The Future of the E-Rate

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The E-rate program has a lot more political clout than it did two years ago, when critics in Congress almost killed it before it got off the ground.

Frequently Asked QuestionsFollow the MoneyA Program Is Born: TimelineThe E-rate's FutureA Bureaucratic Hassle, But Worth ItLeveraging the E-rate's PowerRating the E-rateToday, most observers believe, its future is virtually assured.

"We're in a vastly different place than we were before the first monies had been distributed," says Keith R. Krueger, the executive director of the Washington- based Consortium for School Networking. "Then you had very strong congressional opposition and some people talking about phasing it out in five years. There still are critics, but they are not very vocal right now."

"It's very hard to start a subsidy and then withdraw it," adds Laska Schoenfelder, the co- chairwoman of a Federal Communications Commission panel that recommends rules for operating the E-rate fund. "If it's going to be withdrawn, Congress needs to do that. I don't see that happening."

That's not to say there won't be changes to the program, however. Everything from who runs it and how much funding it receives to what kinds of services it will cover could be open to discussion during the next few months, especially if Gov. George W. Bush of Texas returns the White House to Republican control.

Most importantly, Bush has proposed moving the E-rate program from the FCC to the U.S. Department of Education, arguing that it could be consolidated with other federal education technology programs and managed more efficiently.

One prominent critic of that plan, Reed E. Hundt, a former chairman of the FCC under President Clinton, contends that it would doom the program. Bush hasn't proposed an accompanying increase for the department's budget, Hundt says, asserting that the program would die if it depended on appropriations from a Republican Congress.

"Schools can count on having the election decide whether or not it will or will not exist," claims Hundt, one of the architects of the E-rate program.

Other critics argue that Bush's plan, which would have to be approved by Congress, is unrealistic.

Regardless of who wins the presidential election, E-rate will undergo changes.

"I'm not certain how the telecommunications companies would feel about giving the money to the Department of Education," says Diane M. Shust, the chief lobbyist for the National Education Association, which is supporting Bush's Democratic opponent, Vice President Al Gore. "It seems that it would be unworkable."

But Ray Sullivan, a spokesman for the Bush campaign, counters that funding for the program would not be reduced under the governor's plan.

"Governor Bush supports the program and the funding of the program, and believes it can be run better at the Department of Education," Sullivan says.

Even some Democrats believe that Bush wouldn't try to kill the program, given how many schools are benefiting from it.

"I can't imagine anyone coming into the White House and saying, 'Let's get rid of that thing,'" says Sen. John D. Rockefeller IV, D- W.Va., who co-sponsored the legislation that created the E-rate.

Meanwhile, critics in Congress are lying low. "Nothing is going to happen to scuttle the program this year," predicts Ken Johnson, a spokesman for Rep. W.J. "Billy" Tauzin, R-La., who introduced a bill to change the E-rate's source of funding. Even though the E-rate "has grown wildly out of control," Johnson says, more pressing issues will dominate Congress's attention for the rest of the session.

Gore, who as vice president was a key early supporter of the E- rate program, would keep the program under the FCC if he's elected president, while increasing funds for education technology in other parts of the federal government, says Jim Kohlenberger, a senior adviser to the Gore campaign. "What he won't do is let people undermine the program," Kohlenberger says. "He'll continue to try to streamline the program so it's easier for schools and libraries to apply for it."

Within the FCC itself, the general sense is that the E-rate will stay basically the same for the near future. The five-member commission has the power to set the program's rules, including what it pays for and how much money should be allocated for the E-rate from the universal- service fund, which subsidizes telephone and other communications services in high-cost areas with fees collected from telecommunications companies. None of the four commissioners interviewed for this story said he or she expected any big changes.

Bush has proposed moving the E-rate program from the FCC to the U.S. Department of Education, consolidating it with other federal education technology programs.

But the possibility that at least three of the five current commissioners could be replaced within the next two years makes it difficult to predict what may actually happen. Because the president appoints FCC commissioners and can ensure that up to three of them, including the chairman, are from his party, the panel's political balance would almost certainly shift if Bush were elected.

And Hundt, the former FCC chairman, says that if Republicans gain the upper hand, "they'd probably start shrinking [the E- rate]."

But Harold W. Furchtgott-Roth, a Republican FCC commissioner who has consistently criticized the program, says he's not aware of any "party view" on the E-rate.

He says he has voted against full funding for the E-rate because he doesn't believe the federal Telecommunications Act of 1996, which created the program, intended for it to pay for internal connections in schools.

He also worries that the E-rate has received too much attention at the expense of other parts of the universal-service fund. "There is a kind of crowding-out effect [with the E-rate]," he argues. "The more you spend in one area, the less that's available to spend in other areas."

Regardless of who wins the presidential election, there will likely be discussions about what kinds of services the E-rate program should cover in the years ahead. That question becomes more relevant as one of the program's primary missions—to connect every classroom in the nation to the Internet—gets closer to being accomplished.

Some observers argue that after every classroom has basic Internet access, the E-rate fund should be substantially decreased.

"Once you've paid for the toll road, you ought to rip out the toll booth," says Patrick H. Wood III, a Texas utilities commissioner appointed to that post by Bush and a member of the FCC panel that recommends rules for the E-rate program.

Most supporters of the E-rate disagree, countering that the evolution of communications technology will ensure a continuing need for the program."The demands of these applications [for learning] are going to continue to grow," says Kohlenberger, the Gore aide. "We need to go faster and farther."

Gore would keep the program under the FCC, while increasing funds for education technology in other parts of the federal government.

Even so, supporters are quick to say they won't try to get more out of the E-rate for schools than they're already getting, for fear of resurrecting opposition to the program.

"I don't want to in any way even begin to make people think that I or anyone else is thinking about adding anything else into the E-rate than is currently the case," Rockefeller says.

As for suggestions that E-rate discounts should be extended to institutions of higher education and community technology centers, or be used for personal computers, curriculum content, or teacher technology training, current FCC Chairman William E. Kennard says such proposals range too far from the universal-service fund's original purpose of creating a national phone network.

But, he adds, a legitimate question for the FCC to consider is whether to put a greater emphasis on broadband telecommunications services to schools. Such services typically include the two-way, high-speed transmission of voice, data, graphics, and video over the Internet.

Many schools are already tapping the E-rate for broadband services, but in some areas the services are still unavailable or unaffordable.

"At some point, the basic need [for Internet access] is resolved and the demand moves to something more substantive—other forms of broader connectivity," says David Byer, the executive director of the Web-based Education Commission, a presidential panel charged with investigating the use of the Internet in education.

Another pressing question is whether schools that receive E-rate discounts should be required to use Internet filtering programs designed to screen out material deemed inappropriate for minors. Legislation mandating such a policy has been moving through Congress this year, but its future is unclear. Most education groups oppose the idea, maintaining that schools are capable of monitoring their students' use of the Internet on their own.

Finally, schools should expect to see efforts to simplify the E-rate's application process.

"Because the program was being so intently attacked and monitored, we had to go overboard in getting information and paperwork from our applicants," Kennard says. "Now that we have a better sense of where the problem areas lie, it's my hope we can relieve some of the paperwork burden, particularly for the smaller districts."

Changes could come as soon as January, when the FCC is scheduled to review its universal-service policies.

"If I'm here as chairman, we will look at [the E-rate] because I think it's vital," Kennard says. "You can't look at improvements in universal service and not look at the E-rate."

Vol. 20, Issue 3, Pages 21-22

Published in Print: September 20, 2000, as The Future of the E-Rate
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