FCC Extends E-Rate to Off-Premises Wi-Fi Hotspots

On July 29, 2024, the Federal Communications Commission ("FCC") issued a Report and Order ("Order") extending E-Rate support to off-premises Wi-Fi hotspots for use by students, school staff, and library patrons. Hotspots had been funded under the Emergency Connectivity Fund (ECF) that ended on June 30, 2024. The new funding would become available July 1, 2025, but parties will likely challenge the FCC's authority to fund services beyond schools' and libraries' premises.

Funding for Off-Premises Hotspots

The Order expands E-Rate to cover portable, sole-function Wi-Fi hotspot devices (meaning that subsidies are not available for connectivity built into computers, tablets, or smartphones) and associated "commercially available"[1] mobile wireless internet services that can be loaned to and used off-premises by students, school staff members, and library patrons.

The subsidy will be capped at the applicant's discount-rate portion of $15 per month for monthly recurring services and $90 per Wi-Fi hotspot device, exclusive of taxes and state electronic waste fees (applicants may purchase more expensive devices and services, but the discount will only be based on charges below the caps). Even within these caps, applicants cannot receive more than their discounted share of a three-year budget based upon the capped price of $630 each (i.e., $90 per device plus $15 monthly for 36 months) for 20 hotspots per 100 students and 5.5 hotspots per 1,000 square feet for libraries. Budget cycles begin with fiscal year 2025, and applicants may submit requests for hotspots and services throughout the cycle as long as the total budget is not exceeded but may not request more than 45% of their three-year budget in any single year.

Hotspots will be treated as "category one" services in that their cost will not be deducted from an applicant's category two budget, but in the event that total demand exceeds the FCC's annual E-Rate funding cap, USAC was directed to only fund off-premises devices and services after on-premises category one and two services.

Usage Requirements and Compliance Measures

The FCC seeks to avoid waste by prohibiting support for hotspots that are unused for more than three months, a period that was likely selected to approximate the summer recess. The FCC prohibited applicants from applying for subsidies for Wi-Fi hotspots to be stored for future use such as to replace lost or broken devices. Service providers must check at least once every 31 days to notify schools and libraries (through monthly machine-readable usage reports sent within five business days of such determination) of services not used in the prior 60 days and terminate such services (without any termination penalty) that remain unused for 30 days after such notice. Applicants must replace lost or broken hotspots or work with service providers to discontinue associated services within a reasonable amount of time of becoming aware of the issue (e.g., 30 days). Terminated hotspots can be reactivated once per year.

Schools and libraries are responsible for assuring not only that hotspots are used, but also that they are used "primarily" for educational purposes. Applicants must activate hotspots and publicize availability to students, school staff, and library patrons. Every applicant must post an acceptable use policy (AUP) that requires hotspot use to be "integral, immediate, and proximate to" "the education of students" or "the provision of library services to library patrons," as applicable, but the FCC did not impose ECF's burdensome requirement to collect users' signed acceptance of the AUP. Although the FCC is aware of the practical difficulties in enforcing such restrictions, it decided, for now at least, not to dictate specific requirements for length of lending periods, require the use of login credentials, or restrict access to educational content.However, it warned that "[a]pplicants may be required, during a post-commitment review or audit, to explain what steps they have taken to comply with the requirement that use of the Wi-Fi hotspots is primarily for educational purposes (e.g., user restrictions, content restrictions, or duration or time limits)."

Additional Safeguards and Recordkeeping

Participating schools and libraries will be required to certify program compliance, including that off-premises Wi-Fi hotspots and services are primarily used for educational purposes; establish technical protections in compliance with the Children's Internet Protection Act; and maintain for the duration of the 10-year E-Rate recordkeeping requirement detailed hotspot inventories (including information about missing, lost, or damaged equipment), documentation of the AUP, evidence of publication of hotspot availability, and other program-required information. The FCC directed USAC to "regularly conduct program integrity reviews to monitor school, library, and service provider compliance with the requirements … including checking for warehousing and discontinued lines of services for non-usage."

Opposition

This Order follows earlier FCC efforts to expand E-Rate support for internet connectivity through its June 2024 order establishing a Pilot Program for Enhanced Cybersecurity and its October 2023 decision permitting funding for Wi-Fi on school buses. The Republican-appointed FCC commissioners opposed eligibility for hotspots, as they did with school bus Wi-Fi, arguing that in Section 254 of the Communications Act, Congress only authorized the FCC to fund telecommunications services to be used in "classrooms" and "libraries" and that only Congress and not the FCC can act to revive funding for off-premises hotspots after the expiration of ECF. The FCC's expansive interpretation of Section 254 to cover off-premises connectivity is now more vulnerable to judicial review after the Supreme Court's Loper Bright decision overturned long-standing Chevron deference to an agency's statutory interpretation. The rules would also be vulnerable to FCC reversal if the Republicans win the 2024 presidential election, although unless a judicial stay of the new rules is granted, the filing window for 2025 funding applications will open prior to a new administration.

Further Notice of Proposed Rulemaking

Comments will be due 45 days after publication of the Order in the Federal Register on proposals to:

• ensure that hotspots are being used for educational purposes and not going unused, such as by imposing login authentication requirements, short hotspot loan periods, reduced non-usage periods prior to termination, provision of service provider usage reports to USAC, and mandatory offering of technical support and training for users;
• allow service providers to charge fees for lost or broken hotspots;
• require service providers to implement and certify to compliance with NIST-compliant cybersecurity and supply chain risk management plans, similar to recipients of the FCC's high-cost Enhanced A-CAM funding; and
• exempt from the OPEN Government Data Act hotspot data usage reports and inventories that are provided to USAC.

The FCC also invited "comment on how our proposals may promote or inhibit advances in diversity, equity, inclusion, and accessibility, as well the scope of the Commission's relevant legal authority." Reply comments will be due 30 days after the initial comment deadline.

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For more information on this and related topics, please contact DWT's communications team.

*Fernanda Hilb is a senior regulatory manager with DWT.