Closing the Homework Gap—New $7B Temporary Program an Important First Step

Davis Wright Tremaine LLP

Congress created the E-rate program more than 20 years ago in order to provide internet connectivity to the nation's libraries and schools, but educators and industry have complained for years that it is inadequate to close the homework gap. Calls for reform intensified during COVID-19, and Congress and the Federal Communications Commission (FCC) have now created a new $7.17 billion program to specifically address remote connectivity for students and library patrons.

This new program, the Emergency Connectivity Fund (ECF), will provide funding for internet access services and devices like laptops and Wi-Fi hotspots both for elementary and secondary students and for library patrons. Despite the fact that the existing E-rate program has been the principal funding mechanism that most of the country's schools use in providing connectivity to K-12 students, the FCC has historically interpreted the law establishing the E-rate program to prohibit using E-rate funds for connectivity other than to the school or library itself.

A new law from Congress (tit. VII, sec. 7402 of the American Rescue Plan Act), however, specifically allocated funding for a new FCC program to support remote (primarily at-home) connectivity. On May 11, 2021, the FCC released an Order creating rules for the new program and providing details regarding the types of services, devices, recipients, and service providers that are eligible to receive funding. Below, we summarize some of the key aspects of this new program and highlight some ways in which it differs from the existing E-rate program.

When Will the ECF Program Start and What Periods Does it Cover?

The FCC states in the Order that its contractor, USAC, will open the first filing window for the ECF program "as soon as practicable"—within days or weeks, we expect—and that that window will remain open for a 45-day period. The first window will allow schools and libraries to apply for funding for purchases of eligible services and equipment made between July 1, 2021, and June 30, 2022.

If funding in the first round appears to run far short of demand, the FCC may consider opening an additional window for further prospective funding. If funds remain after processing requests for prospective funding, the FCC will open a further application window to retroactively fund purchases made between March 1, 2020, and June 30, 2021.

When Will the ECF Program End?

The ECF program will end no sooner than one year after the U.S. Secretary of Health and Human Services determines that the COVID-19 emergency period is over. In particular, it will end on the first June 30 that occurs at least one year after the Secretary has declared that the emergency has ended.

Is ECF Funding Only for Remote Connectivity?

The ECF is focused on supporting remote learning. Therefore, ECF funding may not be used to fund devices or services to be used solely at a school or library during the COVID-19 emergency, although funded devices and services may also be used at a school or library.

Otherwise, students, school staff, and library patrons may use ECF-supported devices and services at off-campus locations including the homes of students, school staff, and library patrons; community centers; churches; and any other off-campus locations where they are engaged in remote learning activities. Schools and libraries can purchase Wi-Fi hotspots for use on bookmobiles and buses.

Is the Use of ECF-Funded Services and Devices Limited to Educational Purposes?

Schools and libraries must use eligible equipment and services supported by ECF primarily for educational purposes—defined as activities that are integral, immediate, and proximate to the education of students in the case of a school, and activities that are integral, immediate, and proximate to the provision of library services to library patrons in the case of a library.

Libraries must provide patrons a copy of an acceptable use policy including certain disclosures for ECF-supported services and devices, and both schools and libraries must have processes to ensure—and retain documentation that demonstrates—that devices and services are used by credentialed students, school staff and library patrons who would otherwise lack access to connected devices or broadband connections sufficient to facilitate remote learning during the pandemic.

Which Services Are Eligible?

ECF program funding may be used to purchase commercially available fixed or mobile broadband internet access, including those made available through bulk purchases by a school or library, when such services will not be used solely at the school or library during the COVID-19 emergency. ECF-supported services include broadband provided via:

  • 1. Cable modem;
  • 2. DSL;
  • 3. Lit fiber solutions (dark fiber is not eligible);
  • 4. Satellite; and
  • 5. Wireless, whether fixed, microwave, or cellular mobile.

There are no minimum service requirements (e.g., speed requirements) for such services. In any area in which such services are not commercially available, it may under certain circumstances be possible to construct new networks or implement a so-called datacasting solution. Videoconferencing and voice services are not eligible.

More information about eligible services as well as the circumstances under which new construction and datacasting are eligible can be found in the ECF Eligible Services List found at Appendix B of the Order.

