Managed Internal Broadband Services: Who Actually Uses It

Managed Internal Broadband Services is one of the smallest line items in E-rate. In Funding Year 2025 it accounted for 1.45% of all program commitments — $38.7 million out of $2.66 billion. It is also one of the fastest-growing, and the applicants who rely on it are overwhelmingly small.

MIBS pays a provider to run the Wi-Fi and internal network a school or library already owns: monitoring, configuration, patching, troubleshooting, lifecycle management. It sits inside Category Two, alongside internal connections equipment and basic maintenance, and it draws on the same capped per-applicant budget. The Wireline Competition Bureau has asked whether it should be limited by applicant size, reimbursed by the hour, or removed altogether.

We looked at every MIBS funding request from FY2015 through FY2026 — 25,428 requests from 6,415 distinct applicants — and joined them to site-level recipient data, student counts, and the Category Two budget system. Three findings stand out.

1. Adoption falls as applicants get larger

Because MIBS is a Category Two service, the fair comparison is against applicants who use Category Two at all — not against every applicant in the program. Measured that way, the pattern is consistent and one-directional: the smaller the applicant, the more likely it uses MIBS.

The typical MIBS applicant is small in absolute terms, not just relative to its peers: the median school-side MIBS applicant enrolls 620 students.

Libraries show the same gradient. Among library systems that used Category Two in FY2025, 53.8% of single-outlet libraries used MIBS, against 19.8% of systems with eleven or more outlets.

This is not a recent development. The gap between small and large adoption rates has held for more than a decade, through the pandemic, the Emergency Connectivity Fund, and two Category Two budget cycles.

2. For the smallest applicants, MIBS is the whole of Category Two

Adoption rates say how many applicants use a service. They don’t say how much it matters to them. That question has a starker answer.

3. When small applicants lose MIBS, they do not buy equipment instead

The obvious rejoinder is that applicants who lose a managed service would simply purchase the equipment and run it themselves. The program’s own history tests that claim directly.

Across FY2016 to FY2025 there are 3,211 instances of an applicant funding MIBS in one year and not the next. If MIBS were merely an alternative delivery model, equipment purchases should rise to fill the gap. In aggregate they did not: $43.6 million of MIBS disappeared across those transitions, and internal connections spending fell by $1.7 million. Nearly three quarters of those applicants recorded no increase in equipment spending at all.

The divergence is the finding. Applicants above 5,000 students who stopped funding MIBS increased equipment spending by an average of $37,045, and two thirds of them stayed in Category Two. Applicants below 1,000 students cut their Category Two commitment by 59%, and 66.6% left the category altogether — while spending less on equipment, not more.

Who the users are, and where the dollars are

These are different questions, and the gap between the answers matters for any proposal aimed at saving money.

79% of MIBS applicants serve fewer than 5,000 students. Meanwhile 163 applicants above 5,000 students — 6% of users — account for a third of the dollars. A restriction aimed at the dollars would be aimed at large districts; the disruption would fall on the small ones, whose average request is $7,133 and who are spread across 52 states and territories.

Money is not what constrains them. Small MIBS users spent 81% of their five-year Category Two budget and left $34.7 million unspent. They can afford equipment. What they lack is anyone to run it — which is the reason the Commission made managed services eligible in 2014.

Growth, and what it costs the Fund

Category Two support is capped per applicant by a formula that counts students and sites — $167.00 per student for the FY2021–2025 cycle, $201.57 for FY2026–2030. The formula does not care what the applicant buys with it. That has a direct consequence for any savings estimate.

Because the budget is a ceiling rather than a reimbursement, removing a service from the menu does not lower the ceiling. It changes what applicants may buy beneath it. The saving to the Universal Service Fund from eliminating MIBS is not small — it is zero, unless one assumes the applicants who use it would respond by buying nothing at all. The evidence in section 3 suggests that many of the smallest would do exactly that.

What the data does not show

Three explanations that seem plausible do not hold, and we note them because they appear elsewhere in this debate.

It is not a rural story. MIBS requests are 44.8% rural-only, against 44.9% for all other Category Two requests. Among small school applicants, urban-only applicants adopt MIBS at 33.5% against 20.3% for rural or mixed — the opposite of the expected direction. Size operates independently of geography.

It is not a poverty story. MIBS users below 1,000 students carry an average weighted discount of 72.9%, against 74.0% for those above 5,000. Essentially flat.

MIBS does not reduce Category Two spending. Its users draw $144.47 per student from their budgets against $138.71 for non-users, and use 84.4% of their budget against 81.5%. Reports of cost savings elsewhere in the record compare managed services against in-house staffing, which is a different and legitimate question — but MIBS users do not draw less from the Fund than their peers. What that utilization rate does suggest is that these applicants are making full use of the Category Two budget already available to them, which is not the profile of an unnecessary service.

What follows

The Bureau asked three questions about MIBS: whether to limit it by applicant size, whether to reimburse it by the hour, and how to keep ineligible costs out of it. The size question is the one the data answers most directly, and the answer is that a size limit would cut in the wrong direction under either design. Restricting MIBS to larger applicants would remove it from the applicants who use it most and can replace it least. Restricting it to smaller applicants would penalize districts that have demonstrated it works at scale.

The durable answer is the one most commenters in this proceeding have reached independently: define the service clearly by function, let competitive bidding and the Category Two budget do the cost-control work they were designed for, and apply any change prospectively so that applicants holding multi-year contracts are not stranded mid-cycle. Roughly 30% of MIBS users have relied on it for five years or more.