Wireline Bureau Recommends Commission Retain E-Rate Budget Reforms for Category Two Requests

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The FCC’s Wireline Competition Bureau (WCB) has released a report recommending that the FCC permanently retain its rules establishing five-year budgets that provide set amounts of funding for schools and libraries requesting subsidies for internal connection services through the E-Rate program (also known as the “category two budget” approach).

Prior to 2014, E-Rate funding for category two services was limited such that schools and libraries could only receive funding up to two out of every five years (the “two-in-five” rule”); however, the Commission had replaced these rules with its category two budget approach and established a five-year test period to consider whether its category two budget approach could ensure more broad, equitable, and predictable access to category two funding.  WCB was tasked with monitoring the new five-year budget approach and reporting on its sufficiency and effectiveness.

According to WCB’s report, the category two budget approach was more effective than the two-in-five rule because it: (1) resulted in more category two funding being committed; (2) dispersed category two funds among a larger number of schools and libraries; (3) distributed funds more proportionately among urban and rural schools; and (4) allowed E-Rate funding applicants greater flexibility and predictability to plan network improvements.  WBC did, however, recommend the Commission consider some targeted changes to the approach before moving forward, such as increasing the E-Rate funding floor so more rural libraries could participate.

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