While we anticipated the Federal Communications Commission (FCC) would take a look at its Universal Service Fund (USF) programs once Chairman Pai was in place, we did not anticipate the speed at which moves to review and evaluate previous actions would occur. After the Commission retracted the “E-rate Modernization Report,” our E-rate ears have been itching with concern that our bread and butter USF program would attract undue attention. We did not have long to wait.
Last week, FCC Commissioner Michael O’Rielly sent a letter (pdf) to the Universal Service Administrative Company (USAC) seeking detailed information on libraries and schools that applied in 2016 for E-rate funding for dark fiber and self-provisioned fiber. Our main concern is that the tenor of the Commissioner’s inquiries calls into question the need for these fiber applications. The FCC’s December 2014 E-rate Modernization Order allowed libraries and schools to apply for E-rate on self-construction costs for dark fiber and applicant owned fiber. Allowing E-rate eligibility of self-construction costs “levels the playing field” with the more typical leased fiber service offered by a third party, like a local telecommunications carrier. Because we know from our members that availability of high-capacity broadband at reasonable costs continues to be a significant barrier for libraries that want to increase broadband capacity of their libraries, ALA advocated for this change in several filings with the FCC.
We find Commissioner O’Rielly’s concern about overbuilding to be misplaced. The real issue is getting the best broadband service at the lowest cost, thus ensuring the most prudent use of limited E-rate and local funds. As we explained in our September 2013 comments (pdf) filed in response to then Acting Chair Mignon Clyburn’s opening of the E-rate modernization proceeding, “It is not a good stewardship of E-rate funds (or local library funds) to pay more for leasing a circuit when ownership is less expensive.”
To help ensure that applicants get the lowest cost for their fiber service the FCC already has in-place detailed E-rate bidding regulations that require cost be the most important factor when evaluating bids from providers. As the Commission stated in its December 2014 E-rate Modernization Order (pdf), incumbent providers “Are free to offer dark-fiber service themselves, or to price their lit-fiber service at competitive rates to keep or win business – but if they choose not to do so, it is market forces and their own decisions, not the E-rate rules” that preclude their ability to compete with a self-construction option. The Commission’s reforms to allow self-construction costs for dark fiber and applicant owned fiber were correct in 2014 and remain so. In addition, applicants will evaluate and select the best, most cost effective fiber option for their library or school.
If the last few weeks are any indication of activity at the FCC, we’re in for a busy spring.