Set phasers on VoIP! The modernization of eRate

The new eRate season was filled with many headlines of Fear, Uncertainty and Doubt, or "FUD" as we call it in vendor-land. Vendors and schools are:

  • worried about missing out on funding
  • confused about rule changes
  • concerned about the effects on discount level
  • unclear on the impact that modernization will have on future projects
  • unsure about even when is the right time to file?

One main worry was the FCC aiming their sights on reducing Voice Services funding and eliminating Voice/Video Eligible services altogether. This “Phase down” was feared and would cause havoc with budgets and contractual obligations.

The first year of eRate modernization is at its peak, posting record numbers of applications and submissions. The form 471 window closed later than ever -- April 16th -- (my birthday as it happens), which in turn put a lot of school projects on hold due to the nervous wait for commitment letters.

So after all the twisting and turning to get to this point, can we appraise the reform? Not really -- it’s not over and the wave of funding decisions are still happening. Many schools still need their request approved, while some have already started a revolution in wireless education technology, including the lighting up of more broadband access than ever before. Many will be considering reapplying next year and many more will be fine-tuning their applications in anticipation of 2016 funds.

Standing back for a moment, as a vendor, you have to commend USAC on coping with the pressure of such a significant change to a well-established system. A focused team has delivered a new system that on the whole has been seen as an effective and successful funding initiative, and in directing its attention to Student technology it is mostly welcomed.

Category two funding has also enabled a raft of Wi-Fi and LAN upgrades for many schools -- just in time! It responds to the pressures of: online testing requirements, 1-to-1 ratio programs, and the need for technology to actually make a difference in the teaching environment. This was the right choice and the right platform to embrace digital learning programs countrywide.

The FCC chairman, Tom Wheeler, released a blog after the window closed stating:
"We improved the program's cost-effectiveness, set specific, ambitious goals for the broadband capacity delivered to schools and libraries… and re-purposed funding for Wi-Fi and robust broadband connections capable of supporting cutting-edge, one-to-one digital learning… Work is already underway preparing for next year's introduction of other changes…”

However, there are two areas that Schools should consider looking at:

The first is the real effect of the online ITEM 21 Attachment and its “more than ever” insight in to what a school is buying and how much they are paying. This Open Book commerce will lead to analytical intelligence that can tell USAC, a school, a vendor or a supplier, a lot more than ever before! It will be interesting to see how this new eRate era changes due to this level of visibility. Will schools use it to look at each other’s strategies and pricing?

The second area of uncertainty is the true effect of the VOICE PHASE DOWN. The modernization removed voice and video elements from Category Two. This resulted in the need to find replacement budget to pay for voice trunks etc. The impact is yet to be felt, or even acknowledged, but it’s the newly-introduced 20% reduction YoY of “Category one” eRate funds for any Voice Trunks (long distance, PSTN etc.) service which many see as a major issue that needs to be tackled.

This element of the new eRate means that a lot of schools will have to look for other funding methods for traditional voice services. This topic was the number one conversation we had throughout the 2015 funding window. 

Yet it hasn’t really been raised at the school board level. In fact this issue seems to have not gained any major momentum in the field at all.

Maybe next year’s 40% reduction will be a bit more painful to cover and require real attention. 

To this we did a short research study, using eRepublic and choosing 6 states across the US, we asked a simple question. “How have you changed your school’s district IT strategy to accommodate the phase down in eRate covered voice costs”. The result was a resounding “none/nada/nothing”. Not one of the reports came back with a clear strategy to handle the need for a provision to cover the costs of Voice services after eRate stops paying.

One more serious issue is the number of VoIP vendors who still claim their cloud-based, SIP-based communication solution is 100% eligible (even though it’s already facing phase down funding). Many schools may be led to believe that a VoIP service embedded in a broadband bandwidth offering is 100% eligible. But how can it be when you consider that Funds for Learning just submitted a petition to redact the Voice Phase down and to remove VoIP alternatives from eRate?  Confusion is still out there, and K-12 Voice decisions will be affected. Does this mean that schools are being lulled in to false sense of security?

This issue needs to build more momentum across the schools, and give CIOs clarity and business case data so that they can address it to the greater school governing bodies.

A recent No Jitter article suggested schools do some research:

“Schools have the opportunity to:

  • Assess their telecom trunking models. Traditional PRIs are $200 to $600/month, whereas a SIP trunk costs 25% to 70% less, and as a bonus has better options for redundancy. Some SIP trunk providers leverage ISP bandwidth for transport rather than a dedicated IP circuit. The cost of more Internet bandwidth can still be offset by E-Rate funds. 
  • Determine whether a cloud or on-premises solution makes more sense. 
  • Take a look at unified communications requirements, including mobile distance learning, flipping the classroom, softphones on tablet/Mac/laptop instead of traditional phones, etc. 
  • Investigate other ideas and collect insight."

There are alternatives and cost savings where replacing the legacy trunks with new SIP trunks makes a viable business case. However there are some hidden roadblocks, like how the SIP trunks would require an upgrade/adaption of existing PBX environment, an area also now removed from eRate funding, no longer an eligible service in Category Two.

As a Communication Vendor, we have prepared answers to this Phase Down conundrum, with a Cloud Voice offering linked to SIP trunking. This K-12 friendly solution would not only lower the cost of communications for a school district, but also speed the replacement before the Phase Down makes such a replacement too expensive.

We will have to wait for the problem to gain the impetus that it needs to be seen as an important strategic step for a school district.

Our suggestion is act now. Research it. There are options and additional benefits to the running of a school district (better relationship with parents, faster responses to emergency situations, better collaboration between teachers and other schools). We will be running a K-12 Voice webinar, and releasing a Guide to K-12 Voice evolution in the coming weeks.

It is clear that the eRate system may adapt even further in the next couple of years. (In fact, the request for comments on the 2016 eligible services list is already out.)
The overall acceptance to the program shows that the FCC were right to “reform it and they will come.”

As a vendor, it’s all about ensuring funded schools get perfect installations of the right technology, and unfunded schools get as much help as possible to get that funding elsewhere for today’s infrastructure needs and tomorrow’s teaching success.

We have already started preparation for doing it all again next year!!

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