At the New Year, it is worthwhile to look back on the past year and to plan for the new one. Here’s our annual E-rate review of 2020 and a preview of 2021. Additional details on 2020 developments can be found in our E-Rate Weekly News Archive.
Key E-Rate Milestones in 2020:
Normally we’d start the year’s review in January, but it is important to note that a key event for 2020 actually began in December 2019 when the FCC released the new Category 2 budget rules (FCC 19-117) resetting all budgets as of FY 2021 on a districtwide or systemwide basis (see our newsletter of December 9th). The FCC also extended the existing budgeting process through FY 2020 as a transitional step and added an additional 20% to all budgets.
Back to our regular “Hindsight 2020” review:
|
January
|
- The FCC permanently eliminated a requirement to amortize upfront network installation/special construction charges of $500,000 or more for Category 1 services. The requirement had initially been put in place in 2000 but had been temporarily suspended as of FY 2015 (see our newsletter of February 3rd).
|
|
February
|
- The first reports were received of a coronavirus outbreak in China. Initially the only E-rate implication pointed to potentially longer delivery times for network gear and components coming from China. How wonderful it would have been if that was the only consequence.
|
|
March
|
- The pandemic rapidly became more serious leading to a rash of school closings. FCC Commissioners Rosenworcel and Starks proposed emergency steps to support “telework, telehealth, and tele-education.” Calls to extend E-rate eligibility in support of remote learning were heard throughout the year to no avail.
- The FCC did take a number of significant steps to address the COVID crisis. Specifically:
- The Form 471 application window was extended six weeks into April.
- FCC Chairman Pai initiated a “Keep Americans Connected Pledge” asking broadband providers to avoid service terminations and late fees.
- The FCC temporarily waived E-rate gift rules, initially through September 30th, subsequently through December 31st, then through June 30th of 2021.
- The FCC confirmed that its community use provision of E-rate-supported WiFi networks would be permitted during school or library closures (DA 20-234).
- USAC was directed to provide applicants with additional time to respond to PIA inquiries.
|
|
April
|
- In further response to the pandemic, the FCC extended a series of other deadlines for service delivery dates, invoices, Form 486s, appeals and waivers (DA 20-364).
- A joint announcement by the FCC and the U.S. Department of Education promoted the use of CARES Act funding to support remote learning. The FCC subsequently announced a similar collaboration with the Institute of Museum and Library Services (“IMLS”) to use library CARES funding to increase community access.
|
|
May
|
- USAC’s preliminary estimate of demand for FY 2020 was $2.01 billion, an increase of less than 0.5% over FY 2019.
- The first funding wave for FY 2020 was released on May 9th, less than two weeks after the close of the application window.
|
|
June
|
- As of the end of June, prior to the start of FY 2020, USAC had released ten funding waves with FCDLs issued on just over 73% of applications received for FY 2020 totaling approximately $978 million.
- The FCC declined to make changes to clarify the Category 1 drop-down menus in the FY 2021 Form 470. Applicants who have not yet filed their Form 470s for next year should note the following important points:
- The appropriate drop-down option for an applicant seeking bids for internet access delivered to its premises (i.e., a service that includes data transmission service) is either Leased Lit Fiber (with or without Internet Access) or Internet Access and Transport Bundled (Non-Fiber).
- The appropriate drop-down option for an applicant seeking bids on bulk internet, which the applicant is responsible for transporting to its premises, is Internet Access: ISP Service Only (No Transport Circuit Included).
- The USF contribution factor for 3Q20 reached a new high of 26.5%. Unfortunately, it would rise still higher later in the year.
|
|
July
|
- USAC implemented multifactor authentication (“MFA”) for its new “One Portal” to access EPC and the legacy BEAR system.
|
|
August
|
- In recognition of the pandemic’s effect on E-rate applicants, the FCC began to routinely grant late-filed Form 471 applications submitted less than 60 after the close of the April 29th window.
- USAC introduced a new Category 2 Budget Tool for the next five-year budget cycle FY 2021 – FY 2025.
|
|
September
|
- The USF contribution factor rose again to 27.1% for 4Q20.
- The GAO released a report calling for the FCC and USAC to “comprehensively assess fraud risks to the E-rate program.”
