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#ERATE - CATEGORY 2 UPDATE


MODERNIZING THE #ERATE PROGRAM FOR SCHOOLS AND LIBRARIES.


WCB releases report to analyze available data on the five-year budgets for internal connections, also referred to as \"category two budgets\" before the 2019 funding year. (Dkt No 13-184). Action by: Chief, Wireline Competition Bureau. by REPORT. (DA No. 19-71). WCB. DA-19-71A1.pdf

 

IV. Conclusion

41. The Bureau concludes, based on participation rates, budget utilization, and other data in this Report, that the category two budget approach is generally sufficient. Overall, we observe that schools and libraries participate at a high rate, and funding is available to entities in urban and rural areas, and across all discount bands. Applicants have flexibility to determine how best to use funding, demonstrated by the varied usage rates and number of years applicants receive funding.


42. We conclude that the category two budget approach is a clear improvement over the two-in-five rules approach. Under the category two budget approach, greater funding is available for internal connections, distributed to more applicants, in a more equitable and predictable manner, giving applicants more flexibility to determine how best to upgrade their systems. Specifically, under the category two budget approach, applicants have had access to category two funding every year, and no requests have been denied due to insufficient funding. By contrast, under the two-in-five rules approach, a small number of applicants exhausted available funding, with most applicants receiving no funding. In addition, 43% of schools and 23% of libraries each year now receive category two funding as compared to 10% of applicants under the two-in-five rules. Indeed, 86% of schools have participated in at least one year as have over 80% of highly concentrated urban libraries. Moreover, the category two budget approach has generally resulted in a more equitable distribution of funding that better approximates the makeup of E-Rate applicants, in comparison to the distribution under the two-in-five rules approach where funding disproportionately went to urban schools.


43. We also find that the category two budget approach appears to be sufficient for most schools and libraries. Almost half of schools (48.6%) and most libraries (84.6%) have used less than half of their allocated five-year budget, and a supermajority of schools (73.2%) and libraries (94.4%) will use less than 90% of their budgets.


44. The category two budget approach may not be sufficient, however, for schools and libraries at the funding floor, as well as libraries outside of highly-concentrated urban areas. Only 48% of the 10,000 schools at the funding floor requested category two funding since FY2015, compared to 85% of schools with budgets above the funding floor. Similarly, less than half of libraries outside of highly-concentrated urban areas, including rural libraries and libraries at the funding floor, have requested category two funding. Low total budgets may be deterring participation by these entities because the administrative costs of participating outweigh the benefits of doing so.


45. Recommendations. We recommend that the Commission retain the category two budget approach. Given the improvements that the category two budget approach has shown over the two-in-five rules, the Bureau does not recommend a return to the two-in-five rules approach. The Commission established five-year category two budgets to make funding for internal connections more equitable, predictable, and more broadly available. It did so in recognition of the importance of internal connections, particularly robust Wi-Fi networks, the role they play in enhancing educational opportunities for students and library patrons, and the potential for these networks to close the digital divide. The Bureau’s review of the data from the first five-year category two budget cycle shows that the Commission’s goals in creating these budgets have largely been met.


46. Further, we recommend that the Commission consider some targeted changes to the budgets moving forward such as an increase in the funding floor, to the extent that it finds that insufficient funding is deterring entities at the funding floor and rural libraries from participating. These recommendations are supported by the data the Bureau reviewed and are also consistent with the Public Notice comments.


Ordering Clauses

47. Accordingly, IT IS ORDERED that, pursuant to the authority delegated pursuant to Section 0.91 of the Commission’s rules, 47 CFR § 0.91, and pursuant to the delegation in paragraph 93 of the 2014 Second E-Rate Order,1 this Report in WC Docket No. 13-184 IS ADOPTED.


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