Erate Services
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E-rate Modernization

The Federal Communications Commission (FCC) adopted the E-rate Modernization Order on July 11, 2014. The Order takes major steps to modernize and streamline the E-rate program and focuses on expanding funding for Wi-Fi networks in eligible elementary and secondary schools and libraries across America.

Some of the important program changes include (effective for 2015):


General Info:

Each school district (public or private) must calculate and use a single district-wide discount rate rather than calculating and using building-by-building discount rates. 

  • If an individual school that is part of a school district wants to file a separate application, its discount is the calculated discount for the school district of which it is a part, and it must provide that calculation on its application. An individual school that is part of a school district does not calculate its discount based on its own student population.
  • Independent charter schools, private schools, and other eligible educational facilities must calculate their discounts separately if not affiliated financially or operationally with a school district.
  • Consortia and statewide applicants continue to use the simple average of the discounts of the members of the consortium or statewide application.  In addition, the discount for a consortium or statewide application applies to all services requested on the application, whether one member, a subset of members, or all members share the service.
  • Eligibility for the additional rural discount is determined at the school district or library system level. If more than 50 percent of the schools in a school district or libraries in a library system are considered rural, the district or system is eligible for the rural discount.

Library systems should apply using the discount rate of the school district in which the central outlet, or main administrative office, of the library system is located.

Schools that use surveys to determine their E-rate discount must calculate their discount using only the surveys they actually collect.

USAC must make information regarding services and equipment purchased by schools and libraries publicly available on its website.  Applicants may opt out of this public disclosure requirement only if a specific law, rule, or other restriction bars publication of the purchasing price data.  Vendor contracts executed after the effective date of the Order may not contain any restriction barring publication of this pricing data.  

Applicants and service providers will be required to file all documents with USAC electronically. 

A consortium lead may seek bids on behalf of the schools, school districts, and libraries for which it has authority to seek competitive bids for E-rate eligible services – even if it does not have authority to purchase services for the consortium members.  The Order also directs USAC to prioritize review of E-rate applications from state and regional consortia applicants.

E-rate applicants and service providers must permit auditors, investigators, attorneys, and other appointed personnel to enter their premises to conduct E-rate compliance inspections.

The FCC updated the definition of rural and the manner in which schools and libraries determine their urban or rural status.

  • The FCC now uses the U.S. Census Bureau definition of urban/rural, which defines urban areas as areas with populations of 50,000 people or more for urbanized areas and 2,500 to 50,000 for urban clusters. Rural encompasses all areas not in an urban area.
  • Non-instructional facilities (NIFs), including NIFs with classrooms, do not have an urban or rural status and do not count toward the urban or rural determination for the school district.
  • If there are charter schools that are part of the school district, they count toward the urban or rural determination for the school district.
  • Consortia and statewide applicants do not have an urban or rural status. Each entity that is a member of the consortium or statewide application calculates its discount using the appropriate level of poverty and urban or rural determination as described above.

Technology Plans are no longer required.

The document retention period will be extended from five to 10 years after the latter of the last day of the applicable funding year, or the service delivery deadline for the funding request.



Priority1 will now be called Category1, with emphasis on broadband and internet access.  Service types included in Category1 are telecommunications services, telecommunications, Internet access services, and voice services generally similar to the service types included in the former Priority1.  The maximum discount level remains 90% per funding year (FY).

The highest discount level for voice services is now limited to 70% for FY2015.  This will decrease by an additional 20 percentage points each subsequent FY.  This phase down will apply to all costs incurred for the provision of telephone services and circuit capacity dedicated to providing voice services, including: local phone service, long distance service, plain old telephone services, radio loop, 800 service, satellite telephone, shared telephone service, Centrex, wireless telephone service such as cellular, and interconnected VoIP.  For example, a school district eligible for an 80 percent discount for Category1 services would be eligible for a 60 percent discount for voice services in FY2015, and a 40 percent discount for voice services in FY2016.  

Funding has been eliminated for: paging; telephone service components including directory assistance charges, text messaging, custom calling services, direct inward dialing, 900/976 call blocking, and inside wire maintenance plans; e-mail; web hosting; and voicemail.

There is NO budget for Category1 services.



