The New E-RateJanuary 2015

The basics

• FCC completed two-part rulemaking in December• The rulemakings do the following:

– Set bandwidth goals– Focus funding on broadband by eliminating

nonbroadband services and changing the funding structure

– Establish incentives to build broadband external connections

– Raise the annual funding cap

• Most rule changes go into effect on July 1, 2015– Most external connections rules go into effect in 2016

or later

New bandwidth goals

• Schools– 100 mbps/1000 students in the short

term– 1 gbps/1000 users in long term

• Libraries– fewer than 50,000 served: 100 mbps–more than 50,000 served: 1 gbps

Focusing funding on broadband

• P1 and P2 become C1 and C2• C1 remains a priority, but C2

guaranteed at least $1 billion each year• C1 service changes

– Nonbroadband services eliminated immediately (email, web hosting, paging)

– Voice phased out over next four years– Internet access remains eligible

Focusing funding on broadband

• C1 rule changes aimed at encouraging external connections builds

– Suspend amortization rules for four years– Equalize lit/dark fiber treatment– Allow applicants self-provision– Establish E-Rate matches (up to 10

percent) of state investments– Establish high cost carrier obligations to

serve schools/libraries in footprint

Focusing funding on broadband

• C2 rule changes– New formula

• Schools: – $150 per student/5 years– $9,200 floor

• Libraries: – $2.40 per square foot for most– $5.00 per square foot for urban libraries

– New matrix: 85 percent now top discount rate– New average: Schools must use districtwide

average

Focusing funding on broadband

• C2 service changes

– Basic maintenance only eligible to support services on the ESL, not voice services

– Services and equipment not needed to deliver broadband (circuit cards, storage devices, video components, etc.) ineligible

–Managed Wi-Fi and caching now eligible

Raising the cap

• E-Rate’s annual cap increased by $1.5 billion; now $3.9 billion annually

• Cap for 2015 and 2016 could actually be as high as $4.9 billion because of rollover

• Caveat: Commission will collect only as much as needed based on demand

Other important changes

• Pricing transparency: USAC will make costs of services and equipment purchased by schools and libraries publicly available

• Consortia priority processing• Simplified application process for multi-year

contracts• Eliminating tech plans for C2 • Rural definition change: Located in area with

U.S. Census population of less than 25,000