Navigating New E-Rate Rules for WiFi Hotspots

Beginning in funding year 2025, WiFi hotspots will be eligible for E-rate Category One discounts. Here's what you need to know about your school's eligibility, funding caps, tracking requirements, and more.

• By Brian Stephens
• 09/24/24

Lack of high-speed internet is a significant problem in almost 75% of communities served by the nation's K–12 schools, according to Funds For Learning's annual E-rate Applicant Survey. Beginning with the next E-rate cycle, a key change to the E-rate program's rules aims to narrow the "homework gap" by making WiFi hotspots that schools and libraries loan to students and patrons eligible for E-rate discounts.

For funding year 2025, WiFi hotspots — including both the hardware and monthly service — are eligible for Category One discounts. However, schools and libraries must follow a slew of requirements in order to take advantage.

Here's a closer look at these requirements and what they mean for schools.

Eligibility

The rule change applies to single-user WiFi hotspots only. Other transmission technologies, such as LTE or Citizens Broadband Radio Service (CBRS), aren't eligible — nor are "multi-functional" devices like smartphones, laptops, or tablets, even if they're cellular enabled.

To be eligible, a WiFi hotspot must meet the FCC's strict definition. In its Report and Order announcing the change, the Commission notes that the rules "limit the capability of a sole-purpose WiFi hotspot to devices that: (1) are portable; (2) are a single device (i.e., not a set of linked devices); and (3) do not have Ethernet ports either upstream (WAN-type ports) or downstream (LAN-type ports)."

Applicants are prohibited from applying for more than one hotspot device per student, staff member, or library patron.

Funding Caps and Prioritization

To make sure all applicants get a fair shot at E-rate funding, there is a pre-discount cap on the amount of funding allowed for WiFi hotspots and services over a three-year period.

Each eligible entity will calculate its budget for hotspots using a set formula. The formula considers the number of students (in the case of a school or district) or the size of the building (in the case of a library), adjusted by the Category One discount rate.

The formula is modeled after the budget for Category Two services, but with a different calculation. Here's what this looks like in practice.

A school with 500 students and a 90% Category One discount rate would be eligible for up to $56,700 in E-Rate discounts for WiFi hotspots over a three-year period (the calculation in parentheses is rounded to the nearest ten before multiplying by $630):

(500 students x 20 hotspots / 100 students, or 0.2 x .90 C1 discount rate) x $630 = $56,700

A library with 10,000 square feet and a 90% Category One discount would be eligible for up to $31,500 in E-Rate discounts for WiFi hotspots over a three-year period:

(10,000 square feet x 5.5 hotspots/1,000 sq. ft. x 0.90 discount rate) x $630 = $31,500

In addition to this three-year funding cap, the rules establish a pre-discount limit of $15 per month, per line, on recurring internet service and $90 per hotspot device purchased.

In terms of prioritization, WiFi hotspots and service loaned to students and patrons for off-campus use will be funded after all on-campus services if demand is high.

Utilization and Record Keeping

To prevent schools and libraries from amassing WiFi hotspots, avoid wasteful spending of E-rate funds, and ensure the devices are being utilized properly, the FCC has imposed some rules overseeing use of the equipment.

Lines of service that aren't used for three consecutive months must be terminated by the service provider. Service providers must notify applicants of lines that go unused for 60 consecutive days and then allow applicants 30 days to use the hotspot before terminating the service. Service providers are also required to provide usage reports to applicants at least once per billing cycle.

Applicants can't request funding for WiFi hotspots they plan to use in the future, or for emergency storage in the event of loss, theft, or breakage.

If an applicant does not replace a lost, damaged, or stolen hotspot device, the applicant must discontinue the service within a reasonable time (such as 60 days). Service providers are required to waive early termination fees for services to WiFi hotspots no longer in use.

Also, E-Rate applicants must maintain detailed inventories of their WiFi hotspots and services to verify locations and usage.

According to the FCC, schools and libraries receiving E-Rate support for hotspots are required to maintain "(1) the equipment make/model; (2) the equipment serial number; (3) the full name of the person to whom the equipment was provided; (4) the dates the equipment was loaned out and returned, or the date the school was notified that the equipment was missing, lost or damaged; and (5) service detail." Libraries must maintain the same records, except for the full name of the patron borrowing the hotspot. In both cases, "service detail" is defined as "the line number or other unique identifier that associates a device to that particular line of service."

Other Requirements

As E-Rate eligible equipment, WiFi hotspots are subject to the same rules governing other eligible services.

For instance, schools must be CIPA compliant to be eligible for hotspot funding (that is, they must have technology in place to safeguard students online). They must adhere to all E-Rate competitive bidding requirements, including posting a Form 470, collecting bids, and waiting 28 days before signing a contract and filing a Form 471. And they must keep all documentation for at least 10 years in case they're audited.

Funds For Learning has been helping schools and libraries successfully comply with E-Rate rules and regulations since the program's inception. We recently held a webinar to discuss the new WiFi hotspot rules and are available to help applicants navigate these regulations as needed.