertake a targeted 
effort to help support deployment of high-capacity, scalable last-mile 
connections to eligible schools and libraries that do not currently 
have access to connections that meet the connectivity goals laid out in 
the E-rate Modernization NPRM.
    25. As explained in the E-rate Modernization NPRM, the E-rate 
program currently offers support for broadband construction to schools 
and libraries. However, commenters have explained that even with the 
current levels of E-rate support, some schools and libraries cannot 
afford to pay their share of the cost of deploying last-mile high-
capacity broadband.
1. Scope of Services To Be Funded
    26. In light of the record demonstrating that the costs of one-time 
construction projects, even though already supported by the E-rate 
program, can be cost-prohibitive, we seek comment on whether the 
Commission should undertake a limited initiative, within the existing 
priority one system, to incent the deployment of high-capacity 
broadband connections to schools and libraries. We invite stakeholders 
to offer examples of projects for which they would seek funding if the 
Commission adopts such an approach. Exactly what services should the 
Commission fund as part of this deployment effort? For instance, what 
types of fiber deployment or other high-capacity, scalable broadband 
technologies that meet the connectivity goals in the E-rate 
Modernization NPRM, should be eligible for funding?
    27. In the E-rate Modernization NPRM, the Commission sought comment 
on how to ensure that broadband deployment to schools and libraries is 
done in a way that minimizes the recurring costs for both applicants 
and the E-rate program once deployment is complete. While the record 
indicates that new broadband deployments, once paid for, can 
dramatically lower recurring costs over time, it also reveals 
situations where monthly charges have remained high even after new 
deployments are complete and costs have been fully recovered. If the 
Commission does decide to provide some additional support for the 
capital costs associated with high-capacity deployment, how can it best 
ensure that the recurring costs associated with providing broadband 
over new connections is affordable for the applicants on a going-
forward basis?
    28. Should the Commission change the program's funding methodology 
as part of this deployment initiative? Would it be sufficient for the 
Commission to simply raise the discount rate for all applicants seeking 
deployment support by 10 percent or some other percentage? Or would it 
be better for the Commission to adopt a flat discount rate for all 
applicants? If so, what should this flat rate be? Are there some 
schools and libraries on Tribal lands, or in remote rural areas that 
cannot afford high-capacity broadband build-out without full support? 
Should the Commission consider full support for all applicants seeking 
support for broadband connectivity? While such an approach could 
encourage applicants to participate in the program and greatly increase 
broadband deployment to schools and libraries, how would the Commission 
ensure that applicants do not enter into agreements requiring excessive 
funding for broadband deployment?
    29. Some commenters have explained that vendors often limit up-
front deployment costs and instead collect the costs over several years 
as part of the cost of recurring services. Are there instances in which 
the Commission should authorize increased support for the recurring 
costs of broadband services over a period of time instead of, or in 
addition to, increased support for up-front costs, to the extent those 
recurring costs reflect time-limited recovery for capital investment? 
If so, over how long a period of time and under what circumstances?
2. Ensuring Equitable Distribution
    30. We also seek comment on how best to distribute support among 
the applicants for high-speed connections to schools and libraries. In 
particular, if the Commission makes some additional deployment support 
available to eligible schools and libraries that do not already have 
access to high-speed scalable connections available at reasonable 
prices, how do we identify those schools and libraries? Should we rely 
on the broadband speed targets identified by the Commission in the E-
rate Modernization NPRM and require applicants for this deployment 
funding to demonstrate their current Internet access service does not 
meet that metric? Should we consider future scalability of existing 
connections and/or available pricing when identifying eligible schools 
and libraries? Are there other methods the Commission should consider 
to determine the best projects to fund?
    31. We also seek comment on ways to prioritize applications for 
deployment costs in the event that the demand for such funds exceeds 
availability. In the current E-rate program, when available funds do 
not meet demand, the applicants with the greatest economic need (i.e., 
those with the highest percentage of students that qualify for free and 
reduced school lunches) are funded first at the 90 percent discount 
rate, then funding goes to those applicants eligible for 89 percent 
discount levels, and so on, until the available funds are exhausted. 
Eligible libraries receive the discount rate of the school district in 
which they are located. Should the Commission adopt a similar mechanism 
for distributing funding for deployment of high-capacity broadband to 
eligible schools and libraries?
    32. As an alternative, we seek comment on adopting one or more 
objective impact and/or efficiency metrics to prioritize applications. 
For example, school applicants could be required to calculate the total 
number of students currently in buildings without infrastructure 
capable of meeting Commission-adopted speed goals. Those schools would 
then be upgraded to scalable, high-speed connections with E-rate 
support and applications could be scored based on the total cost per-
student served. Should the Commission also consider prioritizing 
upgrades that do not increase the speed available to applicants, but 
dramatically reduce recurring costs following new investment (for 
example, if applicants

