E-Rate Modernization Order
FCC 14-99
Released July 23, 2014
Pamela Jacobs
Iowa E-Rate Coordinator
E-Rate Modernization
Overview
• Focuses funding on broadband TO and INSIDE
schools and libraries
• Sets funding limits for category 2 (i.e. internal
WiFi) funding
• Phases out funding for voice services and
eliminates entirely services like webhosting
• Institutes other measures to ensure cost
effectiveness
E-Rate Modernization
Focuses funding on broadband TO and INSIDE schools
and libraries
• Sets performance goals
– Schools: Internet at 100 MBPS per 1,000 students
short term and 1 GBPS per 1,000 students long
term
– Libraries: Internet at 100 MBPS for pops under
50,000 and 1 GBPS for larger pops
– WAN connectivity “scalable” to 10 GBPS
E-Rate Modernization
Focuses funding on broadband TO and INSIDE schools
and libraries
• New category designations (no more P1/P2)
– Category 1: Services that enable broadband to
the school /library
– Category 2: Services and goods that enable
broadband inside the school/library
Category 1 is funded first and remaining funds go to
category 2.
E-Rate Modernization
Focuses funding on broadband TO and INSIDE schools
and libraries
• Funding
– “Cap” remains at $2.25 billion (plus inflation post
2011)
– Category 1 is funded first for all discount levels
– $1 billion additional funding targeted for category
2 for each of two funding years (2015 and 2016)
– What is NOT yet clear is whether the $1 billion
becomes part of the “cap.”
E-Rate Modernization
Focuses funding on broadband TO and INSIDE schools
and libraries
• Discount calculations
– Discounts are calculated at the district level for
both C1 and C2
• # eligible for NSLP district-wide divided by # students
district-wide
• Discount matrix for C1 will then be 90%, 80%, 70%, etc
with no discounts such as 63%
• Discount matrix for C2 is similar except max. is 85% (all
other discount levels at 70%, 60%, etc)
E-Rate Modernization
Focuses funding on broadband TO and INSIDE schools and
libraries
• Discount calculations (cont).
– Urban/Rural classifications have changed
– Relies on 2010 census data
– “Urban” will be those district with majority of schools
in “urbanized area” or “urban cluster”
• Appears that more Iowa districts will be “urban” than in
previous years
– District urban/rural will reflect status of majority of
schools (if equal number of schools are urban and
rural, then the district is “urban”)
Category 1 Discount Matrix
Percent of
Eligible Students
Less than 1%
1% - 19%
20% - 34%
35% - 49%
50% -74%
75% -100%
Urban
Rural
20%
40%
50%
60%
80%
90%
25%
50%
60%
70%
80%
90%
Category 2 Discount Matrix
Percent of
Eligible Students
Less than 1%
1% - 19%
20% - 34%
35% - 49%
50% -74%
75% -100%
Urban
Rural
20%
40%
50%
60%
80%
85%
25%
50%
60%
70%
80%
85%
E-Rate Modernization
Other measures to ensure cost effectiveness
Community Eligibility Provision (CEP)
• Districts and schools participating in CEP will
determine their discount percentage by using the
same approach as that for NSLP eligibility under
CEP (i.e. number of direct certified children times
the CEP multiplier-presently 1.6-not to exceed
100% student eligibility)
• If applicant adjusts calculation of CEP, change
must also apply to E-rate discount
E-Rate Modernization
Focuses funding on broadband TO and INSIDE schools and
libraries
• Eligible Services List: Category 1 (previously called priority 1)
– Broadband services including Internet access and digital
transmission service (digital data circuits)
– Broadband services also include “the telecommunications
component of a distance learning capability, video,
interactive television, and video conferencing”
– All eligible C1 services will be merged into one category
“Eligible data transmission and Internet access”
E-Rate Modernization
Focuses funding on broadband TO and INSIDE schools
and libraries
• Ineligible starting in funding year 2015
– Category 1: webhosting, voicemail, e-mail,
paging, directory assistance charges, text
messaging, custom calling services, direct inward
dialing, 900/976 call blocking, and inside wire
maintenance plans (grouped as “Telephone
Components” in past ESLs)
E-Rate Modernization
Focuses funding on broadband TO and INSIDE schools
and libraries
• Likely ineligible starting in funding year 2015
– Category 1: Data cards: “E-rate funding for individual data plans or
air cards for individual users is not cost effective when users of
those services can already access the Internet through internal
wireless broadband networks on wireless-enabled devices
without the help of stand-alone data plans or air cards.”
