TR Daily FCC Eliminates E-Rate Amortization Requirement
Monday, January 27, 2020

FCC Eliminates E-Rate Amortization Requirement

The FCC today eliminated the requirement for schools and libraries that receive funding from the E-rate program to amortize up-front, non-recurring charges of $500,000 or more over three years, as it proposed doing nearly a year ago.

The FCC imposed the amortization requirement in 2000 out of concern that large up-front charges associated with new or upgraded network infrastructure could “drain available E-Rate funding by diverting large sums to a limited number of applicants,” and it suspended the requirement in 2014 through the 2018 funding year to lower barriers to broadband infrastructure investment and increase funding certainty for program applicants. When it adopted the notice of proposed rulemaking in WC dockets 19-2 and 13-184 early last year, it waived the requirement for the duration of the rulemaking proceeding (TR Daily, Jan. 31, 2019).

“Our decision will promote increased broadband infrastructure deployment to our nation’s schools and libraries and thereby further the Commission’s goal of closing the digital divide,” the Commission said in the report and order adopted Jan. 22 and released today.

“During the suspension period [since 2014], applicants no longer had to worry about whether they would receive a funding commitment in the second and third years of the amortization cycle and service providers did not have to wait years to recoup their construction costs since applicants could receive a funding commitment upfront for the E-Rate supported portion of the project,” the order says.

“This increased certainty and predictability for funding of special construction projects, in particular, has increased deployment of broadband infrastructure by resulting in lower costs to both applicants and the USF. With service providers able to recoup their costs sooner, the financing costs that service providers were previously passing on to applicants due to delays in recouping their investments are reduced, if not eliminated. Moreover, eliminating the need for service providers to finance large projects has also reduced the risks associated with investing in these projects and incentivized more service providers to bid on special construction projects,” it adds.

The elimination of the amortization requirement also decreases administrative burdens on E-rate applicants, which can now apply for funding once, rather than three times, the order says.

In a separate statement, Commissioner Jessica Rosenworcel said, “Thanks to E-Rate, schools and libraries in communities in every state are connected to the internet. As a result, this program is an essential part of promoting broadband access and opportunity across the country. Keeping it up to date is important and with this decision we do just that by eliminating an antiquated accounting policy that required the amortization of certain construction costs over several years. This is the right call. As this order highlights, during the period in which this policy was suspended, E-Rate recipients demonstrated that doing so allowed them to expand connectivity and save money. Accordingly, this decision has my full support.”

John Windhausen Jr., executive director of the Schools, Health & Libraries Broadband (SHLB) Coalition, said, “By removing the amortization requirement, the Commission demonstrates its commitment to connecting every school and library in the country to high-quality broadband. The FCC deserves great praise for working on a bipartisan basis to eliminate this outdated rule. The decision will encourage greater investment in fiber networks and promote enormous cost-savings for schools and libraries.” —Lynn Stanton, [email protected]

MainStory: FederalNews FCC UniversalServiceLifeline BroadbandDeployment

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