The FCC have just stated they will support E-rate subsidies for existing school fiber networks. Schools and libraries that own and operate their own fiber network need to take notice, since there are operating and capital costs that can now be subsidized by E-rate, providing significant benefit to schools and libraries. This subsidy is applicable to E-rate funding year 2016, i.e. for the service period from July 1st 2016 to June 30th 2017.
The detail is provided in the Eligible Services List (ESL) that was released by the FCC on September 11th 2015. A link to the ESL document is at http://www.usac.org/_res/documents/sl/pdf/ESL_archive/EligibleServicesList-2016.pdf
The key paragraph this blog post covers is paragraph 12 of the ESL on page 5. I copy paragraph 12 here:
In response to requests from commenters, we add a sentence to Note (1) to clarify that Network Equipment and maintenance and operation are eligible under Category One when purchased for existing self-provisioned networks and existing leased dark fiber that is lit by an E-rate applicant. This clarification reflects the intent of the Commission to expand the fiber options available to applicants and encourage increased competition by fully equalizing the E-rate program’s treatment of lit and dark fiber and by supporting self-provisioned broadband networks. Applicants that currently own a self-provisioned broadband network or lease dark fiber may apply for Category One support for new modulating electronics and other equipment necessary to make the broadband service functional as well as for maintenance and operating costs of those existing networks. For existing dark fiber or self-provisioned networks, applicants will not be required to seek new bids for a lit fiber service in order to receive funding to upgrade or refresh their Network Equipment or to re-contract for maintenance and operation contracts. In addition, we clarify that one-time costs that are part of special construction, specifically design and engineering and project management, are only E-rate eligible as part of a special construction funding request that includes the costs of constructing network facilities.
The important sections of this paragraph I have put in bold. If you’re a school or library or school district or library system and you own and operate a constructed fiber network or you own and operate a fiber network where you are leasing dark fiber, then the maintenance, operation and network electronics required to run the network can all be subsidized by E-rate. The key point here is that this is applicable for networks that you have constructed in the past or for networks where you already lease dark fiber.
Please remember, that you will have to bid out the maintenance and operation services you want subsidized, and you will need to bid out the network electronics you want subsidized. Per standard E-rate rules, the subsidy is the cost up to your discount level, which for an average school or library is 70% but can be as high as 90%.
Also note that both scheduled and unscheduled maintenance costs are subsidized. Thus, if a backhoe accidently cuts through your fiber – an unscheduled maintenance event or emergency event – the cost of the repair will be subsidized.
You may decide you need to refresh all your electronics for your network. If you complete an E-rate form 470 bidding out the network electronics, as is required under E-rate competitive bidding rules, then the cost of the equipment will be subsidized up to your discount level.
You should note that you will not be required to seek bids for lit services, to compare against, as is the case if you were wanting to build your own fiber network or lease fiber. This is another key point that does make sense, since you already have your network in place.
Network maintenance and operation operating costs and capital costs of equipment could be significant for a school or library network and with E-rate subsidies typically ranging from 40% to 90%, with the average being 70% this clarified rule change represents a significant subsidy to schools and libraries.
If you’re a school or library and you operate your own fiber network, whether you constructed it yourself, or you already lease dark fiber, then you should issue a form 470 for funding year 2016, to obtain E-rate subsidies. You can issue a form 470 now for E-rate funding year 2016, with the deadline typically being mid February 2016, if past years are used as an example.
If you have any questions on this, don’t hesitate to shoot me an email.