FCC Continues E-Rate Modernization By Increasing E-Rate Funding Cap

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The Federal Communications Commission (FCC) has adopted a Second Report and Order and Order on Reconsideration that continues its efforts to modernize the schools and libraries universal service support program (E-Rate program). The most high-profile change to the E-Rate program adopted in the order is the decision to permanently raise the E-Rate program’s funding cap by $1.5 billion, which will push annual E-Rate funding over $3.9 billion. Increased E-Rate funding is expected to close a “connectivity gap” in the nation’s schools and libraries by making more funding available to purchase gigabit access services over the next five years. Other E-Rate reforms adopted by the FCC are expected to improve the administration of the E-Rate program and increase options for purchasing high-speed broadband by:

  • Suspending the requirement that applicants seek funding for large up front construction costs over several years, and allowing applicants to pay their share of one-time, up-front construction costs over multiple years;
  • Equalizing the treatment of schools and libraries seeking support for dark fiber with those seeking support for lit fiber;
  • Allowing schools and libraries to build high-speed broadband facilities themselves when that is the most cost-effective option, subject to a number of safeguards;
  • Providing an incentive for state support of last-mile broadband facilities through a match from E-rate of up to 10% of the cost of construction, with special consideration for Tribal schools;
  • Requiring carriers that receive high-cost support to offer high-speed broadband to schools and libraries located in geographic areas receiving those subsidies at rates reasonably comparable to similar services in urban areas; and
  • Increasing the certainty and predictability of funding for Wi-Fi by expanding the five-year budget approach to providing more equitable support for internal connections (Category 2 services) through funding year 2019.
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