[[Page 13603]]

sought to upgrade from Internet access using two T3s to a single 100 
Mbps metro Ethernet circuit, or to purchase WAN upgrades that allowed 
them to buy Internet access at a lower-priced point-of-presence)? If 
so, how much weight should be given to particular levels of reductions 
in recurring costs? If the Commission adopted multiple objective impact 
and/or efficiency metrics, how should they be evaluated together? For 
example, how should applications that reduce recurring costs be scored 
against those that include speed upgrades? Are there other methods the 
Commission could employ to prioritize funding for up-front deployment 
costs in the event demand exceeds availability?
    33. Within the existing priority one system, applicants can receive 
E-rate support for some installation and special construction charges, 
but the cost of large projects must be prorated over three years or 
more. This limit may disproportionately harm rural and other applicants 
that face the largest deployment costs, especially because there are no 
exceptions for rural deployments or other unique circumstances. Would 
adopting one of the prioritization approaches above for deployment 
funding allow the Commission to relax this limit?

C. Encouraging Cost-Effective Purchasing

    34. As the Commission considers how to focus E-rate funding on 
high-capacity connections to and within schools and libraries, are 
there additional steps the Commission can take to help ensure efficient 
use of E-rate funds spent on broadband projects? Below we seek comment 
on three possible ways to encourage cost-effective purchasing. We also 
invite commenters to offer other methods to encourage cost-effective E-
rate purchasing.
    35. Consortium purchasing and bulk buying. In the E-rate 
Modernization NPRM, the Commission sought comment on encouraging 
consortia and other bulk purchasing programs. If the Commission moves 
to support a more limited set of equipment and services for high-
capacity internal connections, is there an opportunity for E-rate 
applicants to drive down prices of the products necessary for Wi-Fi and 
LAN connectivity through consortium purchasing or other forms of bulk 
buying? If so, what steps can the Commission take to encourage cost-
effective consortia or other bulk purchasing of such products? 
Likewise, if the Commission focuses some additional funding on high-
capacity broadband deployment to schools and libraries currently 
unserved by broadband services, should the Commission encourage the 
formation of consortia to encourage providers to offer affordable 
services to groups of schools and/or libraries? If so, what steps can 
the Commission take to encourage the formation of consortia that have 
the tools to engage in cost-effective purchasing? Are there steps the 
Commission can take to encourage currently successful consortia to add 
members, particularly eligible entities that currently lack the kind of 
purchasing power enjoyed by consortia? How can the Commission help 
ensure that the formation of such consortia does not unfairly 
disadvantage smaller providers that may be efficient local providers of 
high-capacity services?
    36. Technology planning. Another possible approach to ensuring 
cost-effective purchasing of broadband services is to require 
technology planning. The Commission eliminated technology plan 
requirements for E-rate applicants seeking only support for priority 
one services in order to simplify the application process for schools 
and libraries. The E-rate Modernization NPRM sought comment on whether 
there were lessons learned from current and previous technology plan 
requirements and whether these requirements should be re-instituted. We 
now ask more specifically whether the Commission should require 
applicants that are seeking E-rate support for upgrading high-capacity 
connections to school buildings or libraries to demonstrate that they 
have a plan and the capacity to use those services within their 
buildings.
    37. Data collection and transparency. In the E-rate Modernization 
NPRM, the Commission sought comment on how best to collect data on the 
speed and quality of school and library connections. The Commission 
also sought comment on what data to collect to support the proposed 
goal of maximizing cost-effective purchasing. As the Commission 
considers how best to provide support for broadband deployment within 
and to schools and libraries, we renew our request for comment on those 
data issues and on whether price transparency for E-rate supported 
services will help drive down those prices.

