Dive Brief:
- Internet service provider associations lobbied the Federal Communications Commission to exempt sales agents, value-added resellers and dealers from the obligations of an E-Rate consultant. The FCC is accepting comments to inform its proposed rulemaking for the E-Rate Program, which helps schools and libraries afford technology services.
- USTelecom, NCTA and INCOMPAS asked the FCC to allow vendors to compensate channel partners that assist schools and libraries in the E-Rate program as long as they are not managing the actual E-Rate process. The provider organizations joined the Technology Channel Sales Professionals trade association, which also filed a comment calling for agents to be carved out of the consultant category.
- Reply comments are due November 12, and the outcome could decide whether agents keep earning vendor commissions on E-Rate deals, as the FCC looks to increase oversight of third-party consultants in the program.
Dive Insight:
The FCC wants to define a consultant as a non-employee helping an organization participate in the E-Rate program. It wants good reasons why it should exclude channel partners.
“Is there anything unique about the service provider-channel partner relationship and/or how channel partners are compensated that warrants excluding them from our definition?” the commission wrote in its call for comment June 25.
The implications are heavy for agents that broker technology for educational institutions. If they are lumped into the E-Rate consultant category, they will be subject to registration, certification and fee restrictions, INCOMPAS wrote in June. Most importantly, they’ll lose the ability to earn vendor sales commissions.
The FCC intends to close loopholes that previously allowed vendors to unduly influence consultants in the competitive bidding process.
“By establishing a clear definition of a consultant, we seek to provide greater clarity to program participants regarding the individuals subject to the Commission’s consultant-related rules and requirements and the scope of work typically performed by them,” the commission wrote.
The FCC needs to specify the actual conduct it is trying to crack down on, according to the E-Rate Management Professionals Association.
“A person who works for a service provider and also prepares an applicant’s FCC Form 470 or bid evaluation is the conflict the commission’s competitive bidding rules already prohibit,” the trade association for E-Rate consultants wrote in its comment. “The definition should make clear that such a person is a consultant to the applicant for purposes of the certification, and that the certification requires disclosure of the service-provider relationship.”
Agents do not administer the E-Rate process, TCSP Board Chair for TCSP Darcee Nelan said.
“We don't file for the subsidies on behalf of clients,” Nelan told Channel Dive. “We don't get any of the subsidy money, so therefore we are not USAC consultants. We are sales agents of the providers.”
The TCSP hopes to avoid repeating the FCC’s Rural Healthcare program, which banned service providers from paying commissions to any third-party entities helping rural hospitals and clinics. The ruling devastated some technology advisor firms, which make most of their revenue from commissions. The FCC's request for public input on agents is a golden opportunity, TCSP President Bill Power said.
And this time around, the ISPs are rallying in support of agents. USTelecom includes channel vendor heavyweights AT&T, Verizon and Lumen, and NCTA includes Comcast and Charter.
“They are wholeheartedly supportive and advocating the position we're advocating, and I think that's really important,” Power said. “The last time with rural healthcare, we didn't have any real lobbying involvement from the providers, and now we do.”
The window to submit initial comments for the FCC’s proposed rulemaking closed Oct. 13, and reply comments are due Nov. 12.
