How E-Rate 2.0 Helps Schools Afford Broadband and Wi-Fi

The Federal Communications Commission (FCC) recently made the biggest changes to E-Rate since the program was created 19 years ago to help schools pay for telecommunications and Internet services. Public K–12 schools and districts should be aware of what these changes mean to funding and eligible services.

The changes, which went into effect this year, include increased funding and the phasing out of some services and technologies, as well as increasing support for broadband and wireless networks in classrooms.

“This is about taking E-Rate from the 20th century to the 21st century, and it is now entirely focused on high-speed broadband,” says Jon Wilkins, the FCC’s managing director.

Ensuring Affordable Broadband and Wi-Fi

The fundamental structure of E-Rate remains the same, according to Wilkins. Discounts are based on economic need. Individual schools or districts can choose the providers or technologies that best fit their needs, as long as selected options are the most cost-effective.

The biggest structural change in the program is a $1 billion annual commitment to internal networks, which aims to ensure that schools receive the subsidies they need to provide students with high-speed Wi-Fi access in their classrooms. The FCC’s modernization efforts will ensure that E-Rate will fully fund schools’ Wi-Fi needs over the next five years, Wilkins says.

Category Changes

The FCC has also changed the names of the funding categories from Priority One and Priority Two to Category One and Category Two. Specific changes to the categories include the following:

CATEGORY ONE: While the highest discount level for Category One services remains at 90 percent, the highest discount rate for voice services will drop to 70 percent for the 2015 funding year and decrease another 20 percentage points each year after.

Services eliminated from Category One include email, text messaging, voicemail and web hosting.

CATEGORY TWO: The highest discount level for Category Two services and equipment has been reduced from 90 percent to 85 percent. This reduction spreads E-Rate funds more widely and provides an incentive for applicants to find the most cost-effective options.

The previous rule that schools could receive funding only for internal connections in two years out of any five-year period has been eliminated. The new guideline allows schools to apply for Category Two funding for purchases of up to $150 (pre-discount) per student over a five-year period.

New Category Two services and equipment that are eligible include managed Wi-Fi services and caching technology, which stores frequently accessed links and other web content locally.

The FCC also eliminated E-Rate support for Voice over IP systems, virtual private networks and software, except for software used for internal broadband distribution.

Supporting Broadband

The FCC also provided more flexibility and options for schools to access affordable high-speed broadband, with the goal of spurring investment in high-speed broadband infrastructure. Toward that goal, schools can now pursue large construction projects and get E-Rate funding up front in one year, rather than over multiple years.

Beginning in funding year 2016, schools and districts can also:

• Pay their portion of nonrecurring large construction costs over multiple years through an installment plan. Previous rules required schools to pay their portion within 90 days of service delivery.
• Use E-Rate funds to lease dark fiber, which can drive down broadband costs. Previously, schools could purchase only lit fiber services.
• Build their own high-speed broadband facilities, if that is the most cost-effective solution.
• Receive additional E-Rate discounts if states help fund high-speed broadband construction. If a state agrees to provide financial support for last-mile broadband facilities, the E-Rate program will match the state’s contribution by providing up to 10 percent in additional Category One discounts.

For more on E-Rate's modernization and how it will affect your school, read CDW’s white paper Get Ready for E-Rate 2.0.