D. Streamlining the Administrative Process

    38. As the Commission considers how best to support high-capacity 
broadband connections to and within schools and libraries, consistent 
with the Commission's proposed third goal of streamlining the 
administration of the E-rate program, we seek additional comment on how 
best to minimize the administrative burdens and overhead associated 
with applying for and receiving such support. Are there for example, 
simple changes the Commission can make to the E-rate information 
collections that will ease the administrative burdens on E-rate 
applicants and vendors that take advantage of a modernized E-rate 
program?
    39. Are there changes to the invoicing deadlines the Commission 
should adopt to take into account a focus on broadband deployment? 
Under the current program, all recurring services must be completed 
during the funding year and invoices must be submitted no later than 
120 days after the last day to receive service or 120 days after the 
FCC Form 486 Notification Letter date, whichever is later. Non-
recurring charges for broadband projects, such as build-outs and 
special construction, must be completed by September 30 following the 
close of the funding year, with some exceptions. Because of the 
possibility that complex projects could take additional time beyond the 
funding year, should new deployment be given 18 months to be completed 
and invoiced from the date the funds are committed? Should complex 
internal connections projects be given 18 months to be completed and 
invoiced from the date the funds are committed? Could invoicing 
deadlines be synchronized with other federal funding programs to reduce 
complexity for applicants? Should applicants be allowed any extension 
of their project deadlines? If so, under what circumstances? Currently, 
special construction or build-outs can commence six months before the 
start of the funding year. Should the Commission give applicants 
additional time before the funding year to begin special construction 
to schools and libraries, or to begin internal infrastructure projects?

II. Reduced Support for Voice Services

    40. In the E-rate Modernization NPRM, the Commission proposed to 
refocus the E-rate program on supporting high-capacity broadband 
connectivity to and within schools and libraries and recognized that it 
needed to confront the prospect of eliminating or reducing support for 
voice and other legacy services that do not advance the deployment of 
broadband. As schools and libraries increasingly transition to voice 
over Internet protocol (VoIP) services, we expect the price they pay 
for voice services to decrease. While many commenters expressed support 
for a transition from funding voice

[[Page 13604]]

telephony services, many such commenters also stressed the importance 
of phasing out support for voice services over a number of years, with 
several specifically endorsing a three- to five-year phase-out period. 
Below we seek comment on several specific ways for the Commission to 
transition away from support for voice services, and we invite 
commenters to offer other suggestions for how best to redirect E-rate 
support from voice to broadband services.

A. Reduced E-Rate Support for Voice Services

    41. One way for the Commission to phase out support for voice 
services would be to gradually reduce the discount rate applicants 
receive for voice services. For example, the Commission could phase out 
support for voice services by 15 percentage points per year, beginning 
in funding year 2015, and continue to reduce support for such services 
by the same amount each year until funding for voice services is fully 
phased out in funding year 2020. We seek comment on this approach, as 
well as any other options for reducing E-rate spending on voice 
services. A gradual approach to reducing support for voice services 
should give schools and libraries time and the incentive to find lower 
priced solutions, and could also provide the Commission a period to 
evaluate whether it should adjust the phase out schedule. Although such 
an approach will result in some applicants receiving no support for 
voice services prior to funding year 2020, the most economically 
disadvantaged applicants--i.e. those that are currently eligible for a 
90 percent discount rate --would be eligible for a 75 percent discount 
on voice telephony in funding year 2015, a 60 percent discount in 
funding year 2016, a 45 percent discount in 2017, a 30 percent discount 
in funding year 2018, and a 15 percent discount in funding year 2019.
    42. We expect that the diminished availability of E-rate funding 
for voice services will be ameliorated by the fact that many applicants 
have transitioned or will transition to VoIP, which is generally 
considered to be more cost-efficient than traditional voice services. 
Although some commenters have suggested that the initial costs, 
including the cost of new handsets, to transition to VoIP is cost 
prohibitive for them, others indicate that they are embracing this 
trend. Our approach also takes into consideration that the growth of 
competitive options for voice services, such as VoIP, should drive down 
costs for voice services.
    43. If the Commission elects to phase out support for voice 
beginning in funding year 2015, will schools and libraries have 
adequate time and resources to make needed adjustments? Commenters 
should consider that as the E-rate program increasingly supports high-
capacity broadband, applicants may be eligible for increased levels of 
support for broadband services to and within schools and libraries. 
Will increased funding for these other types of services assist schools 
and libraries adjusting to decreasing levels of E-rate support for 
voice telephony services? Will increased support for high-capacity 
broadband networks to and within schools and libraries put applicants 
in a better position to transition to VoIP, and would E-rate still be 
supporting voice services, albeit indirectly, by supporting the 
infrastructure and services over which VoIP will ride? Would it be 
appropriate, therefore, to phase out support for voice services only 
once a school or library has gained access to high-capacity broadband? 
If so, we seek comment on whether we should adopt different voice 
phase-out dates on a case-by-case basis for individual schools or 
libraries, such as within one year after they have broadband that meets 
the goals for high-capacity broadband established in this proceeding.
    44. We also seek comment on whether the entries for telephone 
services, telephone components, and interconnected VoIP in the Eligible 
Services List (ESL) include all of the types of voice services and 
components that should be covered by the five year phase out. Are there 
any services in these entries that should be excluded from the phase 
out? Are there other types of telephone services that are not 
specifically listed in the current ESL that should be subject to the 
phase out? Commenters should provide details on the specific voice 
services for which support should be phased out and provide detailed 
reasons for why certain services should be included or excluded from 
the list of targeted voice services.

