E-Rate Broadband and Tech Update

E-Rate changesLast month, I shared a post on big changes coming to the E-Rate Program. This month, I’m pleased to provide even more information about what schools can expect in the coming years.

Following are the highlights of the Federal Communications Commission’s (FCC) E-Rate Modernization Order released on July 23, 2014. We have only listed the changes that have the greatest impact. The purpose of the order is to continue support of high-speed access to schools and libraries and expand access to digital learning technologies by providing support for Wi-Fi networks within schools and libraries.

Changes include:

1. Priority One services is now known as Category One and Priority Two is known as Category Two.

2. Category One are the services needed to support connectivity to schools and libraries.

3. Category Two are the internal connections (hardware and software) on site at a school or library.

4. Funds will shift between Category One and Category Two services to meet demand.

5. The highest discount level for Category One services remains at 90%, but Category Two is reduced to 85%.

6. The highest discount rate for voice services will be 70% in 2015 (a reduction of 20%) and will decrease by 20% each funding year thereafter.

a. For example, if a school’s discount was 40% in 2014 it will be reduced to 20% in 2015 and then to 0% in 2016.

b. This will apply to all voice services including but not limited to: local and long distance service, cellular and voice-over-IP (VoIP). If the FCC takes no further action on this by the opening of funding year 2018, the phase down will continue.

7. All web hosting, email and voicemail discounts will be eliminated beginning in 2015.

8. Data plans and aircards for mobile devices will remain eligible for support only if a school or library can demonstrate that individual data plans are the most cost-effective options for providing internal broadband access for portable mobile devices.

9. Sets an annual funding target of $1 billion for eligible Category Two services for fiscal years 2015 and 2016.

10. The technology plan requirement for Category Two services is eliminated.

11. The current 2-in-5 year rule will not be in effect for applicants that receive support in fiscal year 2015 and 2016.

12. Schools applying for Category Two funding can request discounts on purchases up to $150 (pre-discount) per student over a five-year period. Libraries can request up to $2.30 (pre-discount) per square foot.

13. There is a minimum funding floor of $9,200 (pre-discount) on Category Two support for each school or library over a five-year period. Costs for services shared by more than one entity must be divided between entities.

14. The five-year budget applies to entities that receive support in 2015 and/or 2016.

15. Applicants can seek support for Category Two non-recurring services purchased on or after April 1, three months prior to the start of the funding year on July 1.

16. Funding for internal connections will be available for routers, switches, wireless access points, internal cabling, racks, wireless controller systems, firewall services, uninterruptable power supplies, caching and the software supporting each of these components. Note this is a preliminary list and the final 2015 Eligible Services List is not yet available.

17. Basic maintenance services, managed Wi-Fi, and caching are eligible for Category Two support. Support for these services will be available only to those applicants that receive Category Two support in funding years 2015 and/or 2016.

18. Category Two support is eliminated for telephone and video components (including VoIP or video-over-IP), servers (except those for caching) and storage devices. Note this is a preliminary list and the final 2015 Eligible Services List is not yet available.

19. Schools that use surveys to determine their E-Rate discount must calculate their discount using only the surveys they actually collect.

20. The document retention period will be extended from five to 10 years after the latter of the last day of the applicable funding year, or the service delivery deadline for the funding request.

Greg Lowry is a Schooley Mitchell consultant based in San Francisco, Calif. His areas of expertise include supplier negotiation, billing analysis and contract optimization, business continuity planning, and sales and business development consulting.