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Voice in the New E-rate

Shortly after the first E-rate Modernization Order was adopted by the FCC, we did an analysis of the hypothetical effect the new E-rate rules might have had on prior funding years, based on data that USAC had provided on funding request types.

One helpful result of E-rate modernization is that Funds For Learning can now sift through funding request data and identify requests by type. We took a look at voice services in this funding request analysis. Although the FY 2015 filing window is still open until 11:59 p.m. tonight, as of April 14th 74% of applicants have submitted Category One Forms 471 to USAC (when compared to the number of applicants from FY 2014). This gives us a good initial data pool to evaluate as we take a look at the impact of E-rate modernization on Funding Year 2015.

Voice services were subject to a 20 percentage point reduction in discounts this year, and in Funding Year 2016 the reduction will proceed to 40 percentage points below the broadband Category One discount rate. Additionally, voice mail and other custom calling features have been eliminated completely. The FCC’s goal in this reduction is to free up more E-rate money for applicants to use for broadband connectivity and network equipment and services.

While there were diminished discounts available for applicants this year, this has had no downward effect on the applicant pre-discount spending for voice services in comparison to previous years. The graph below shows the pre-discount amount for voice services in Funding Years 2012 and 2013, along with the preliminary amount from FY 2015, with requests from just under ¾ of applicants (voice spending detail was not available for FY 2014).

Voice Spending (Pre-discount)

The average E-rate discount rate for non-voice, Category One services is currently at 76%, while the average discount percentage for voice service funding requests stands at 54%

Based on the reported pre-discount amounts, applicants are spending an average of $34,280 on voice services this year. Due to the discount phase down, the support for voice services has been reduced by an average of $6,856 per applicant.

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