B. Alternatives

    45. The Commission may also decide to eliminate voice more quickly 
or to modify in some other way the current approach to supporting voice 
services. Therefore, we also seek comment on a number of alternative 
ways to approach funding for voice services, and we invite comment on 
the approaches we identify below, as well as variations on or 
alternatives to any such options.
    46. Elimination of voice support. As an alternative to a phase down 
of voice support, should the Commission consider eliminating all 
support for voice services starting in funding year 2015? Such an 
approach would more quickly accomplish the Commission's goal of 
transitioning the E-rate program to supporting high-capacity broadband, 
but would also result in a more stark loss of support for applicants. 
Would it be more appropriate to provide additional time for applicants 
to make necessary budgetary changes by eliminating all support for 
voice services, but in a later funding year?
    47. Lower priority for voice services. In the alternative, we also 
seek comment on retaining support for voice services under a lower 
priority. For example, SECA recommends that the Commission establish a 
new priority category for particular services, including voice 
services, to be funded at a flat 50 percent discount and that all 
applicants have equal access to the services in this category. Would it 
be more manageable for applicants to adjust to a larger reduction in 
funding the first year we implement a discount reduction for voice 
services because they know they will continue to receive such funding 
in future years? If we were to take such an approach, would it 
encourage applicants to move to more cost-effective solutions or would 
we need to take additional steps to encourage such transitions?
    48. Benchmark for VoIP support. As voice communications 
technologies migrate from traditional TDM to IP should the Commission 
encourage this transition for schools and libraries using the E-rate 
program? Some commenters suggested that rather than phasing out E-rate 
support for all voice services, the Commission should continue to 
provide support for VoIP solutions. A possible middle ground would be 
for the Commission to identify inexpensive VoIP solutions for schools 
and libraries and use such services as a benchmark for how much support 
the E-rate program will provide for voice services.
    49. If the Commission establishes a benchmark support amount, 
should the benchmark be on a per-user basis or some other basis? If the 
Commission establishes a per-user benchmark, how would applicants 
establish the number of users they have that provide the basis for the 
amount of their requested support? If the Commission establishes a 
benchmark support amount, should the E-rate program use this benchmark 
to support all voice services, regardless of the technology used? Or 
should the Commission use the benchmark derived support amount only to 
fund VoIP service and phase down support for all other voice services? 
Does the transition to VoIP services offer applicants an

[[Page 13605]]

opportunity to use consortium purchasing or other forms of bulk buying 
to drive down the cost of services while ensuring service quality? If 
so, what steps can the Commission take to encourage such purchasing?

