September 16, 2020 – The FCC’s Wireline Competition Bureau has announced the opening of a second E-Rate filing window for funding year 2020 to allow schools to request additional E-Rate funding to address increased on-campus bandwidth needs caused by the COVID-19 pandemic.[1] Specifically, schools may only request E-Rate discounts for additional on-campus category one services during this second funding window. Also, under certain circumstances, schools will not have to undergo a new competitive bidding process. The second filing window will open upon publication of the Bureau’s Order in the Federal Register, and will close on October 16, 2020.

According to the FCC’s News Release, “during this second filing window, schools will be able to purchase additional bandwidth for this academic year to address needs resulting from the increasing shift to 1:1 student-to-device ratios in classrooms, live streaming of classroom instruction to students at home, and expanding use of cloud-based educational tools and platforms – all of which can significantly increase on-campus bandwidth requirements.” The Bureau’s action represents the FCC’s latest effort to provide immediate relief to E-Rate schools as they continue to deal with the coronavirus pandemic.

E-Rate Funding For 2020

In March 2020, the Wireline Bureau set the E-Rate program funding cap for funding year 2020 at $4,226,120,519.[2] Normally, an E-Rate funding year runs from July 1st through June 30th of the following year. E-Rate participants apply for funding by filing FCC Form 471 during the funding window, which typically opens anywhere from 3-6 months before the start of a funding year.

For funding year 2020, the E-Rate filing window was available from January 15, 2020 through April 29, 2020. On May 1, 2020, the Universal Service Administrative Company (USAC) estimated the total demand for the E-Rate program for funding year 2020 would be $2.91 billion. This breaks down to an estimated demand for category one services of $1.74 billion and of $1.17 billion for category two services. USAC also informed the FCC of the availability of $500 million in carry-forward funding for 2020.[3] In July 2020, the Wireline Bureau directed USAC to fully fund eligible category one and category two requests.[4]

Category One Services Only For Second Filing Window

During the second funding year 2020 application window, schools may only request E-Rate discounts for additional on-campus category one Internet access or data transmission services needed as a result of the COVID-19 pandemic.[5]

The Wireline Bureau has given this reminder to applicants: E-Rate must be used on campus, and any “off-campus use of eligible services, even if used for an educational purpose, is ineligible for support.”[6]

Competitive Bidding Waived For Second Funding Round

Pursuant to the FCC’s E-Rate program rules, applicants for E-Rate funding are subject to a competitive bidding process in which they must publicly post a Form 470 to USAC’s website outlining their desired discounted services. Often, a Form 470 will include a request for proposal or other documents with further details on the requested services. Service providers review these applications and bid to provide service. An E-Rate applicant will then evaluate all bids it received and choose the most cost-effective bid. All applicants must wait at least 28 days before entering into an agreement for services. E-Rate applicants then file FCC Form 471 during the applicable funding year’s filing window to request E-Rate support for the contracted services.

During the second funding year 2020 filing window, the Wireline Bureau has waived the competitive bidding process for certain situations. Specifically, schools may submit an FCC Form 471 during the second funding year 2020 application window requesting E-Rate discounts without initiating a new competitive bidding process for the requested services if the applicant:

(1) already sought bids for the services by posting an FCC Form 470;

(2) received a Funding Commitment Decision Letter from USAC approving a funding year 2020 funding request for eligible category one Internet access and/or data transmission services that relied on that FCC Form 470, or has such a funding request pending; and

(3) requests additional E-Rate discounts during the second application window to purchase additional bandwidth through the existing service provider or a new one.[7]

The following requirements also apply to the waiver of the competitive bidding process:

• For the purposes of this second funding year 2020 application window only, USAC shall grant funding requests from applicants seeking funding where the price per megabit is the same or less than the original contract. Alternatively, if the price per megabit is higher than the original contract, USAC will limit the funding commitment to the price per megabit in the original contract.

• This temporary exemption to our competitive bidding rules does not relieve service providers of their obligation to offer the lowest corresponding price for services.

• To the extent states and localities have not waived local procurement laws, E-Rate applicants may post an FCC Form 470 if necessary to comply with local laws.

Form 471 Application Information

E-Rate schools applying for funding in the second round are required to submit the following information in the narrative section of the new FCC Form 471 funding request:

(1) the identification numbers for the funding year 2020 FCC Form 471 and funding request that previously relied on the FCC Form 470;

(2) a statement confirming that the requested E-Rate discounts are for additional bandwidth needed as a result of COVID-19; and

(3) to facilitate and expedite USAC’s review, additional information about the price per megabit in the original and new funding requests and any difference in pricing.[8]

********************

[1] Schools and Libraries Universal Service Support Mechanism, CC Docket No. 02-6, Order, DA 20-1091 (Sep. 16, 2020) (Order), https://docs.fcc.gov/public/attachments/DA-20-1091A1.pdf. The Bureau’s decision has been made on an emergency basis, without notice and comment.

[2] Wireline Competition Bureau Announces E-Rate And RHC Programs’ Inflation-Based Caps For Funding Year 2020, CC Docket No. 02-6, WC Docket No. 02-60, Public Notice, DA 20-263 (Mar. 12, 2020), https://docs.fcc.gov/public/attachments/DA-20-263A1.pdf. The 2020 E-Rate funding cap represents a 1.8% inflation-adjusted increase to the $4,151,395,402 cap from funding year 2019. Id. The FCC began indexing the E-Rate funding cap to inflation in 2010. See 47 C.F.R. § 54.507(a)(1).

[3] “USAC projects that a total of $500 million will be available to carry-forward to Funding Year 2020 from prior funding years as follows, 2000: $24.27 million; 2001: $3.07 million; 2003: $1.85 million; 2004: $1.08million; 2005: $3.04 million; 2006: $3.73 million; 2007: $2.50 million; 2008: $2.00 million; 2013: $0.63 million; 2014: $0.38 million; 2017: $100.67 million; 2018: $284.52 million; and 2019: $72.26 million (net of funds carried back to funding years with a negative carry forward balance).” USAC, Federal Universal Service Support Mechanisms Fund Size Projections for Third Quarter 2020, WC 06-122, WC 05-337, WC 03-109, CC 02-6, CC 02-60, CC 96-45 (May 1, 2020), https://www.fcc.gov/ecfs/filing/105011625508530.

[4] Wireline Competition Bureau Directs USAC To Fully Fund Eligible Category One And Category Two E-Rate Requests, CC Docket No. 02-6, Public Notice, DA 20-712 (July 6, 2020), https://docs.fcc.gov/public/attachments/DA-20-712A1.pdf.

[5] Order at ¶ 16. The schools and libraries universal service support program – E-Rate – provides discounts for two categories of services. Category one services include telecommunications, telecommunications services and Internet access. Category two services include internal connections, basic maintenance of internal connections and managed internal broadband services.

[6] Order at ¶ 16.

[7] Order at ¶ 18.

[8] Order at ¶ 19.