Published Online: June 2, 2015
Published in Print: June 3, 2015, as The E-Rate Overhaul in 4 Easy Charts
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The E-Rate Overhaul in 4 Easy Charts

Big changes to the E-rate program made by the Federal Communications Commission over the past 18 months are showing up in dramatic ways in this year's requests for telecommunications-related funding by schools and libraries. The biggest shift: Huge demand—and support—for internal wireless connectivity.

According to new data provided to Education Week by the FCC, applications for E-rate discounts to help purchase the equipment and services needed for internal wireless networks were up 92 percent compared to 2014-15. And for the first time in three years, those requests are likely to actually be granted. The FCC says it expects to make funding commitments for all of those so-called "Category 2" applications deemed eligible. The price tag could rise as high as $1.6 billion.

That money will be available because of a policy overhaul adopted by the FCC in summer 2014, as well as its historic vote in early 2015 to increase the annual E-rate spending cap from $2.4 to $3.9 billion.

The new E-rate is directing resources "where schools and libraries need the most help: getting access to robust broadband," FCC Chairman Tom Wheeler wrote in a recent blog post. The changes will be widely felt on the ground, and soon.

Historically, for example, a relatively small handful of large urban districts ate up whatever limited E-rate funds were available to support internal connections, leaving most schools and libraries with nothing. By instituting a new cap on the per-pupil amount that any one applicant could request, however, the FCC ensured that this year, all eligible applicants will share in the newly available funds for wireless. More than $238 million in commitments have already gone out.

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Not everything is roses: Many districts and libraries may face new holes in budgets resulting from the commission's phase-down of support for older telecommunications technologies, which begins this year. But overall, Mr. Wheeler wrote, "we're thrilled that modernization is working as projected."

1. A Bigger Overall Pie

After voting earlier this year to raise the annual E-rate cap, the FCC could award schools and libraries as much as $3.9 billion in 2015-16. That’s an increase of 60-plus percent compared with recent years.

2. A Huge Appetite for Wireless Connections

After years of providing little or no support for hardware and services needed to support robust internal wireless networks, the FCC made some big policy changes in 2014. The result: Schools and libraries have pounced, as seen in the dramatic increase in applicants for so-called Category 2 E-rate funds, devoted to internal connectivity.

3. Spreading the Wealth

The last year the FCC awarded money for Category 2 discounts was 2012-13, when just half of applicants gobbled up the entire $809 million that was available. This year, the FCC expanded the pot of money for Category 2 requests and also capped the per-pupil request that applicants could make for funding. That meant significantly more applicants, each asking for less money. As a result, as many as 10,000 schools, districts, and libraries will likely share about $1.6 billion in Category 2 aid this year.

4. A New Budget Hole to Fill

The downside to all the new support for broadband and wireless? The FCC has begun phasing out E-rate support for some older technologies. A 20 percentage-point reduction in the discount rate for phone services this year, for example, was a big reason schools and libraries requested $337 million less for this type of E-rate funds in 2015 than they requested in 2014. Beginning this year, schools must start finding money to pay for phone service from sources other than the E-rate program.

Vol. 34, Issue 32
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