C. Other Issues Related to Voice Services

    50. As the Commission considers how to treat voice services as part 
of a modernized E-rate program, we seek comment on several specific 
issues relating to the funding of voice services and invite commenters 
to raise other issues.
    51. Internal connections. We also seek comment on whether the 
Commission should end support for internal connections used for the 
delivery of voice services which are currently supported as priority 
two eligible services. Will discontinuing support for the internal 
connections used to deliver voice discourage applicants that had been 
considering a transition to VoIP? If VoIP is the most cost-effective 
option for voice services, we seek comment on whether the E-rate 
program should offer some short term incentive to applicants to 
transition to VoIP. Some commenters have already explained in this 
proceeding that they are reluctant to switch to VoIP for a variety of 
reasons. Would it be a sufficient incentive for applicants to 
transition to VoIP if the E-rate program provided an additional, one-
time discount, such as 10 percent to 20 percent, to applicants in order 
to help defray the up-front costs necessary for the first year of a 
transition to VoIP?
    52. Rural areas or areas that lack access to broadband. If the 
Commission decides to decrease support for voice services, some 
commenters have suggested that it continue to provide support for 
traditional voice services for those schools and libraries in remote 
rural areas, on Tribal lands, or elsewhere that lack access to high-
capacity broadband and therefore will find it more challenging to adopt 
affordable VoIP options. For example, Alaska EED and Alaska State 
Library ask the Commission to consider extending the eligibility of 
voice services for locations that rely on satellite Internet service. 
We seek further comment on such an approach, and specific comment on 
how, if the Commission adopts such an exemption, it should determine 
which applicants should qualify? Would it be sufficient, for example, 
to simply require applicants to certify that there are no alternatives 
to POTS service in their geographic location?
    53. Above we ask whether we should adopt different voice phase-out 
dates for individual schools or libraries, such as within one year 
after they have the high-capacity broadband that meets the goals 
established in this proceeding. Should we adopt this approach for rural 
schools and libraries, and require that for rural entities to qualify 
for an exemption from phase-out, they do not have the high-capacity 
broadband meeting the goals laid out in this proceeding? Should waivers 
or exemptions for those applicants in areas where VoIP is not available 
also be available for those applicants that can upgrade to VoIP but 
choose not to for financial or other reasons? Are there other types of 
schools and libraries that have unique needs meriting continued E-rate 
support for voice services at current levels? How should we define the 
areas or circumstances where support for voice service would continue 
to be supported under an alternative like this?

D. Easing Administrative Burdens

    54. We seek comment on how best to reduce the administrative burden 
on E-rate applicants, regardless of which approach to supporting voice 
services the Commission takes in modernizing the E-rate program. If, 
for example, the Commission decides to phase down or phase out support 
for voice services, will calculating the correct amount of support due 
to applicants be administratively challenging? If so, what can the 
Commission do to ease the administrative burdens? Commenters have 
generally supported easing the burdens for multi-year contracts for 
recurring services, is that something that would be particularly useful 
in this context? Likewise, if the Commission moves to supporting voice 
using a per-user cost for VoIP services as a benchmark, are there 
administrative challenges the Commission should take into account, and 
are there things the Commission can do to ease the administrative 
burden of such an approach on schools and libraries?

III. Demonstration Projects

    55. In the E-rate Modernization NPRM, the Commission sought comment 
on innovative approaches to encouraging efficiency in the E-rate 
program. Many commenters offered examples for how new approaches to 
planning and procuring services might be either (or both) more cost 
effective or more administratively efficient. At the same time, many 
commenters argued that local needs vary and local decision making has 
been one of the hallmarks of the E-rate program. As the Commission 
considers how best to meet the high-capacity connectivity needs of 
schools and libraries cost effectively, commenters supported the use of 
E-rate funds for projects of broad relevance to help identify and 
accelerate the development of best practices for achieving cost savings 
and innovation within E-rate.
    56. We therefore now seek further comment on providing limited 
funding for well-defined, time-limited demonstration projects aimed at 
identifying and testing different approaches to meeting schools' and 
libraries' connectivity needs. Like the recently adopted Technology 
Transitions Order that solicited a broad set of experiments in order to 
develop facts and data, such projects would be set up as proof of 
concept experiments on innovative approaches to maximizing cost-
efficient use of E-rate funding. These projects, although experimental, 
would provide needed services and equipment to E-rate eligible 
participants. We seek comment on funding a number of different types of 
demonstration projects based on Commission and stakeholder proposals. 
We also invite suggestions of other types of projects the Commission 
should conduct, the amount that should spend on any individual project, 
and the total budget for such projects.
    57. As one example, the Commission sought comment on whether to 
allow experimentation in bulk purchasing of E-rate eligible services 
and equipment. We received a mixed reaction in response to the E-rate 
Modernization NPRM on whether the Commission should create a formal 
bulk buying program. While commenters expressed concern about the 
potential rigidity of requiring applicants to use such a program, they 
supported promoting the use of statewide or consortia bulk purchasing. 
We therefore seek further comment and proposals on how to conduct one 
or more initial experiments with bulk purchasing. A structured bulk 
buying demonstration project could test the cost-effectiveness and 
flexibility of such a program using just a small number of services or 
products, and would have the benefit of providing applicants with 
products and services they need as part of their broadband networks. 
For example, stakeholders could propose a project to gather data on 
bulk purchasing by a state, consortia, or regional research and 
education network for certain internal connection components, 
commercial internet access, or a VoIP solution that would replace 
traditional voice service. We seek comment on these types of projects 
and how to foster innovative and scalable practices.
    58. A demonstration project could also provide an opportunity to 
gather