Priority2 will now be called Category2, and consists of the internal connections equipment or services necessary to bring broadband into, and provide it throughout, schools and libraries.  Service types included in Category Two are internal connections, managed internal broadband services, and basic maintenance of internal connections generally similar to the service types included in the former Priority 2.  The maximum discount level is now set at 85% per FY.  Funding is available for routers, switches, wireless access points, internal cabling, racks, wireless controller systems, firewall services, uninterruptable power supply, caching, and the software supporting each of these components used to distribute high-speed broadband throughout schools and libraries. 

Support is eliminated for: circuit cards/components; interfaces, gateways, antennas; servers (except those WCB may find necessary for caching); software; storage devices; telephone components, video components, as well as voice over IP or video over IP components, and the components, such as virtual private networks, that are listed under Data Protection other than firewalls and uninterruptible power supply/battery backup.


Category2 Budgets:

Each school or library receiving Category Two support in FY2015 or FY2016 will have a five-year, pre-discount budget for those products and services.  

EACH individual school and EACH library outlet/branch has a Category Two budget.  School districts and library systems may not average their costs across multiple school or library budgets.     

  • To calculate the budget for a school:  multiply the number of students who attend the school by $150. 
  • To calculate the budget for a library:  multiply the total area of the library in square feet (including all areas enclosed by the outer walls of the library and occupied by the library), by $2.30 (two different caculations are now available for libraries)
  • The minimum Category2 budget amount is $9200 per school/library.

Non-instructional facilities (NIFs) do not have Category Two budgets. If an NIF is essential for the effective transport of information to or within a school or library, the applicant must allocate the cost of the eligible product or service associated with the NIF to one or more of the entities benefiting from the service.  School NIFs are school buildings or buildings on school property that generally don't contain classrooms:  administrative buildings, school bus barns and garages, cafeteria offices, and facilities associated with athletic activities.  Library NIFs are library buildings or buildings on library property without public areas:  administrative buildings, bookmobile garages, interlibrary loan facilities, and library technology centers).

Category Two budgets are subject to a five-year cycle beginning with the first funding year in which you receive Category Two support. However, the budgets can be used as needed, and schools/libraries are not required to use one-fifth of the budget each year.  For example, if your student population or library area in square feet does not change and you use some or all of your budget in FY2015, your available budget for FY2016 would be your original budget for FY2015 less any of that budget you used in FY2015, and so on for the remainder of the five-year period that started with FY2015.

Remember that your Category Two budget is based on the PRE-DISCOUNT cost of the products and services allocated to your school or library. A change in your E-rate discount from year to year does not affect the amount of your Category Two budget – only the amount of the cost that USAC will reimburse.



An applicant is exempt from the requirement to file an FCC Form 470 for an Internet access service if:  

  • the service offers bandwidth speeds of at least 100 Mbps downstream and 10 Mbps upstream for a pre-discount price of $3,600 or less annually (including any one-time installation and equipment charges), and
  • the service and price are commercially available.  Applicants may not average the cost of services across a number of buildings to qualify for this exemption. 



Applicants entering into new qualifying multi-year contracts will be permitted to use a streamlined application process in subsequent funding years if they submit a complete FCC Form 471 for the first funding year of the contract. Applicants in existing multi-year contracts must submit a complete FCC Form 471 for funding year 2015, to qualify for the simplified process in subsequent funding years. This simplified application process will be available to any applicant, beginning in funding year 2015, as long as:

  • the multi-year contract is five years or less, and
  • to the extent applicable, any changes in the requested services are within the scope of the original FCC Form 470 and multi-year contract.

Applicants must have a signed contract or other legally binding agreement in place prior to submitting their FCC Forms 471 to USAC. This ensures support for those applicants that have negotiated and agreed to contractual terms, but have difficulty obtaining signatures prior to the submission of their FCC Forms 471. 

On the FCC Form 471, each applicant will allocate the cost of the Category Two products and services to the entities sharing them. Each amount allocated to a particular school or library will count against the budget for that school or library.  Your budget could increase for FY2016 if your student count increases or you build an addition on your library.  Conversely, it could also decrease if your student count decreases or you downsize the internal area of your library.


 -- “Highlights of the E-rate Modernization Order”, SL News Briefs, 08/12/014
-- "Category One and Category Two", SL News Brief, 09/05/2014
-- "Category Two Budgets", SL News Briefs, 09/12/2014
-- "Overview of Discount Calculations for FY2015", SL News Brief, 09/19/2014
--  "Urban/Rural Status", SL News Brief, 10/24/2014



-- Please Check This Page Often for Modernization Updates --