– In other words, any request for wireless data via air cards will
be subject to intense scrutiny in PIA and will denied if deemed
duplicative service.
E-Rate Modernization
Phases out funding for voice services and
eliminates entirely services like webhosting
• Eligible Services List (Category 1)
– Voice service phase out (starts in 2015)
• Applies to ALL eligible voice service: local phone
service, long distance phone service, plain old
telephone (POTS), 800 service, Centrex, cellular voice
service
• Phase out schedule: 20 discount percentage points will
be deducted each funding year beginning in funding
year 2015
Voice Service Phase out Schedule
Voice Discount will be:
If your district or
FY 2015
library’s
discount is
FY 2016
FY 2017
FY 2018
FY 2019
20%
No funding
No funding
No funding
No funding
No funding
25%
5%
No funding
No funding
No funding
No funding
40%
20%
No funding
No funding
No funding
No funding
50%
30%
10%
No funding
No funding
No funding
60%
40%
20%
No funding
No funding
No funding
70%
50%
30%
10%
No funding
No funding
80%
60%
40%
20%
No funding
No funding
90%
70%
50%
30%
10%
No funding
E-Rate Modernization
Sets funding limits for category 2(i.e. internal WiFi) funding
• Funding for category 2
– Each school shall be eligible for support of category 2
services/goods up to a pre-discount price of $150 per
student over a 5-year funding cycle (new schools may
estimate #s but must repay if over-estimates occur)
– Each library shall be eligible for support up to $2.30
per square foot
– Minimum pre-discount floor of $9,200 over 5 years
(pre-discount minimum)
E-Rate Modernization
Sets funding limits for category 2 (i.e. internal WiFi) funding
• Category 2 funding
– If all allowable C2 funding for a school or library is not utilized in
first (or second) year(s), then the remainder may be
requested/used in subsequent years
– Five years for C2 funding is dependent upon FCC review and a
new order is needed after funding years 2015 and 2016
– C2 funding are allocated to highest discount bands first (i.e. 85%
discount) until all available funds are expended
– Discounts are calculated at the district level
– May apply for C2 funding for some schools one year and other
schools in a different year
E-Rate Modernization
Sets funding limits for category 2 (i.e. internal WiFi)
funding
• Non-instructional buildings for C2 funds
– Support is not available for C2 services/goods in
non-instructional buildings unless those C2
services are essential for the effective transport of
information to or within one or more instructional
buildings
E-Rate Modernization
Sets funding limits for category 2 (i.e. internal WiFi) funding
• Category 2 predictability?
– Not all applicants will be funded in the year they apply
– There is no provision for applicants to buy C2 equipment in one
year and get funded in a future year (i.e. if you purchase in 2015
but do not get funding approval until 2017, you cannot
retroactively get reimbursed for previous/2015 purchase)
– FCC has established a goal to connect an additional 10 million
students in each funding year 2015-2019
– FCC Chair has stated his goal to have each school receive C2
funding once during five years (2015-2019)
– If an applicant requests and is funded for less than the
maximum per school budget in a funding year, applicant may
request remaining budget funding in a future year
E-Rate Modernization
Focuses funding on broadband TO and INSIDE schools and
libraries
Eligible Services List: Category 2
• Three “flavors” which combined are all subject to limit of
$150 per student pre-discount cap over 5 years (or $9200
per school pre-discount floor over 5 years)
– Purchase and installation of internal WiFi equipment
(permanently eligible)
– Managed internal broadband service (eligible in FY 2015 and
2016; future eligibility TBD)
– Maintenance of eligible internal broadband equipment (eligible
in FY 2015 and 2016; future eligibility TBD)
E-Rate Modernization
Focuses funding on broadband TO and INSIDE schools and libraries
• Eligible services list: Category 2 (previously priority 2)
Flavor 1: Purchase and installation of
– Access points used in a local area network (LAN) or wireless
– local area network (WLAN) environment
– Cabling, connectors, and related components used for internal
broadband connections
– Caching (NEW! May be limited to FY 2015 and 2016 only; continued
eligibility TBD)
– Firewalls used to ensure the continued operation of eligible
equipment by protecting equipment from security hazards
– Network switches
More (next page)
E-Rate Modernization
Eligible Services List: Category 2 (cont.)