[[Page 13606]]

information and test proposals for implementation of a technical 
assistance program. For example, a demonstration project could test the 
effectiveness of hiring technical assistance experts to assist in 
network design or technical planning in a small number of districts, 
schools, and/or libraries whose costs fall outside a standard range for 
E-rate applicants. Another could test the use of consultants who are 
experts on connectivity costs and are un-affiliated with broadband 
providers.
    59. We also seek comment on other proposals in the record. The 
American Library Association, for example, suggested a pilot program 
aimed at temporarily increasing the discount level for targeted 
libraries, prioritizing based on public-private partnerships, and 
providing technical assistance in order to ``catalyze innovation'' in 
advancing library services. If we were to fund such a project, how much 
funding should we provide and over what period of time? What sort of 
support could we expect the private sector to bring to such a project? 
Are there particular needs of libraries that we should focus on? What 
types of technical assistance would be particularly valuable, and to 
what end? What data should the Commission collect, as part of such a 
pilot program, and how should we use that data to measure progress 
towards success? Are there ways in which libraries' connectivity needs 
differ from those of schools? Are there other types of demonstration 
projects aimed at addressing the unique needs of libraries that the 
Commission should fund? With respect to all proposed demonstration 
projects, we request commenters be as specific as possible about the 
goals, the amount of funding, the process for selecting participants, 
the data to be collected and the timeline for any projects they propose 
or support.
    60. Commenters also contributed other ideas, such as a pilot 
program to link last-mile infrastructure to BTOP funded networks, 
experiments on the use of consortia efforts, or projects that target 
rural areas. Another proposed a project to implement bulk purchasing of 
a platform to facilitate affordable access to advanced information 
services. We seek comment on these proposals and how such projects 
could be structured to gather data and evaluate success. These examples 
are not meant to be exhaustive. We welcome further ideas from 
stakeholders on the types of demonstration projects that can help 
identify cost efficiencies and drive down the cost of E-rate supported 
services. Are there other approaches used by enterprise customers to 
drive down their broadband costs that the Commission should experiment 
with in the E-rate program?
    61. We seek specific comment on the process for selecting such 
proposals. In determining projects, should the Commission focus on 
experiments that examine cost impacts or consider other types of 
criteria, such as innovativeness? How should the Commission prioritize 
project funding? Should the length of any given demonstration project 
be limited to a single year? Should they be tied to specific E-rate 
funding years? Should the Commission select different kinds of projects 
to evaluate the different models' effects on driving down costs of E-
rate eligible services? These projects should be designed to help the 
Commission gather data needed to inform decision-making and make future 
reforms. Therefore, we seek detailed comment on the data goals and how 
to evaluate the projects during and after selection. We also seek 
further ideas on how to share information and empower applicants to 
replicate project successes across the country.
    62. Numerous commenters have confirmed the importance of 
streamlining the administration of the E-rate program. Therefore, as we 
consider demonstration projects, we also invite experiments that find 
ways to reduce the administrative burden on E-rate applicants.

