This past Monday, the FCC’s Wireline Competition Bureau released a Report examining the effects of the phasedown in E-rate support for voice services adopted in the FCC’s 2014 E-rate Modernization Order in order to emphasize the funding of high-speed broadband service. The Order created a phasedown of support for voice services by 20 percent each year commencing in Funding Year (FY) 2015 and continuing through FY 2018, with voice support ending entirely in FY 2019. The 2014 Order also required the Bureau to measure the impact of the phasedown on E-rate applicants generally and on those that had previously requested support only for voice services. The Report breaks its findings down by state, by urban versus rural applicants, and by applicants qualifying for different rates of E-rate support.
Overall, the Report found that support for voice services, which accounted for 1/3 of all E-rate support in FY 2014, constituted only 10 percent of such support in FY 2016. The total amount of support for voice plunged from $708 million in FY 2014 (before the phasedown began) to $259 million in FY 2016 (the second year of the phasedown). The number of applicants seeking support for voice services declined from 24,575 in FY 2014 to 18,884 in FY 2016. But the Report also found that a significant majority (71 percent) of applicants who received only voice service support in FY 2014 continue to receive E-rate support for voice and other services. Only 12 percent of FY 2014 applicants did not apply for any E-rate support in FY 2016.
Several industry parties, including T-Mobile, NTCA and TDS, have asked the FCC to consider maintaining E-rate voice discounts beyond FY 2018. But the Report states that unless the FCC acts, “the phasedown will continue until no funding is available for voice services in funding year 2019.”