June 18, 2015 – Recent changes to the eligibility rules for the Federal Communication Commission’s eRate program open the door for new fiber connections for schools and libraries using agency funds.
Among the rule changes were the suspension of the requirement that applicants seek funding for large up front construction costs over several years, the equalization in the treatment for schools and libraries seeking support for “dark fiber” services, and allowing institutions to build high-speed broadband themselves when more cost-effective.
What’s more, these were only among the significant changes to the eRate program in December 2014.
Because they closely followed other significant changes in July 2014, it has taken some time for the broadband industry to fully recognize their significance. Moreover, the eRate is only the most recent of the four major components of the agency’s Universal Service Fund to receive an overhaul.
The eRate changes came last year in two traunches. in July, the agency updated its rules to allow great use of technologies allowing schools and libraries to close the so-called “Wi-Fi” gap.
Then in December, the agency a addressed the “Connectivity Gap” by granting schools and libraries significantly greater flexibility in purchasing Gigabit-level bandwidth to meet their growing needs. Additionally, the December order lifted the annual cap on spending eRate funds to $3.9 billion, from the current $2.4 billion.
Although the additional $1.5 billion in funds availability has been well-known, It has taken some time for the industry to recognize the scope of the rule changes for the construction of fiber-based services.
“Last year was a big year for the eRate,” said Lisa Hone, associate bureau chief of the Wireline Competition Bureau at the FCC at a May 20 workshop at the agency’s headquarters in Washington. “The $3.9 billion means that in the 2015 funding year, the eRate is able to fully meet demand, for the first time since 2010.”
The May 20 “Public Workshop On E-Rate Funded Fiber Build Projects” drilled into details regarding the significance of the new fiber rules for eRate.
In a dialogue at the workshop between Jon Wilkins, managing director of the FCC, and Joe Freddoso, former CEO of MCNC, the non-profit fiber-optic network in North Carolina, Wilkins defined the following terms:
- Lit fiber or lit services are the traditional, conventional, high-speed service, received from an incumbent service provider. The school or library is buying the service at a recurring, monthly charge, but may also need to pay a one-time construction charge.
- Dark fiber are the physical fiber strands, built and owned by the service provider, but to which the school or library buys dedicated access, for some period of time, to operate for a period of time. This is often done through a legal mechanism known as an Indefeasible Right of Use (IRU).
- Self-provisioning is when the school or library takes full responsibility for itself to build, to operate, and to maintain the broadband network. While this can be a bigger undertaking, if the school needs to undertake this activity, eRate now supports it, too.
Before the December changes, if a school or library undertook construction of more than $500,000, it had to be spread over three years, said Wilkins. Now, it can all be done in one year.
As with many government funding activities, schools or libraries must come up with some portion of the funds — known as a match — to access eRate funds. Before the December changes, said Wilkins, the match had to be paid in the first year. Now, that up-front cost can be spread among four years.
These are the among the changes that can incentivize schools and libraries to obtain funding for fiber-optic services besides those lit services that are offered through a traditional incumbent. By enabling construction costs to be funded up front, Wilkins said, “eRate provides a much more open ability to select dark fiber or self-provisioning a network.”