New and improved universal service support mechanism for schools, libraries to become effective January 3

The FCC’s Sixth Report and Order (6th R&O) in its Schools and Libraries Universal Service Support Mechanism proceeding (more commonly known as “the E-rate program”) – first adopted last September – has finally been published in the Federal Register. This means that the revised rules will take effect on January 3, 2011

In the 6th R&O, the FCC has upgraded and modernized the E-rate program, consistent with the National Broadband Plan’s (NBP’s) vision of improving broadband connectivity at the nation’s schools and libraries.

The revisions adopted in the 6th R&O fall into three conceptual categories: (1) providing schools and libraries with greater flexibility to select and make available the most cost-effective broadband and other communications services; (2) simplifying the E-rate application process; and (3) improving safeguards against waste, fraud and abuse.

In particular, the 6th R&O provides schools and libraries with more flexibility by allowing applicants to lease dark or lit fiber from the most cost-effective provider. The FCC has also changed its rules to allow schools to permit community use of E-rate funded services outside of school hours. With affordable fiber, these “School Spots” are a major step toward the NBP’s goal of connecting an anchor institution in every community to affordable 1 gigabit per second broadband. The FCC indexed to the inflation rate E-rate’s funding cap in order to maintain purchasing power. Finally, the FCC seeks proposals for a limited pilot program to establish best practices to support off-campus wireless connectivity for portable learning devices, such as digital textbooks, outside of regular school or library operating hours. The Commission has separately announced that applications for the pilot program must be submitted on or before December 17, 2010.

The FCC simplified the E-rate program by streamlining the application process to reduce the administrative burden on applicants. The FCC also removed the technology plan requirement for priority one (telecommunications services and Internet access) services. The FCC is facilitating the disposal and recycling of obsolete equipment that received E-rate support by authorizing schools and libraries to receive consideration for such equipment.

The 6th R&O improves safeguards against waste, fraud and abuse by codifying the requirement that competitive bidding processes be fair and open. Applicants may not solicit or receive gifts from service providers and service providers may not offer or provide gifts to applicants. In addition, the 6th R&O adopts the eligible services list (ESL) for funding year 2011 (July 1, 2011-June 30, 2012). The FCC revisits this list each year based on input as to which services should or should not be deemed eligible for support. The only change of significance in this year’s ESL was to include features that facilitate the ability to communicate, such as blogging, e-mailing over a school or library’s hosted website, discussion boards, and services that may facilitate real-time interactive communication such as instant messaging or chat, as eligible for funds as part of a web hosting package. The FCC had previously deemed such features as ineligible, presumably because of their potential to devolve into a social networking site.

The FCC noted that the 6th R&O represents the first stage in a multi-stage upgrade of the E-rate program. The changes adopted will be in place for the upcoming funding year; however, the FCC will continue to consider changes to further improve and update the E-rate program.