How Much Funding Is Available for Services?

The ECF program does not include explicit caps on prices for internet connectivity services (unlike the program's approach to devices, discussed below). The new FCC rules only provide that the price for such services must be "reasonable"1 and indicate that the FCC's Wireline Competition Bureau will provide guidance to the program's administrator, USAC, regarding how to determine what is reasonable in this context.

Assuming that the price of the requested service is deemed reasonable, the ECF program will reimburse 100 percent of the purchase price. Installation, activation, and configuration charges, as well as taxes, shipping charges and other "reasonable fees" are eligible. Applicants for funding and their service providers should carefully review the list of administrative and other costs and fees that are ineligible in the Eligible Services List.

Which Devices Are Eligible?

The new ECF rules limit funding to the following types of connected devices:

  • 1. Wi-Fi hotspots;
  • 2. Modems, including air-cards that connect end-user devices to the Internet;
  • 3. Routers;
  • 4. Devices that combine a modem and router; and
  • 5. Connected laptops and tablets.

Smartphones, desktop computers, and videoconferencing devices are not eligible. Components such as cords and chargers that are included by the manufacturer with any eligible device and are necessary for the device to work are eligible.

More information about eligible devices may be found in the Eligible Services List.

How Much Funding Is Available for Devices?

The price for any otherwise eligible device must be "reasonable"—as with the price for services. But unlike the rule for services, ECF support for connected devices is capped at the amounts below unless a waiver is obtained to meet the needs of a student, school staff person, or library patron with disabilities.

  • $250 for Wi-Fi hotspots; and
  • $400 for all other eligible devices.

Again, assuming that the price of the requested device is deemed reasonable, the ECF program will reimburse 100 percent of the purchase price up to the applicable cap (or any amount approved in a waiver).

Are Past Purchases Eligible?

Past purchases of services or devices may be covered by the ECF funding but only if (i) the FCC at some point in the future determines that there are funds remaining in the program and (ii) opens a filing window specifically for previously purchased devices and services, which the FCC will require to have been purchased on or after March 1, 2020.

What Are the Per-Location or Per-User Limits?

Fixed broadband services (such as DSL or cable broadband) are limited to one ECF-supported connection per location. In the case of a student living in an apartment, the limit would apply to each individual apartment rather than the entire apartment building.

For non-fixed services (such as a wireless service) as well as connected devices, the limit is on a per-user basis. ECF program support is limited to one connection and one device per eligible student, school staff member, or library patron.

Schools and libraries receiving ECF support must document the students, staff members, and patrons served at each location.

Which Schools and Libraries Are Eligible?

All schools and libraries that are eligible to participate in the E-rate program may apply for ECF funding. Importantly, applicants need not actually participate in the E-rate program.

How Does a School or Library Apply for Funding?

Schools and libraries will use the FCC Form 471 Service Provider to seek support for eligible equipment and services. If demand outstrips available funds during any application window, funds will be prioritized based on an applicant's E-rate discount.

Rural schools and libraries will be eligible to receive their standard E-rate discount plus 5 percent. Urban schools and libraries will follow the E-rate discount matrix as written for category one services based on their NSLP rate.

Unlike the E-rate program, the ECF rules do not impose a competitive bidding requirement, but such a requirement may be imposed by local, state, or Tribal procurement rules, or by the school or library's own procurement processes and rules. If the school or library is subject to any of these local, state, Tribal, or internal rules, they must follow those rules—including any requirement to conduct a competitive bidding process with respect to both previous purchase and future purchase and contracts.

Which Vendors and Service Providers Are Eligible to Participate?

As with E-rate, service providers do not need to be eligible telecommunications carriers (ETCs) and are not required to be participants in the E-rate program. They are, however, required to register with the System for Award Management (SAM) at SAM.gov. (The Order does not specify if providers and vendors will need a Service Provider Identification Number from USAC.)

Moreover, consistent with Universal Service Fund programs, ECF support cannot be used to purchase, rent, lease, or otherwise obtain any covered communications equipment or service from a company identified as posing a national security threat.

