Dec 052012
 

The FCC released a number of decisions on E-Rate appeals yesterday. We’ve got an interesting case involving Net56, good news for Fort Worth Independent School District, and not so good news for Sprint. The highlights of each are included below.

1. Net56, Inc. (DA 12-1951). In a decision that largely mirrors a previous Net56 ruling (see DA 12-1792), the FCC found it acceptable for an applicant to make payments directly to a financial services company for eligible and ineligible services, and then for the financial services company to pay Net56 for the eligible services. The FCC also concluded that Net56’s centralized solution, whereby most of the equipment was housed off-site at Net56’s location, was cost effective. In so finding, the FCC noted that USAC failed to account for all of the relevant costs (e.g., licenses, additional bandwidth, and training) when comparing Net56’s leased solution to a premises-based solution. Finally – and though the issue was never raised by USAC – the FCC found that Net56 complied with the Lowest Corresponding Price (LCP) rule. To make this showing, Net56 had provided examples of prices for its commercial customers and compared them to the prices charged the applicant.

2. Fort Worth Independent School District (DA 12-1937). Here, the FCC relied upon documentation provided on appeal to find that Fort Worth had received the recurring services and switches for which it billed USAC. The fact that Fort Worth later replaced the switches it had purchased with ones that had greater capacity was deemed acceptable because, at the time of the replacement, the Commission’s rules permitted applicants to upgrade their equipment on a yearly basis.

3. Sprint-Florida, Inc. (DA 12-1938). In this decision dating back to Funding Year 1999, the FCC ordered Sprint to reimburse USAC for funds disbursed in violation of Commission rules. The genesis of the dispute was a 2002 audit by USAC that alleged Sprint had failed to deliver or install many of the funded PBX components. Sprint subsequently conducted an internal audit and, despite identifying various billing errors on its own, disputed USAC’s findings on multiple grounds. In the end, the FCC rejected Sprint’s arguments, finding that USAC appropriately relied upon the applicant’s physical inventory documentation (along with its own site visits) to determine which equipment was in fact installed. The FCC found Sprint’s records to be “less than reliable” given Sprint’s previous dependence upon installation documentation that was admittedly incorrect.

For more information about these decisions – or any of the issues raised therein – please contact the Troy Law Group (www.troylawgroup.com).

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