The agenda for the FCC’s September 2025 Open Commission Meeting includes the following two items:
- Modernizing the E-Rate Program for Schools and Libraries – The Commission will consider a Declaratory Ruling that would align E-Rate eligibility with section 254 of the Communications Act of 1934, as amended, and clarify that the provision of Wi-Fi, or other similar access point technologies, including the equipment needed to provide such service, on school buses is ineligible for E-Rate funding.
- Addressing the Homework Gap through the E-Rate Program – The Commission will consider an Order on Reconsideration that grants a petition for reconsideration and finds that section 254 of the Communications Act of 1934, as amended, does not permit the funding of off-premises use of Wi-Fi hotspots and Internet services and makes them ineligible for E-Rate support.
Given the past statements from the 2:1 Republican majority on the Commission, including Chairman Brendan Carr, we fully expect that the FCC will vote to terminate both services going forward.* If and when that occurs, the next set of questions becomes what happens to funding for bus Wi-Fi for FY 2024 and for both bus Wi-Fi and hotspots for FY 2025? In other words, if both services become ineligible, to what extent will those changes be administered retroactively?
Unfortunately, these are significant questions. Rather than simply deciding to make these services ineligible going forward into FY 2026, FCC Chairman Carr has expressed a belief that both services were adopted “illegally” by the previous Democratic FCC majority because of provisions of the Communications Act of 1934 and/or the Telecommunications Act of 1996 limiting E-Rate support to “on-campus” services.
To be clear, neither the 1934 Act (as amended) nor the 1996 Act uses the phrase “on-campus.” In our view, any such restriction would be a function of the FCC’s shifting interpretations of earlier rulemakings, particularly the 2014 First and Second E-Rate Modernization Orders. It is one thing to modify what services are eligible going forward, and quite another to decide that such rules should be rolled back retroactively.
If they are, here is the funding situation for FY 2024 and FY 2025 as it now stands:
Specifically:
- School bus Wi-Fi first became eligible in FY 2024. Excluding a few cancellations, USAC approved 232 applications awarding $12.2 million in funding. Of the $4.7 million disbursed to date, 88% was paid out as SPIs, primarily on a recurring basis throughout the funding year. It is not clear whether remaining FY 2024 BEARs or SPIs are currently being processed.
- Although school bus Wi-Fi and hotspots are theoretically eligible for FY 2025 — as per the FY 2025 Eligible Services List — no applications have been approved to date.
Next week’s Commission meeting is likely to be a disconcerting one for applicants and service providers with a stake in bus Wi-Fi and/or hotspots.**
What we expect to hear at the meeting, and what we would rather hear at the meeting, are two quite different scenarios. As expressed in our Section 706 Report comments (see our newsletter of September 15th), we continue to believe that school bus Wi-Fi (if not hotspots) is a valuable service that needs to be preserved. What we expect to hear, however, is that the FCC intends to make both services E-Rate ineligible and to do this without public comments.
Worse still, we expect the Commission to make these services ineligible retroactively. This would or could mean:
- Denying all pending bus Wi-Fi and hotspot applications for FY 2025. Applicants, who have already begun these services would then be on the hook for services already provided and perhaps those committed under contract for longer terms.
- Funding for FY 2024 bus Wi-Fi services could be subject to a zero Commitment Adjustment Decision (“COMAD”). Should this occur:
- All outstanding funding commitments would be cancelled; and still worse
- Demand Payment Letters could be issued requesting the return of all funds previously invoiced.
Should any of this occur, applicant faith in the reliability of the E-Rate program to fund its promised broadband commitments, after all program guidelines were carefully followed, will take a major hit. After twenty-five successful years, this would be the first time the government, led by either Republicans or Democrats, defaulted on previously approved E-Rate funding.