Vendors and providers will also be subject to the FCC's Red Light rule regarding delinquent regulatory fees and, therefore, must satisfy any debts owed to the FCC before any application for ECF is processed. Payments will not be made to entities on the Treasury Do Not Pay (DNP) list.

What Do Participants Need to File to Get Paid?

ECF will use two forms from the E-rate program—FCC Form 474 (Service Provider Invoicing, or SPI, form) and FCC Form 472 (Billed Entity Applicant Reimbursement, or BEAR, form)—to process payments to ECF recipients. Service providers and vendors may accept the responsibility of invoicing USAC for ECF support but are not obligated to do so.

Schools and libraries must identify in their funding applications whether they or the service provider/vendor will invoice USAC. If the service provider or vendor will handle invoicing USAC, the school or library must submit a copy of the agreement to do so with the funding application. Costs incurred by consultants or service providers to prepare invoices for applicants are not reimbursable.

Eligible schools and libraries who choose to invoice USAC directly may do so prior to making payment in full to the service provider or vendor but must remit payment to the provider or vendor and verification of that payment to USAC within 30 days after receipt of the requested ECF support. Invoices from the provider or vendor detailing the items purchased and supporting the amounts requested in the application must be submitted along with reimbursement requests. Invoices for reimbursement may be submitted as early as 15 days after the announcement of the first wave of commitments and up to 60 days from the later of the issuance of a Funding Commitment Decision Letter (FCDL), any revised FCDL, any commitment change or successful appeal of a prior FCDL, or the service delivery date.

Schools, libraries, and service providers/vendors must certify on invoicing forms that reimbursement is not being requested for equipment or services that are not being used. Participants need to take reasonable actions to monitor and track usage, which may include requiring their service providers to provide monthly reports or other information on data use.

USAC will review invoices for services and devices, although the precise timeframes and processes for that review have not yet been determined.

Is the ECF Program Just Like E-rate?

Although the ECF program is similar to and will leverage many aspects of the E-rate program (such as some of its forms), the ECF program is not technically a Universal Service Fund program. Compliance is therefore covered by a different set of rules which vary in some instances from the E-rate program rules.

The two biggest differences are that the ECF program will fund off-campus use without the need to "cost allocate" (reduce) the funding request; and the ECF program will fund end-user devices, such as laptops and tablets. Neither is eligible for E-rate funding.

Another crucial difference is that the ECF program itself does not require competitive bidding to award a contract to the service provider or vendor—although like E-rate it does require that schools and libraries adhere to any local, state, Tribal, or internal competitive bidding requirements. But similar to E-rate, ECF support cannot be used to purchase, rent, lease, or otherwise obtain any covered communications equipment or service from a company identified as posing a national security threat.

Other Important ECF Rules

  • Gift Limits: The FCC adopted the same, very strict limitations on gifts between service providers/vendors and schools and libraries that participate or may participate in the ECF program. The maximum gift permitted is generally $20 per item and $50 total annually, including items such as meals.

These restrictions apply to the respective entity's employees, officers, representatives, agents, independent contractors, and individuals who are on the entity's governing boards. That being said, there is a temporary exception for the donation of broadband connections, devices, networking equipment, or other things of value that are directly related to addressing the pandemic-related needs of students, school staff, and library patrons through June 30, 2022.

  • No Double Dipping: Schools and libraries may not seek ECF funding for devices or services already reimbursed through other federal COVID-19 relief programs like the CARES Act, Emergency Broadband Benefit Program, and other provisions of the American Rescue Plan, or through state programs specifically earmarked for eligible equipment and services or similarly targeted gifts. But schools and libraries may seek reimbursement for the portion of the costs of eligible equipment and services not covered through other funding.
  • Device Inventory Obligation: Recipients of ECF funding must track and document the devices and other equipment for which they receive funding, including documenting information about missing, lost, or damaged equipment.
  • Document Retention Period: Participants must retain records related to their participation in the ECF Program that demonstrate compliance with all ECF Program rules, for at least 10 years from the last date of service or delivery of equipment.

DWT is closely following the development of the new ECF program and has decades of experience in advising clients on these types of programs. 

FOOTNOTE

1  47 CFR 54.1707

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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