Wants to eliminate amortization of upfront buildout costs

The FCC has proposed eliminating an impediment to schools' and libraries' access to high-speed broadband.

The FCC since 2014 had suspended a requirement that schools and libraries amortize over three years upfront charges for construction projects of $500,000 or more--but that grace period was set to expire at the end of the 2018 E-rate funding cycle (the E-rate is the portion of the Unversal Service Fund government subsidy program funding those broadband buildouts).

The FCC has proposed eliminating the amortization requirement permanently. It said making schools and libraries pay for those projects over three years created uncertainty about whether they would have e-rate funding to cover years two and three and increased costs for those builds.

"Our experience over the past few years suggests that allowing the amortization requirement to be restored would decrease broadband investment while increasing administrative burdens, and that eliminating the requirement would not create a drain on E-Rate funding," the FCC said in a notice of proposed rulemaking and order.

"[O]ur experience indicates that the suspension of the amortization requirement has encouraged the deployment of high-speed,

low-cost broadband networks by eliminating administrative barriers and making E-Rate funding more predictable," the FCC said, but also said it was eeking comment on whether that experience bore out.

The order waives the amortization requirement while the FCC collects comment and votes on making it final.

The Schools, Health and Libraries Broadband Coalition (SHLB) was celebrating.

"The SHLB Coalition is thrilled that Chairman Pai and the FCC have suspended the E-rate amortization requirement for FY 2019 applicants and proposed to eliminate it altogether," said SHLB Coalition executive director John Windhausen Jr. "Uncertainty over the amortization rule has been one of the biggest disincentives to building high-capacity broadband to our nation's schools and libraries. As the FCC points out, the concern that special construction might overwhelm the E-rate program has dissipated over time. Reinstating the amortization requirement would have been costly for schools, libraries, and broadband providers, and would have jeopardized several state matching programs.... We encourage the FCC to eliminate the amortization rule altogether."

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