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After Changes to Categories One and Two, FCC Grants Waiver for Certain Contracts

Danielle Frappier Posted in FCC

On February 8, 2017, the FCC’s Wireline Competition Bureau waived several of its rules with respect funding year 2017.  The eligible services list (“ESL”) for FY 2017 contained several changes pertaining to whether a service is classified as Category One or Category Two.  One of the changes was to classify as Category One all connections among multiple schools and libraries, regardless of whether the school or library buildings are located on the same physical grounds.  Previously, the E-rate rules contained a presumption that if the communications service crossed a public right of way, it was a Category One service.  The 2017 ESL now defines “campus” in a much more flexible way.  For example, if multiple schools share a single building, the portion of the building used by each school in that building is that school’s campus.  The result is that certain services that were previously been defined as Category Two (such as those contained in the same building) are now categorized as Category One.

This can be a problem for recipients that are operating under a multi-year contract and therefore may have filed their FCC Form 470 categorizing the service differently than how the service is now classified on the ESL for FY 2017.  The Bureau’s order waives the rule requiring parity between the Category of service sought in the FCC Form 470 and the Category of service ordered in the FCC Form 471 but only for  recipients bound by multi-year contracts entered into prior to the issuance of the FY 2017 ESL on September 12, 2016 covering  service  previously classified as Category Two that  is now classified as Category One.  The order explicitly states that the waiver does not apply to voluntary term extensions of the underlying contracts.

The order also grants a waiver of the new classification standards for internal connections wiring, which is typically owned or controlled by the school or library.  Where such wiring is provided to a school or library located in the same building with other schools or libraries, the recipient may elect to classify  such wiring under Category Two until further guidance from the Bureau.  Where such an election is made, the school or library would no longer be required to comply with the more elaborate Category One bidding requirements associated with self-provisioned networks.  Those rules were meant to ensure that schools and libraries made an apples-to-apples cost comparison between managed and self-provisioned WiFi networks.  The Bureau determined that those rules, while appropriate for the provisioning of a communications service, were not appropriate for internal wiring.