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Published in Print: May 9, 2001, as FCC's E-Rate Proposal Would 'Spread the Wealth'

FCC's E-Rate Proposal Would 'Spread the Wealth'

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Schools and districts in highly impoverished communities that have been getting first crack at federal E-rate discounts for wiring classrooms and building telecommunications networks may have to share more of that aid with schools that are not quite as poor, under a proposal by the Federal Communications Commission.

The FCC, which designs the rules governing how the federal "education rate" program operates, is considering changing the formula for awarding the discounts, which range from 20 percent to 90 percent. "[The FCC is] trying to spread the wealth," said Norris Dickard, a senior associate at the Washington- based Benton Foundation who heads that organization's E-rate project.

Under the proposal, the first tier of E-rate services—discounts for telephone service and Internet access—would not be affected. Those discounts are awarded to all eligible school and library applicants and consume the majority of the $2.25 billion that telecommunications companies are required to pay in to the program every year.

But the FCC is proposing to change how second-tier discounts are doled out.

Second-tier discounts—which are for internal connections such as wiring classrooms and buying communication servers and routers—are currently awarded first to applicants that are eligible at the 90 percent discount level, which generally includes schools with enrollments in which more than 75 percent of students are eligible for federal free or reduced-price lunches. As it is, only after those requests are satisfied is the remaining money awarded to applicants serving communities that are less poor.

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To give schools in marginally wealthier communities a slice of E- rate support for internal connections, the FCC is proposing to give, at the 90 percent level and each level below that, priority to the schools and libraries that did not receive funding during the previous year.

Having prior recipients sit out for a year of funding for internal connections could hurt schools or districts that have multiyear contracts to install infrastructure, some education technology experts said.

The funding problem, as explained in the FCC's April 30 "notice of proposed rule making and order," soon to be published in The Federal Register, is that the top-priority applicants for internal connections will almost certainly drain the E-rate fund dry this year, leaving school and library projects unfunded in communities that are nearly as poor as the ones that qualify for the discounts.

The 37,188 applications filed for the program's Year 4, which runs from July of this year through June of next year, have requested $5.2 billion in discounts, FCC officials estimate, which is well above the $2.25 billion funding cap.

The period for accepting comments on the proposed rule change will be within 15 days after the proposed change is published in The Federal Register. Comment and reply procedures and the complete text of the proposed rule are available online at

Vol. 20, Issue 34, Page 7

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