On June 29, 2023, the Federal Communications Commission circulated a draft Report and Order making certain changes to E-rate rules for Tribal libraries participating in the E-rate program. As a part of the Report and Order, the Commission also proposes changes to cost-allocation requirements for all schools and libraries participating in the E-rate program. If adopted, the changes to the program will include:
90% ancillary use rule for Internet access
Noting that “conducting cost allocations to exclude costs associated with minimal ineligible use or service components can be challenging, especially with regards to services,” the FCC adopts a presumption that “if at least 90% of an applicant’s requested Internet service is being used for eligible purposes, the remaining ineligible use of the Internet service will be presumed to be ancillary and, therefore, cost allocation is not required.” The Commission further noted that “if an applicant selected the most cost-effective Internet service offering to meet its needs, then the minimal ineligible use of that Internet service should be treated as ancillary and cost allocation is not required.” The draft Report and Order also cautions applicants that they may only request the amount of bandwidth they need for eligible uses.
Cabling cost-allocation
Stating that “it is unworkable to determine conditional eligibility of… cabling on a drop-by-drop basis,” the FCC now advises that “the eligibility determination should be based on the purposes of the network as a whole, rather than for each cabling “drop” or “jack”. As such, cabling “drops” or “jacks” that are part of a local area network primarily serving an eligible purpose… are eligible for E-Rate and do not require cost allocation.” The Order cautions, however, that “cabling is ineligible to the extent it is installed specifically for a security camera network or for a dedicated voice network.”
Non-instructional facility Category Two equipment use
In the draft Order, the FCC recognizes that “applicants have been required to undergo complicated cost-allocation calculations that have proven to be administratively burdensome” for shared Category Two equipment installed in non-instructional facilities. As a result, the Order states that “as long as the applicant is choosing the most cost-effective offering for the shared equipment… without regard for the NIF’s use, we agree that the applicant should not be required to cost allocate the NIF’s use of the shared equipment. In recognition of this, we now amend our rules to no longer require cost allocation to remove the costs associated with the NIFs’ use of the shared equipment in NIFs and related-library administrative buildings.”
In addition to modifying ancillary use and cost-allocation requirements for all applicants, the draft Order also includes a specific competitive bidding exemption for all library applicants. If adopted, library applicants seeking to purchase Category Two products and services with a total cost of $3,600 or less will not be required to file the FCC Form 470 and conduct the associated competitive bidding process.
The draft Report and Order may be viewed here.
