The document discusses changes to E-rate program rules expanding access to broadband. Key changes include: - Treating dark and lit fiber equally starting in FY2016. - Requiring applicants seeking dark fiber or self-provisioning to upload RFPs for both dark/self-provisioning and lit service. - Spreading applicant costs of large special construction projects over 4 years if requested in the RFP. - Focusing on cost-effectiveness analysis and total costs over a reasonable timeframe when evaluating lit fiber service vs self-provisioning options.

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Fiber Options
Second E-rate
Modernization Order
Review

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• Investment vs. Reimbursement; Own vs. Rent
• Emphasis on providing additional flexibility for schools
and libraries seeking high-speed broadband
connections.
• Lack of access to broadband, especially in rural areas,
and high cost of those services are major obstacles in
meeting program goals.
• Scalability to bandwidth demand growth
• Provisions take effect from FY 2016 forward.
Overview
Expanding Access to Broadband

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Expanding Access to Broadband
What’s New? Lit Services Special Construction
Applicant
Point #1
High Bandwidth Lit Service
Service Provider Owns
Applicant bids lit service
Applicant
Point #2
Old Rule New Rule
Discount share of special
construction if over $500,000 spread
over 3 years with the last two years
not guaranteed
Discount share of special
construction on approved projects
paid upon verification of service
delivery
Applicant share paid in the first year Applicant share paid over four years
if requested in RFP and accepted by
vendor

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• Beginning FY 2016, ESL treats dark and lit
fiber equally.
• Dark fiber leases allow the purchase of
capacity without the fiber services
transmitting data.
Equalizing Dark and Lit Fiber
Expanding Access to Broadband

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Expanding Access to Broadband
What’s New? Dark Fiber Special Construction
Applicant
Point #1
High Bandwidth Service needed
Applicant desires to compare ownership vs. lit service
Applicant
Point #2
IRU Self build
Indefeasible right to use is like
ownership - a number of strands
between the two points (likely 2 or 4)
over a number of miles for a number of
years (usually 5-20)
Applicant seeks bids on construction of
fiber between the two points. Twelve
(12) strands is reasonable due to
manufacturing costs of fiber. Fiber paid
by E-rate can only be used for E-rate
services.
IRU can be of existing or new build fiber Applicant owns entire fiber system up to
12 strands (cost allocation if over 12
strands)

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• Requirements:
– Applicants soliciting bids for self-construction must
also seek bids for lit fiber service on an FCC Form 470.
– Applicants must compare the cost of lit fiber service
to the total cost of ownership over the life of the for
self-construction option.
– Applicants seeking dark fiber or self-provisioning
must upload an RFP for dark fiber/self-provisioning
and lit service in new the FCC Form 470 system.
IRU or self build of Fiber Networks
Expanding Access to Broadband

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• USAC will focus on verifying the cost effectiveness analysis.
• When you add up the total anticipated costs over a reasonable,
defensible time period, the most cost effective option will be
clear in most cases.
• If close call, consider financial risks and uncertainties associated
with self-provisioning and long term IRUs vs lit fiber service.
Can include those factors in the bid evaluation.
• Would this be the right solution if it was your own money?
Cost Effectiveness
Expanding Access to Broadband

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Self-provisioning: Example A
Aggregation Network
Internet
Entity 1
Entity 2
Entity 3
District/System
Hub
or
CO/PoP
Local
Loop
District/System WAN
Orange lines indicate potential for special construction
Advanced
Networks

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Self-provisioning: Example B
Aggregation
Network
Internet
Entity 1
Entity 2
Entity 3
Local
Loop
District WAN
Advanced
Networks
District/
System
Hub or
CO/PoP
Regional
Hub or
CO/PoP
Orange lines indicate potential for special construction

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Self-provisioning: Example C
Internet
Library or
School
CO or POP
Local
Loop
Orange lines indicate potential for special construction

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Sample timeline for applicants
Special Construction
Timing Activity Comment
Now Self Identify to FCC/USAC Tracking 40+ projects
Now Finalize consortium if consortium
application
Now Begin to develop RFP for lit vs.
dark
Multiple RFPs/ 1 form 470
Due diligence for RFP
November 2015 Issue RFPs, File 470 Manage RFP response
process/Complex so extend period
January 2016 RFP response deadline Complex projects require extended
bidding time
February 2016 Evaluate RFP Make purchase decisions
February 2016 Applicant mini-bids If necessary
February/March 2016 File 471’s