The Schools and Libraries Program, also known as E-rate, is a Universal Service Fund program designed to help public schools and libraries gain access to affordable telecommunication services and high-speed Internet access. Public school districts and libraries may apply annually for eligible services, which they can procure through service providers at a discounted rate. The services fall into two groups: Category One and Category Two. Category One services are defined by the Universal Service Administrative Company (USAC) as “services that provide the basic conduit access to the Internet.” Category Two services are those “needed to enable high-speed broadband connectivity and broadband internal connections components.” See the USAC website for additional information.
Since E-rate's establishment two decades ago, school technology needs have evolved greatly while the program itself remained unchanged until 2014. In a series of change orders, the Federal Communications Commission (FCC) overhauled E-rate. Of the multiple changes, perhaps the most significant was prioritization of support for fiber connectivity to all schools. Now is the time for school districts to take advantage of the changes and consider upgrading to long-term network solutions to meet future connectivity goals.
At a high level: the new 2016 school year E-rate rules have "equalized" the treatment of lit, leased dark, and self-provisioned fiber options. Equal amounts of funding are available for each of these options, provided applicants can show that they are the best option for their specific situation.
In E-rate terminology, special construction refers to the upfront, non-recurring costs associated with the installation of new fiber to or between eligible entities. Applicants may seek funding for special construction charges in connection with leased lit, leased dark, and self-provisioned fiber projects. Special construction charges eligible for Category One support consist of three components:
The term special construction does not include network equipment necessary to light fiber, nor the services necessary to maintain the fiber. Charges for network equipment and fiber maintenance are eligible for Category One support as separate services, but not as special construction.
If new fiber installation is not necessary, the payment is considered a standard non-recurring, installation cost.
Please note: All E-rate funding requests that include special construction, regardless of whether it’s for lit, leased dark, or self-provisioned fiber, are subject to more detailed review. The review process may take longer than in past years and you should be prepared to answer detailed questions about your funding request if asked. Examples of requested documentation could include copies of all bids received, cost per foot of fiber installation, detailed bill of materials, and maps of proposed construction routes.
While most school districts purchase lit fiber services directly from a service provider, leased dark fiber services have proven to be a cost-effective solution for a significant number of districts. The FCC now recognizes dark fiber as a cost effective viable option for some districts and has enacted changes to E-rate to level the playing field between lit and leased dark fiber.
With the Modernization Order reversing this discrepancy, the types of services eligible under Category One for leased dark fiber have been updated. Category One eligible services include:
Please note: applicants applying for leased dark fiber are required to consider comparable leased lit fiber service and to document via their bid evaluations that they are picking the most cost-effective solution. All E-rate funding requests for leased dark fiber, even those without special construction costs, are subject to more detailed review. The review process may take longer than in past years and you should be prepared to answer detailed questions about your funding request if they are asked.
Self-provisioned fiber has been eligible for E-rate funding since 2016, provided that it is demonstrated to best the most cost-effective solution to obtaining high-speed broadband. This option may be especially appealing for schools that have previously received few to no bids to their Form 470 submissions. While it may not work for all, exploring the self-provisioned solution could yield dividends as a scalable and economical option for some districts.
Eligible Category One services for self-provisioned fiber include:
Please Note: while self-provisioned fiber networks are now E-rate eligible, they are considered an “option of last resort” to be funded when there are truly no other scalable broadband options available. Applicants applying for self-provisioned fiber are required to consider all options over third-party owned infrastructure, and to document via their bid evaluations that they are picking the most cost-effective solution. All funding requests for self-provisioned fiber will be subject to intense scrutiny and applicants should be prepared to provide very detailed documentation to make their case. Examples of requested documentation could include copies of all bid responses received, cost per foot of fiber installation, detailed bill of materials, and maps of proposed construction routes.
Beginning in Funding Year 2017, applicants seeking the self-provisioned option must also select the “Transport Only - No ISP Services” option on their Form 470. This option is a technology neutral way of seeking support for bandwidth including, but not limited to, leased lit fiber. To select leased lit fiber only would be insufficient.If you are curious about the process for self-provisioned fiber requests, please contact us.
The Second E-rate Modernization Order gave applicants the flexibility to pay the non-discounted portion of special construction costs in monthly or yearly installments over one to four years. This change was meant to assist districts that lack the ability to pay the entire non-discounted portion of special construction costs upfront but can pay smaller amounts over time. USAC has only made this option available for requests through the 2018 E-rate cycle.
Note that service providers are under no obligation to allow a district to pay the non-discounted portion of the special construction costs in installments. Districts must indicate that they are looking for this type of plan in their Form 470 and/or RFP. For example, a district with a 70% discount receives a lit fiber bid that includes $60,000 of special construction. E-rate will pay $42,000, or 70% of the special construction costs ($60,000 * .70 = $42,000,) leaving $18,000 that the district must pay. The provider has also agreed to accept annual payments for the remaining non-discounted portion over 4 years. The district therefore must pay the provider $4,500 per year ($18,000 / 4 = $4,500).
Beginning in Funding Year 2017‐2018, the logic for determining whether a connection between buildings is Category 1 or Category 2 has changed (see the 2017 Eligible Services List). Public rights of way and co-located schools no longer impact whether a connection is considered Category 1 or Category 2. The defining factor is whether the connection is between different entities, regardless of their physical location.
||The connections are between different schools with their own entity numbers.|
||The connections are between different buildings belonging to the same school with a single entity number.|
||Connections that distribute broadband to buildings of a single school located on multiple campuses miles apart may be eligible for Category One support. It is best to contact USAC for guidance on your particular situation.|