IV. Procedural Matters

A. Regulatory Flexibility Analysis

    63. The E-rate Modernization NPRM included an Initial Regulatory 
Flexibility Analysis (IRFA) pursuant to 5 U.S.C. 603, exploring the 
potential impact on small entities of the Commission's proposals. We 
invite parties to file comments on the IRFA in light of this additional 
document.

B. Paperwork Reduction Act Analysis

    64. This document seeks comment on a potential new or revised 
information collection requirement. If the Commission adopts any new or 
revised information collection requirement, the Commission will publish 
a separate document in the Federal Register inviting the public to 
comment on the requirement, as required by the Paperwork Reduction Act 
of 1995, Public Law 104-13 (44 U.S.C. 3501-3520). In addition, pursuant 
to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, 
44 U.S.C. 3506(c)(4), the Commission seeks specific comment on how it 
might ``further reduce the information collection burden for small 
business concerns with fewer than 25 employees.''

C. Ex Parte Presentations

    65. This matter shall be treated as a ``permit-but-disclose'' 
proceeding in accordance with the Commission's ex parte rules. 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 Sec.  1.1206(b). In proceedings governed 
by rule Sec.  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.

D. Comment Filing Procedures

    66. Comments and Replies. We invite comment on the issues and 
questions set forth in this document and IRFA contained herein. 
Pursuant to Sec. Sec.  1.415 and 1.419 of the Commission's rules, 47 
CFR 1.415, 1.419, interested parties may file comments on this document 
by April 7, 2014 and may file reply comments by April 21, 2014. All 
filings related to this document shall refer to WC Docket No. 13-184. 
Comments may be filed using the Commission's

[[Page 13607]]

Electronic Comment Filing System (ECFS) or by filing paper copies. See 
Electronic Filing of Documents in Rulemaking Proceedings, 63 FR 24121, 
May 1, 1998.
     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.
     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 12th 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.
     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 12th Street SW., Washington, DC 20554.
    67. People with Disabilities. To request materials in accessible 
formats for people with disabilities (braille, large print, electronic 
files, audio format), send an email to [email protected] or call the 
Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-
418-0432 (tty).
    68. In addition, one copy of each paper filing must be sent to each 
of the following: (1) the Commission's duplicating contractor, Best 
Copy and Printing, Inc., 445 12th Street SW., Room CY-B402, Washington, 
DC 20554; Web site: www.bcpiweb.com; phone: (800) 378-3160; (2) Lisa 
Hone, Telecommunications Access Policy Division, Wireline Competition 
Bureau, 445 12th Street SW., Room 6-A326, Washington, DC 20554; email: 
[email protected]; and (3) Charles Tyler, Telecommunications Access 
Policy Division, Wireline Competition Bureau, 445 12th Street SW., Room 
5-A452, Washington, DC 20554; email: [email protected].
    69. Filing and comments are also available for public inspection 
and copying during regular business hours at the FCC Reference 
Information Center, Portals II, 445 12th Street SW., Room CY-A257, 
Washington, DC 20554. Copies may also be purchased from the 
Commission's duplicating contractor, BCPI, 445 12th Street SW., Room 
CY-B402, Washington, DC 20554. Customers may contact BCPI through its 
Web site: www.bcpi.com, by email at [email protected], by telephone at 
(202) 488-5300 or (800) 378-3160 or by facsimile at (202) 488-5563.
    70. Comments and reply comments must include a short and concise 
summary of the substantive arguments raised in the pleading. Comments 
and reply comments must also comply with Sec.  1.49 and all other 
applicable sections of the Commission's rules. We direct all interested 
parties to include the name of the filing party and the date of the 
filing on each page of their comments and reply comments. All parties 
are encouraged to utilize a table of contents, regardless of the length 
of their submission. We also strongly encourage parties to track the 
organization set forth in this document in order to facilitate our 
internal review process.
    71. For additional information on this proceeding, contact James 
Bachtell at (202) 418-2694 or Regina Brown at (202) 418-0792 in the 
Telecommunications Access Policy Division, Wireline Competition Bureau.

Federal Communications Commission.
Trent B. Harkrader,
Associate Bureau Chief, Wireline Competition Bureau.
[FR Doc. 2014-05433 Filed 3-10-14; 8:45 am]
BILLING CODE 6712-01-P