On September 28, 2010, the Federal Communications Commission (FCC) released a Universal Service Fund (USF) order updating its existing Schools and Libraries Universal Service (E-rate) program.[1] The following is a summary of the most significant changes.

E-Rate Applicants May Lease Dark Fiber

  • Eligible schools and libraries may receive support for the lease of fiber--whether lit or dark--as a priority one service, from any entity, including telecommunications carriers and non-telecommunications carriers. Previously, Commission rules limited schools and libraries to services offered by telecommunications carriers.
  • Dark fiber must be lit immediately and used to meet broadband needs. Applicants may not acquire unneeded capacity or warehouse dark fiber for future use.
  • Because dark fiber has not been classified as either a telecommunications service or Internet access, the Commission will include it in the miscellaneous section of the eligible services list (ESL).
  • Maintenance and installation costs of fiber are eligible costs.
  • The modulating electronics needed to light dark fiber are not an eligible cost. Neither are special construction charges incurred to connect applicants' facilities to an off-premises fiber network.

Commission Adopts Limited Trial to Investigate Offsite Wireless Access

  • The Wireline Bureau will implement an "E-rate Deployed Ubiquitously (EDU) 2011 Pilot Program" to determine if wireless off-premises connectivity services should be eligible for E-rate support.
  • The program will make $10 million available for funding year 2011.
  • The FCC expects that most proposals will provide connectivity for limited purposes (e.g., downloading digital textbooks), not for providing broad Internet access.
  • Applications. Applicants must submit FCC Form 471 to USAC during the regular application window. The FCC waives the E-rate competitive bidding rules for applicants that already have legally binding agreements for off-premises service. Support will not cover the portable devices or equipment. Applicants must have implemented or be implementing an off-premise connectivity program to students or library patrons.
  • Selection. The FCC expects that, if the Bureau awards funding, there will be only a handful of selected applicants. Selected applicants will receive the identified connectivity support and will not be required to cost-allocate the dollar amount of support for the time that portable devices are not at the school or library. In its review, the Bureau will consider: the impact E-rate support will have; the number of students or library patrons served; the cost; the poverty level and current discount rate of the school or library; the financial need of the school or library; the location and topography; and the committed school or library resources available.

Community Use of Schools E-Rate Facilities and Services

  • Schools may open their E-rate facilities to the public when classes are not in session.
  • Community use must be incidental and not increase overall costs to the E-rate program.
  • Schools may not charge for the use, but may recover costs associated with permitting community access, such as additional electricity, security and heating costs.

Streamlining E-Rate Administrative Requirements

  • The E-rate technology plan requirements are eliminated for priority one applications, but not for priority two applications.
  • The FCC retains the competitive bidding and waiting period obligations, but simplifies the FCC Form 470 process for all participants.
  • Schools and libraries may dispose of E-rate equipment for payment or other consideration, but no sooner than five years after the equipment is installed.

Waste, Fraud and Abuse

  • The E-rate gift rules are made consistent with federal agency gift rules, which permit only certain de minimis gifts.
  • The new gift rules should not discourage companies from making charitable donations to E-rate eligible entities in the support of schools--including, for example, literacy programs, scholarships and capital improvements--as long as such contributions are not directly or indirectly related to E-rate procurement activities or decisions.

Addition to Eligible Service List

  • Dark fiber is added to the ESL.
  • Web hosting is retained as an eligible priority one service.
  • The following services are not added to the ESL: (1) software applications used with wireless devices; (2) enhanced firewalls; (3) anti-virus and anti-spam software; (4) online backup solutions; and (5) unbundled warranties.

Other New Rules

  • The E-rate program funding cap (currently $2.25 billion) will be indexed to the rate of inflation on a going-forward basis, beginning in the current funding year.
  • Support will be available to the residential portion of schools that serve students with special circumstances