The FCC’s Wireline Competition Bureau has announced that the inflation-based funding cap for Funding Year 2012 will be $2.338 billion, an increase of 2.1% from FY2011.

This is the second year of inflation-based funding cap adjustments for the E-rate program. From Funding Year 1998 through 2010, the funding cap was set at $2.25 billion, but this static amount did not keep pace with the rising costs of advanced telecommunication services. The FCC recognized this issue in the Sixth Report & Order, and began to adjust the funding cap on an annual basis to account for inflation.

While the increase to the cap will off-set the inflation from FY11 to FY12, it is still less than half of the demand for FY12.