- The FCC announced a second application window for FY 2020 to permit schools to apply for additional bandwidth to support the increased demand generated by large numbers of off-campus learners remotely accessing the schools’ on-campus internet facilities.
|
|
October
|
- USAC implemented a streamlined processing system for BEARs with multiple FRN line items so that they would be reviewed and funded on a line-by-line basis.
- The FCC updated its guidance on Category 2 budgets to cover independently-run charter schools and independent schools or districts with part-time students.
- Departing from its traditional practice of holding regional, in-person, fall training workshops, USAC substituted a comprehensive series of webinars (available online).
|
|
November
|
- Connected Nation, which assumed the responsibility for maintaining the E-rate broadband funding database from EducationSuperHighway, released the first version of its free Connect K-12 tool.
- Joan Wade, Executive Director of the Association of Educational Service Agencies, was reappointed to the USAC Board.
|
|
December
|
- With the pending change of the Administration, FCC Chairman Ajit Pai announced his intention to resign as of January 20, 2021. The Senate also confirmed the nomination of Nathan Simington to assume the Commission seat previously held by Michael O’Rielly. This will temporarily leave the FCC with four Commissioners — two Republicans, two Democrats — pending the nomination of a fifth Commissioner by incoming President Biden.
- The FCC issued a long-awaited Order (FCC 20-178) giving applicants up to 120 days to submit invoices after the receipt of a Revised Funding Commitment Decision Letter (“RFCDL”).
- The FCC released the Eligible Services List (DA 20-1418) for FY 2021, virtually unchanged from FY 2020. The FCC declined requests to include support for remote learning and additional cybersecurity protection.
- The USF contribution factor broke the 30% level jumping to 31.8% for 1Q21.
- New COVID-19 relief legislation, while not addressing E-rate support for remote learning, did include an additional $54 billion for Elementary and Secondary School Emergency Relief (“ESSER”) and, more specifically, $3.2 billion for an Emergency Broadband Benefit (“EBB”) program that can be used to subsidize devices and home internet access for remote learners (see our newsletter of December 28th).
|
Anticipated E-Rate Developments in 2021:
Despite a smoothly running E-rate program and efforts by the FCC and USAC to ease the pandemic’s impact on schools and libraries, 2020 was an exceedingly difficult year. Although vaccine distribution has begun, the early months of 2021 may be the worst yet.
At this point, USAC is on track for opening the Form 471 application window on January 15th and closing it on March 25th. To be safe, we encourage applicants to complete their competitive bidding processes, sign their contracts, and file their FY 2021 applications as early in the year as possible.
The most significant E-rate developments for 2021 are likely to depend upon the political restructuring of the FCC, expected to begin after the January 20th inauguration. With the Democrats in charge of the Administration, we would expect the appointment, at least initially on an acting basis, of Jessica Rosenworcel as FCC Chair. Commissioner Rosenworcel is a long-time proponent of using E-rate to support remote learning, specifically to resolve the Homework Gap. Fundamental changes to the E-rate program in this direction, however, may well depend upon the appointment of a third Democratic Commissioner and/or supportive changes in Congress.
One problem that the FCC will hopefully address this year is the ongoing funding of the Universal Service Fund (“USF”). As noted in our 2020 summary above, and in more detail in our newsletter of December 21st, the USF quarterly contribution factor has for the first time spiked above 30%. The FCC has been ducking this growing problem for years. The only solution on the table at the moment is a minority report released in 2019 by three state members of the advisory Federal-State Joint Board on Universal Services recommending the expansion of the contribution base to include a broader class of services, e.g., broadband internet services. Unfortunately, an FCC announcement (FCC 20-185) last week indicates that three state commissioners on the Joint Board, including two of the three authors of the report, have been replaced (apparently upon “retirement”).
Other developments to look for in 2021 include:
- FCC modernization of its suspension and debarment rules as per the Notice of Proposed Rulemaking (FCC 19-120) (see our newsletter of December 2, 2019).
- Possible expansion of the list of “covered companies” included in the FCC’s order Protecting Against National Security Threats to the Communications Supply Chain Through FCC Programs (FCC 19-121) based on additional threats out of China.
- Reevaluation of the E-rate eligibility of enhanced cybersecurity products and services, particularly as Category 2 (see SECA’s ESL Reply Comments).