My wife once said to me, “It’s not how much money you have, its how you spend it!” That sage advice is as relevant for E-rate FY2018 as it is for running a household; understand your requirements and find the right product(s) to meet both your budget and needs. 

Since 1998, E-rate has helped K-12 schools and Public Libraries defray the costs of Internet access, telecommunications and network infrastructure equipment and services. Funding amounts, allocations, categories and even eligible services have shifted and changed in the almost two decades this program has been in place, but one aspect has remained constant – there is a finite pool of money, allocated to two categories of services.

That is why you need to know what is being funded and how you can best access that funding. Here are some interesting tips that you might find helpful.                                        

Steps to E-rate Success

E-rate FY2017 was funded at $3.9B with $1B earmarked for Category Two (C2) services (Internal Connections, Managed Internal Broadband Services, and Basic Maintenance of Internal Connections) and $2.9B allocated to Category One (C1) services (Data Transmission Services and Internet Access, and Voice Services[i])

There are several things to consider in addition to E-rate caps and service funding phase downs when calculating your five year budget request for C2 services.  The formula is straightforward - but can be confusing - so let’s walk it through:

1. Know or calculate your discount rate
2. Know your student population – for the building or district; or the square footage of the library
3. Multiply:

○ Schools: Total student number x $153.47[1] x discount rate
○ Libraries: Total internal square footage x $2.351 x discount rate
○ Rural Libraries: Total internal square footage x $5.121 x discount rate

Your total is the entire amount of money you can request from USAC for C2 services purchases for the next five years!

In order to follow my wife’s advice, start by developing your requirements – if one of the requirements is proprietary to a company, then translate that feature/technology to the industry standard. (For example, if you use Cisco Discovery Protocol, only one company can provide equipment to support your technology.  However, choosing IEEE 802.1AB gives you a vendor neutral protocol that can be used to buy equipment based on the vendors’ identity and capabilities.)

Lessons Learned

The largest university system in the U.S. (California State University system) went through this type of requirements - translation exercise - in 2012. They discovered that if they had not used industry (vendor) neutral protocol, they would have paid $100M more over their 10 year contract.In this case, the marketplace acted as a strong advocate for a wise customer.  Essentially, the CSU system analyzed performance, protocols and port densities that were needed at all campuses, and wrote an open/standards based RFP.  This allowed the entire industry to submit competitive bids, with Alcatel-Lucent Enterprise solutions winning the requirements based RFP (Read Network World’s article). When you analyze the vendor neutral responses, maintenance is one cost delta that clearly stands out:  ALE was an astonishing 6% of Cisco’s proposal for identical service and support.

Table 1 - CSU Bid response details, by Bid Area

Smart about E-rate FY2018-Blog Image

The February 6, 2015 Smart Briefs Newsletter advises “Don't limit your requests to make and model numbers from a specific manufacturer.” Fortunately, E-rate advises all applicants to create a procurement environment like the CSU system, stating: 

“You cannot specify a specific manufacturer’s makes and model numbers in an FCC Form 470 and/or an RFP without adding the words ‘or equivalent.’ After you close your competitive bidding process, you must evaluate ALL bids received, including those providing an equivalent solution”.

The January 22, 2016 Smart Brief is another good resource that shows how to create an RFP or Form 470 that opens your responses to the entire marketplace – saving you money with no compromise on features or performance! Also, here is a helpful glossary of terms that E-rate uses.

For more information on Alcatel-Lucent Enterprise solutions, please visit my Education pages. There, you can review our customer success stories, learn about the products and features that serve our education customers and connect with our sales/business partner community.

[1] FY2017 number – annually adjusted for inflation

[i] Voice Services are phasing down by 20% per year starting in FY2015. For FY2018 it is 0% unless you have > 75% NSLP eligible student population

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About the author

Greg Kovich

Global Sales Lead, Education Vertical

Greg Kovich leads global sales for ALE’s Education vertical.  Greg has overseen or created several Education solutions including “The Fundamentals of Communications” – a vendor neutral course on digital network communications; “Safe Campus” – a solution uniting emergency alerts with first responder collaboration and mass notification; “Secure Campus” – a solution that allows instructors to limit student network access to determined sites; and “Pandemic Education Continuity” – a solution that enables classroom instruction in the event the institution is closed due to health or environmental crisis. 

He is a 1992 graduate of Indiana University with over 20 yrs experience in Information Technology.

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