In its recent Sixth Report and Order (Order), the FCC has adopted significant changes to the Universal Service Schools and Libraries (ERate) Program, as well as to the E-Rate Program’s Eligible Services List (ESL). These changes become effective 30 days after publication in the Federal Register.  

FCC ADDS DARK FIBER TO THE ELIGIBLE SERVICES LIST (ESL) AND ALLOWS NON-TELECOMMUNICATIONS PROVIDERS TO PROVIDE LEASED FIBER TO SCHOOLS AND LIBRARIES

After removing dark fiber from the ESL in 2003, the FCC has now reinstated it as a priority one service eligible for funding year 2011, as either a telecommunications service or an Internet access service. In this decision, the FCC refutes arguments that dark fiber is not a service, but does not make a determination on the service classification of dark fiber. In support of its decision to include dark fiber on the ESL, the FCC cites to its section 254 authority to make “additional services,” above and beyond just telecommunications services, eligible for E-Rate support. To receive E-Rate funding for dark fiber, however, the school or library is required to light the fiber immediately and use the lit fiber for broadband services. Applicants will not receive the funding until the fiber is lit. Applicants are prohibited from using E-Rate funds to purchase and warehouse dark fiber capacity for future use.

Significantly, the FCC is permitting both telecommunications service providers and non-telecommunications service providers to bid on the provision of leased dark and lit fiber to E-Rate applicants. In its decision, the FCC held that section 254 does not prohibit the FCC from allowing non-telecommunications providers, including research and education networks, regional, state and local government entities and networks and utility companies, for example, to participate in the E-Rate program. In discussing its decision to permit non-telecommunication providers to provide leased fiber to ERate applicants, the FCC dismissed arguments that such entities are too inexperienced, more likely to discontinue services, or raise conflicts of interest or financial conflict issues, among others.

FCC STREAMLINES E-RATE REQUIREMENTS: ELIMINATES TECHNOLOGY PLAN REQUIREMENTS FOR PRIORITY ONE SERVICES AND REVISES DEADLINES FOR REQUIRED TECHNOLOGY PLANS

The FCC amended its rules to eliminate the requirement that E-Rate applicants submit technology plans for priority one services. In so doing, the FCC found that most applicants will conduct technology reviews anyway pursuant to separate state and local technology planning requirements, specific funding requirements required for related programs (i.e., DOE’s EETT), or as part of the applicant’s budget and procurement process. The FCC indicated that it believes that simplifying the application process will reduce costs for applicants and encourage increased participation in the E-Rate program.

The FCC still requires applicants for priority two services to submit technology plans, but amended its rules to simplify the technology plan process. For example, where technology plans may expire in the middle of the funding year, the FCC revised its rules to no longer require applicants to provide a completed technology plan that covers the entire upcoming funding year upon filing the FCC Form 470. Thus, applicants can obtain funding under an existing technology plan for the upcoming funding year, but must revise and update the technology plan prior to its expiration.

The FCC also eliminated the requirement that a technology plan be in place prior to the posting of an FCC Form 470 third-party master contract. Rather, an applicant that selects a state master contract simply needs to file its technology plan prior to filing its own FCC Form 470.

FCC PERMITS SCHOOLS AND LIBRARIES TO DISPOSE OF OBSOLETE EQUIPMENT FOR VALUE FIVE YEARS AFTER INSTALLATION

The FCC has revised its rules to now allow schools and libraries to dispose of obsolete E-Rate equipment for monetary consideration or other comparable value, but they must wait five years after installation before doing so. By definition, pursuant to the FCC’s amended rule, E-Rate eligible equipment for E-Rate eligible services is considered obsolete five years after installation. Thereafter, this obsolete equipment may be resold or transferred for consideration. Schools and libraries are still subject to the section 54.513(c) requirements governing transfer of eligible services and equipment, which prohibits the sale or transfer of E-Rate equipment and services for up to three years after purchase.

FCC REVISES RULES TO PERMIT SCHOOLS AND LIBRARIES TO GRANT THE COMMUNITY ACCESS TO E-RATE FUNDED FACILITIES AND SERVICES DURING NON-OPERATING HOURS

Based on current waivers already granted, the FCC has decided to revise permanently its rules to allow schools and libraries to grant the general public access to their E-Rate supported facilities and services when classes are not in session. To do so, however, schools and libraries must follow these conditions:

  • Request only the amount of E-Rate funding necessary for educational purposes for their current student population. They cannot request additional E-Rate funding to provide such access to the community.  
  • Limit community use to non-operating hours and Internet access while on an applicant’s campus.  
  • Provide the use of services and facilities purchased with E-Rate funding to community users free-of-charge. Schools and libraries can, however, assess fees for recovery of costs not subsidized by the E-Rate program, such as computer fees and training fees, as well as electricity, security, and heating costs.  

FCC REVISES ELIGIBLE SERVICES LIST (ESL) AND ESL PUBLICATION PROCESS

As explained above, the FCC has added dark fiber to the ESL and has retained web hosting as an eligible priority one service for funding year 2011. The FCC refused, however, to add the following to the ESL: (1) wireless device software applications; (2) enhanced firewalls and intrusion detection/intrusion prevention devices; (3) antivirus and anti-spam software; (4) online backup solutions; and (5) unbundled warranties. The FCC also revised its rules so that the FCC will publish individual eligible and ineligible services only on the ESL rather than in its rules.  

The FCC also is amending its rules to require USAC to submit proposed changes to the ESL by March 30 of each year, rather than June 30, to provide the FCC and the public with more time to consider such proposals. The FCC did not, however, agree to extend the 60-day ESL release date. While the FCC will continue to publish a public notice seeking comment on proposed changes to the ESL, it eliminated the requirement that the FCC release the final ESL by public notice. This change allows the FCC to release the ESL by an order if needed to provide more detailed information on any revisions made to the ESL.