FCC opens extensive inquiry into efficacy and future of the E-Rate program

Key Takeaways

On August 14, the Federal Communications Commission (FCC) published a Notice of Proposed Rulemaking (NPRM) and Further Notice of Proposed Rulemaking (FNPRM) regarding the E-Rate Program. The proposed rulemaking seeks broad comment on the efficacy and statutory basis of the E-Rate Program, as well as proposes new certification requirements on participants in the program.  

The E-Rate Program is designed to help schools and libraries afford broadband connectivity and telecommunications services through the availability of discounted telecommunications equipment and services. Under the proposed rulemaking, the FCC seeks comment on whether to limit or sunset the E-Rate Program, if it determines that the record reflects that the program’s goals and objectives have been met.  

Counties strongly support the continuation of the E-Rate program, which has helped schools and libraries afford the telecommunications equipment and services necessary to benefit from modern telecommunications and connectivity to and within the premises. Counties are encouraged to comment on the proposed rulemaking to express support for the E-Rate program and share additional details on how the program has supported sustained connectivity in your communities’ schools and libraries.  

Comments on the proposed rulemaking are due on October 13, and reply comments are due on November 12.

Read the proposed rulemaking here

What is the E-Rate program?

Established under Section 254 of the Telecommunications Act of 1996, the E-Rate Program provides discounts for eligible schools and libraries to purchase covered telecommunications and networking equipment that can support access to modern connectivity. The E-Rate Program is a Universal Service Fund (USF) program administered through the FCC’s Universal Services Administrative Company (USAC).

The program functions in the following way:

1. Schools and libraries identify goods or services they need and submit request(s) for competitive bids for them to the USAC.  
2. The USAC posts the competitive bids onto its website for vendors to bid on, and after reviewing the bids, the school or library selects the most cost-effective eligible product and service using price as the primary factor.  
3. The entity then applies to USAC for approval of the desired purchase. The USAC will review the application and then issue funding commitments when approved.  
4. Finally, when a vendor provides the selected service, either the vendor or the applicant submits requests for USAC to reimburse the entity with the approved discounts.

Eligible equipment for purchase under the program includes category one services, which provide connectivity to schools and libraries, and category two services, which provide connectivity within schools and libraries. Category one services take priority over category two services under program rules.  

From program years 2022-2024, the E-Rate program disbursed an average of $2 billion in subsidies annually, out of a total annual disbursement rate of approximately $8 billion across all four USF programs.

What is in the FCC’s proposal?

The FCC first seeks comment on its NPRM, which examines various elements of the E-Rate program, including the following:  

• The program’s progress on accomplishing its mission under the universal service mandate of the Telecommunications Act of 1996.
• Whether the FCC should discontinue the program, if the record indicates its universal service mission is complete.
• Whether the methodology that is applied to determine discount percentage remains the most effective method for ensuring higher discounts are awarded to the most disadvantaged schools and libraries.
• How E-Rate funded networks are utilized, and whether the FCC has authority to increase oversight of network usage.

The FCC is also proposing an FNPRM to institute guardrails into the program, create certification requirements for consultants to the program, and institute additional certification layers for all entities, to ensure programmatic goals are met and not abused. The requirements include:

• New registration, certification and disclosure requirements for E-Rate program consultants hired to connect qualifying entities with funds. 
• Restrictions on certain consultant compensation arrangements, such as percentage-based fee arrangements.
• Standardized filing deadlines for required program forms for all entities, including service providers.
• Additional contracting requirements intended to strengthen competitive bidding, such as the discontinuation on the use of existing contracts in the competitive bidding process.

Why this matters to counties

County libraries and schools depend on the E-Rate program to keep telecommunications equipment affordable in their schools. If the FCC were to discontinue the E-Rate Program, counties would be required to pay more for telecommunications equipment in their anchor institutions, which would become more costly on county budgets. Counties therefore support the continuation of the E-Rate Program.  

NACo will continue to monitor the rulemaking and assess next steps. NACo encourages counties to reach out to NACo staff and share feedback on the proposal.