News of the Week

USAC released Wave 37 for FY 2019 on Thursday, December 12th.  Funding totaled $18.8 million.  Cumulative commitments through December 12th are $2.04 billion. 

The FCC released the final version of the Eligible Services List (“ESL”) for FY 2020.  As expected, following the release of the Category 2 Order (FCC 19-117) the previous week, there were no surprises.  In fact the actual ESL, included as an attachment to the ESL Order (DA 19-1249), was exactly the same as the FY 2019 ESL.  Specifically:

1. Language in the draft ESL indicating the conditional eligibility of Basic Maintenance of Internal Connections (“BMIC”), Managed Internal Broadband Services (“MIBS”), and caching servers was removed after these services were deemed permanently eligible in the Category 2 Order.
2. The FCC clarified that “virtualized equivalents” of eligible services and equipment — i.e., those available in the cloud that can provide the same functions as locally installed internal connections equipment — are eligible for E-rate funding.
3. The FCC declined requests to make any new equipment or services eligible for FY 2020.  As it had in past years, the FCC deemed such requests to be “beyond the scope” of the ESL proceeding.

Given the pressing need for network security and resiliency, the FCC’s reluctance to expand the ESL accordingly for FY 2020 is disappointing.  On the positive side, however, bipartisan support for future changes of this nature was expressed by two of the five Commissioners in the Category 2 Order, namely:

From Commissioner Michael O'Rielly:

From Commissioner Jessica Rosenworcel:

To move this forward, we’d be looking for the FCC to develop and release a Notice of Proposed Rulemaking (“NPRM”) to explore the eligibility of both Category 1 and Category 2 network security equipment and services.  Any school or library that is subject to a cyber-attack should consider filing comments to help the FCC understand the breadth of the problem. 

Upcoming E-Rate Dates:

USF Quarterly Contribution Factor Declines:

Last Friday, the FCC announced the Proposed First Quarter 2020 Universal Service Contribution Factor of 21.2%.  As shown in the following table, the first quarter percentage is a welcome drop from last quarter’s all time high of 25.0% but is still on the high side when compared with the previous eight quarters.  The drop from 25% is primarily the result of lower projected expenses in the High-Cost and Lifeline programs that are down 16%, and a modest 1% increase in the interstate telephone contribution base.

The longer-term solution to high contribution factors will require the expansion of the contribution base probably along the lines of the Federal State Joint Board proposal released last October (see our newsletter of October 21st).

USAC’s Schools and Libraries News Brief of December 13, 2019 summarizes the FY 2020 budget rules of the FCC’s recent Category 2 Order (FCC 19-117) indicating that:

• FY 2020 is a transition year — a prelude to a reset of five-year budgets for FY 2021-2025.
• All applicants will have a prorated portion of Category 2 funding available for FY 2020.

Note:  For many applicants, who have yet to use any Category 2 funding, this transitional year can provide more funding than will be available in the subsequent five years.

• Applicants will not be able to carryover unused Category 2 funding from FY 2020 into FY 2021.

For a more detailed discussion of the new Category 2 rules, see our newsletter of December 9th.

USAC’s News Brief also:

• References the FCC’s release of the Eligible Services List for FY 2020 discussed above.
• Provides instructions for applicants wishing to update their EPC account administrators.