– Routers
– Racks that support eligible internal connections components
– Uninterruptible Power Supply (UPS)/Battery Backup necessary
for basic power protection for eligible equipment
– Wireless LAN Controllers
– Software necessary to support this list of eligible broadband
internal connections components, including Client Access
– Licenses for LAN/WLAN networks
– Improvements and upgrades to components on this list of
eligible broadband internal connections
E-Rate Modernization
Eligible Services List (Category 2):
Flavor 2: Eligible Managed Internal Broadband Services (e.g.,managed Wi-Fi)
Eligible in FY 2015 and 2016; future eligibility TBD
-Services provided by a third party for the operation,
management, and/or monitoring of eligible broadband internal
connections components.
-In some managed services models, the third party manager
owns and installs the equipment and school and library
applicants lease the equipment as part of the managed services
contract. In other cases, the school or library may own the
equipment, but have a third party manage it for them.
E-Rate Modernization
Eligible Services List: Category 2
Flavor 3: Basic Maintenance of Eligible Broadband Internal
Connections Components
Eligible in FY 2015 and 2016; future eligibility TBD
The following basic maintenance services are eligible:
-Repair and upkeep of eligible hardware
-Wire and cable maintenance
-Configuration changes
-Basic technical support including online and telephone based
technical support
-Software upgrades and patches including bug fixes and
security patches
E-Rate Modernization
Other measures to ensure cost effectiveness
• Tech plans no longer required for any services
• Expedited review of contracts after first year in effect
• Beginning in funding year 2017, all forms must be filed
electronically (form 471 for 2015 and beyond must be filed
electronically)
• Beginning in funding year 2017, applicants using BEAR
process will receive direct reimbursement
• All appeals must be made to USAC first (exception: waiver
requests may go directly to FCC)
• Document retention will be extended from 5 years to 10
years
E-Rate Modernization
Further Notice of Proposed Rulemaking (FNPRM)
• Order contained over 130 questions or requests for
comments, such as:
– Meeting future E-rate funding needs (i.e. should cap be raised?)
– Ensuring efficiency of multi-year contracts
– Standardizing collection of NSLP data (i.e. should applicants rely
upon Iowa Dept of Ed data?)
– Encouraging consortium applications
– Ensuring sufficient support for schools and libraries that lack
connectivity TO their facilities
• Comments were due September 15; reply comments were
due September 30
E-Rate Modernization
Other pending changes
• Final eligible services list for funding year 2015
• Changes to the form 471
• Follow-up order to Further Notice of Proposed
Rule-Making (FNPRM)
• Possible clarification or errata orders
• Second modernization order to focus on C1 issues
(like affordable broadband TO schools and
libraries)
E-Rate Modernization
Upcoming dates/reminders
• Funding year 2015
– Phase out of voice services; elimination of
eligibility for webhosting, etc. plus limited
eligibility of data cards
– New 10 year document retention requirements
– Start planning for C2 applications
– Form 470 and 471 deadlines not yet known
E-Rate Modernization
Upcoming dates/reminders
• Funding year 2014
– Deadline to file form 486 is 120 days after date of funding
commitment decision letter OR October 28, 2014 (whichever is
later)
• Funding year 2013
– File form 472 (aka BEAR) including service provider certification
no later than October 28, 2014; no automatic extension; if
needed, file extension request before October 28
• Funding year 2012
– File form 472 (aka BEAR) no later than October 28, 2014 (an
automatic 1-year extension was already granted by FCC for this
funding year only)