A Crystal Ball for E-rate 2.0 Success
Each year E-rate applicants have requested funding support which outpaces what the fund can ultimately support. USAC has always been able to commit funding for applicant’s telecommunications and Internet access services, but for the last two years no schools or libraries have been able to receive funding in support of internal connections or basic maintenance projects, due to the funding shortfall.
In July 2014 the FCC released the E-rate Modernization Order (E-rate 2.0) and updated the rules governing the program. School and library sites now receive a budget cap for their Category Two projects that they can spend over a five year period. The FCC anticipated that the new rules would make it more likely that all E-rate applicants could receive some support for their E‑rate eligible projects.
Final numbers will not be available until all of the paper-certified forms are processed, but we have a preliminary analysis of the funding requests for Funding Year 2015. As of April 23, 2015, there were 24,496 applicants which requested funding for Category One discounts totaling $2.1 billion while 9,400 applicants filed for Category Two discounts totaling $1.5 billion, for a total of $3.6 billion overall.
The FCC increased the E-rate cap by $1.5 billion in the December 2014 2nd E-rate Modernization Order, and the cap now stands at $3.9 billion. Based on my analysis of the preliminary data, there is enough funding available for FY 2015 to fund every application that is found to be in compliance with the rules.
We will release final numbers when all of the FY 2015 applications are accounted for, however, stakeholders should be wary before drawing conclusions on what the true demand for E-rate 2.0 products and services will ultimately be, or whether E-rate reform has met the FCC objective to “…modernize the E-rate program to effectively meet the needs of 21st Century schools and libraries…” It will take several funding years before we can ultimately feel confident the new E-rate has been a success.