E-rate Category 2 NRPM Update

E-rate Category 2 NPRM Update

In July, the FCC released a Notice of Proposed Rulemaking (“NPRM”) on the future of Category 2 rules and funding levels for FY2020 and beyond (FCC 19-58). 

While concluding that Category 2 should continue on a budgeted basis as has been the case since FY2015, the budgeting process is now subject to NPRM comments and ultimate FCC resolution.

With complex questions still to be answered and potential rule changes on the horizon, we would advise applicants who are trying to optimize their FY2020 funding to wait to file a 470 for Category 2 until new rules are issued. 

EducationSuperHighway enthusiastically agrees with the Commission’s statement that the E-Rate Category 2 Rules implemented via the 2014 Modernization Orders have resulted in “more equitable and predictable” Category 2 funding, and fully supports the Commission’s intent to make these rules permanent. 

The E-rate Category 2 program has been a real game-changer for school districts across America looking to upgrade their internal networks. Since 2015, 83% of school districts nationwide have received federal E-rate Category 2 funding — a dramatic increase from 14% between 2011 and 2014.

If no action was taken by the FCC, Category 2 funding would revert back to the cumbersome pre-2015 “two-in-five” process, so the NPRM provides some assurance of funding for applicants planning Category 2 projects for FY2020. Based on the NPRM it is likely that: 

Applicants will at minimum, have access to new funding in FY 2020 if: 

  • They began using their 5-year budgets in FY 2015 (i.e. their budgets end in FY 2019)
  • They have not used any Category 2 funding

Applicants will at minimum, have access to whatever funding remains in FY 2020 if:

  • They began using their 5-year budgets in subsequent funding years (i.e., FY 2016 – FY 2019)

Another issue is that the eligibility of Managed Internal Broadband Services (MIBS, or Managed WiFi), and Basic Maintenance for Internal Connections (BMIC) also expire at the end of FY2019. Therefore, if the FCC does not issue a Category 2 Order that re-authorizes these subcategories (or issues a new Eligible Services List that does so), those services will not be eligible for an E-rate discount for FY2020.

We will be updating our 2020 Funding Year guidance for schools as soon as an FCC Order is published. Until then, the information we provide about Category 2 should be considered provisional.

Read EducationSuperHighway’s full response to the Notice of Proposed Rulemaking here. For more information on how E-rate Category 2 can help you improve your internal network, explore our free tools and resources, or schedule a call with a member of our team.