On July 23, 2014, the FCC (News - Alert) released an order modernizing the Schools and Libraries Program of the Universal Service Fund, commonly called the E-Rate program. 

Primarily, the order begins the process of de-emphasizing voice and other legacy services for E-Rate support, and instead increases support for broadband, Wi-Fi, and other advanced technologies. The order establishes a number of connectivity, speed, and scalability targets for E-Rate broadband service funding, and sets funding goals for Wi-Fi services for the next two years. To increase the number of applicants that receive funding, the percentage of support for purchases is being decreased from 90 to 85 percent. Based on the funding levels and expected demand, funding will likely be prioritized based on the poverty of a school district. If a school is run independently from a district (for instance, for a charter school) the school’s individual poverty rate will be used. Funding is also prioritized for broadband and other outside connectivity technologies over Wi-Fi and other internal connectivity technologies.

Effective 2015, the commission will de-fund certain legacy components like circuit cards, interfaces, gateways, antennas, software, storage devices, telephone components, video components, VoIP components, and certain data protection services. It will also cut funding for services like e-mail, text messaging, paging, directory assistance, custom calling service, 900/976 blocking, voicemail, and web hosting. To encourage efficiency with broadband connections, the fund will instead provide move support for “managed Wi-Fi” services if an applicant wishes to hire an entity to provide and maintain the W-iFi on behalf of the school. Caching services will also be supported. 

The commission’s E-Rate eligibility rules are complex, and we expect that they will continue to evolve over time as the agency strives to modernize the program with 21st century technologies. 

William B. Wilhelm (News - Alert) is a partner and Jeffrey R. Strenkowski is counsel at the global law firm of Bingham McCutchen LLP.