E-rate stakeholders, including the Illinois Office of Governor, Illinois Department of Innovation & Technology and the Schools, Libraries & Healthcare Broadband Coalition (SHLB), applauded the Commission’s recent Notice of Proposed Rulemaking (NPRM), released January 31, 2019, seeking public comment and additional data on making the suspension of the current E-rate amortization policy permanent.
In the early years of the E-rate Program, the amortization policy was created in order to not deplete funding by allowing large, upfront payments to be made for large telecommunications projects. Until 2014, the policy required any non-recurring payment that exceeded $500K to be amortized over a minimum period of at least three years. In the FCC’s 2014 Second E-rate Modernization Order, the Commission expanded eligible services to include large scale special construction costs, dark fiber, and self-provisioned networks to support high speed broadband connectivity to our nation’s schools and libraries. As a result, it suspended the amortization requirement until June 30, 2018, to bolster and promote competition and expedite the construction and affordability for these large-scale projects upfront.
There are a number of benefits that support the elimination of the outdated amortization requirement, such as, inter alia, (1) opening opportunities for smaller schools districts and consortia, (2) promoting federal and state collaboration through state matches, (3) decreasing administrative costs, (4) creating greater transparency in pricing, (5) promoting greater competition between the small and medium tiered-regional and national providers and the larger incumbent providers, and (6) providing other alternatives to leased managed services.