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Education Opinion

Making ‘Cents’ of E-Rate Spending

By Guest Blogger — February 26, 2014 2 min read
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Note: Taryn Hochleitner, a research associate at AEI, is guest posting this week.

With 2013 E-Rate funding requests totaling almost $5 billion, education groups are calling for an increase of the federal program’s insufficient $2.38 billion funding cap. Raising the cap would likely mean increasing telecommunications companies’ required contribution to the fund, a charge providers typically pass on to consumers. But a troubling lack of clarity on how current funds are spent, and anecdotal signs of waste and abuse, makes improvements to oversight and spending transparency necessary before any overall funding increase can proceed in good conscience.

How can we assure consumers their money is well-spent? The FCC needs to acquire better information on service pricing and applicant spending, and assess whether and how to share those data. Publishing this information would be an invaluable vehicle for accountability and third-party research and analysis. And a more transparent E-Rate market could lower prices and allow funds to stretch further. Here are three changes the FCC may consider in its effort to improve transparency of E-Rate spending:

Facilitate Bidding Price Comparisons: In last year's public notice, the FCC requested comment on ways to facilitate applicants' sharing of information on prices of E-Rate-eligible services in order to help others assess whether they're getting a fair deal during the bidding process. Though there is a rule requiring providers to give schools and libraries the lowest price available, there's no real way of enforcing it. (In its comment to the FCC, Comcast called the rule "a source of ongoing confusion and uncertainty.") Applicants with similar needs may pay different prices for similar services due to varying levels of negotiating savvy. Not all E-Rate applicants are equipped to judge a good price, and can wind up paying too much. Are there ways applicants can crowd-source their knowledge to avoid this issue? Would service providers be willing to share information to enable better price comparisons?
Publicly Report Purchase Prices: The FCC may consider publishing actual prices providers charge applicants for E-Rate services. While applicants have to report this information to the Universal Service Administrative Company, it is not currently made public. There is staunch disagreement between education and industry groups on this subject: While education groups have advocated for the change, industry representatives feel that circulating prices would reveal proprietary information and lead to misleading cost comparisons. Would this fix actually result in lower prices, or will it deter vendors from participating in the program?
Solicit "Impact" Information From Applicants After They Have Used Discounted Services: After obtaining a service contract, applicants are required to report information on "impact"--like the number of students or patrons to be served--in their application for a discount (remember, applicants have to sign a contract before they know if they're getting E-Rate funding). This happens before projects are completed and before schools have received their funding commitment. The same information could reveal a more accurate picture if instead provided on the back-end, perhaps during the invoicing phase.

But these data, and other relevant information that the FCC may choose to collect and/or make public, will be of limited use if they can’t be easily shared or compared. It would behoove the FCC, then, to require applicants to report data in a standard format. In a joint comment to the Commission, a collection of eight education groups advocated for the FCC to adopt “Open Data Policy” practices, meaning the data are publicly accessible, machine-readable, and reusable. These groups write, “Publishing data online in an open format that can be retrieved, downloaded, indexed, and searched can help accelerate collaboration, innovation, and better resource allocation.” This call was echoed by New America’s Open Technology Institute, which suggested integrating E-Rate data with other datasets like NCES’. Once collected, such data could be made publicly available online--any researcher’s dream. Last year at an AEI event, FCC Commissioner Ajit Pai proposed creating “an easily accessible online resource so that the public can see in detail how much E-Rate funding is available to a school and how each school is spending its E-Rate funds.”

Making these changes likely won’t be simple. For example, despite the enormous benefits of doing so, the FCC will have to carefully consider whether requiring applicants to report data in a standard, machine readable format will impose undue administrative burdens, especially since lessening such burdens is a main objective of E-Rate modernization.

But the effort will almost surely be worthwhile. Beyond accountability purposes, making the above changes could allow for a number of useful analyses, like identifying trends in service needs or comparing costs and pricing across communities or states. Most importantly, they can go a long way towards making sure applicants are getting the best bang for their E-Rate bucks, something E-Rate modernization proponents and consumers alike could cheer about.

--Taryn Hochleitner

The opinions expressed in Rick Hess Straight Up are strictly those of the author(s) and do not reflect the opinions or endorsement of Editorial Projects in Education, or any of its publications.

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