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States Want Amortization Req’s Removed

The State E-Rate Coordinators’ Alliance (SECA) has asked the FCC to permanently eliminate the amortization requirement for large Category 1 projects. SECA believes that there are sufficient E-rate funds available and “no countervailing financial concern that the permanent elimination of amortization would pose.”

E-rate regulations require that one-time charges for Category One services in excess of $500,000 be amortized over a period of at least three years. The FCC initially suspended this rule beginning in funding year 2015 as part of the E-rate Modernization process. By Order, the amortization requirements were set to be reinstated in funding year 2019; however, the FCC intervened, suspended the rule for another year, and asked for public comment about the usefulness and necessity of the rule.

In its filing to the FCC, SECA highlights the positive impact the suspension of amortization has had on broadband investment across the country. SECA also explains that one-time upfront costs play a critical role in the success of state matching programs. These programs can increase an applicant’s E-rate discount by as much as 10 percent when a state provides a match for special construction costs. As stated in their submission, “SECA believes that reinstatement of amortization would cripple the FCC’s state matching initiative.”

Public comments about the amortization rule are due to the FCC by March 18, 2019. Reply comments are due by April 1, 2019.

The full text of SECA’s comments is available here.

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