Chapter 3

'Washington Gave Us Leverage'

'Washington Gave Us Leverage'

The federal effort to deliver affordable high-speed Internet to rural schools has brought new hope to one of Mississippi's most disconnected districts.

Calhoun County, Miss.

Inside the Federal Communications Commission headquarters last May, Mike Moore sat stoically, his nerves betrayed only by the pen bouncing in his fidgety hands.

For years, the superintendent of the 2,500-student Calhoun County schools has been charged outrageous rates for Internet service so slow his teachers couldn’t get online to take attendance.

But following the FCC’s overhaul of a program known as the E-rate, the district’s fortunes had abruptly turned.

Moore had been invited to the nation’s capital to tell federal officials how Calhoun County’s dramatic transformation came about, and what lessons it might hold for the rest of the country.

Calhoun County Superintendent

"Eyes started opening up and people said, 'Wow, this is really ridiculous,'" Superintendent Mike Moore said of efforts to bring attention to Calhoun County's slow, expensive Internet service.

It began, the superintendent said, with a phone call from Washington. Incredulous bureaucrats were skeptical of the district’s claim that it was getting billed $9,275 a month for a mere 3 megabits-per-second of bandwidth, delivered to its schools over old copper lines.

“I’m not going to say they didn’t believe us,” Moore told the panel. “But they said, ‘Can you send us your last 12 months [of] bills?’”

The feds had a vested interest. For almost two decades, the E-rate has been picking up most of the tab for the exorbitant rates that rural schools are often charged for subpar Internet service. Since 1996, the program has distributed about $31 billion. While that money has helped connect almost every school in the country to the Internet, rural schools continue to find themselves at a huge disadvantage when it comes to prices and access to fiber-optic cables.

To help close the gap, the commission voted in 2014 to overhaul the program. The goals, FCC officials said, are to upgrade nearly every school to a high-speed connection, while also bringing prices down by as much as 25 percent. To make that happen, the commission voted to pour an additional $1.5 billion a year into the E-rate, as well as to approve a series of rule changes aimed at spurring more competition among telecoms in rural parts of the country.

After proving just how dire its situation was, Calhoun County became one of the first school systems in the country to test the commission’s new approach.

Amazingly, Moore told the panel, the strategy worked.

The mere threat of new competition lit a fire under the district’s previously unresponsive Internet providers, the superintendent maintained. Suddenly, he said, those same telecoms were offering high-speed fiber-optic connections, at rates far lower than what they were charging schools for the outdated copper lines already in place.

“I loved it,” Moore said. “I really wanted to be able to tell these private companies, ‘Now, we can control you a little bit. You don’t control us.’”

At a Disadvantage

If it can happen here, FCC officials and school-broadband advocates would like to believe, it can happen in the rest of rural America, too.

“There are two lessons out of Calhoun County,” Chairman Tom Wheeler said in a recent interview.

“One is that everybody can be connected. And second is that when [school districts] take the situation into [their] own hands and say, ‘I’m not going to put up with it anymore, being told it’s too expensive or it can’t be built,’ the FCC will help.”

But the challenge is steep: The typical rural district pays almost two-and-a-half times as much for bandwidth as its urban and suburban counterparts, according to a new analysis by the nonprofit EducationSuperHighway. Rural schools are also twice as likely to lack access to the technologies experts describe as essential to keeping up with the ever-growing demand for more bandwidth in the classroom.

Furthermore, a look behind the curtain in Calhoun County reveals a more complicated story than the one Moore told in Washington. In fact, a screw-up of the district’s own creation has delayed the network upgrades the superintendent touted last spring.

And in some parts of rural America, improvements seem most likely to result from state, rather than federal, efforts.

Still, it’s clear that the commission’s overhaul of the E-rate program has jolted what had been a moribund landscape. As a result, for the first time, thousands of rural schools have good reason to hope that affordable high-speed Internet might finally be coming their way.

That’s welcome news in countless classrooms where the pent-up demand for better Internet is palpable.

Vardaman Teacher Patti Harrell
Patti Harrell Teaching Truck

Lesson planning and other online work that can be done in 45 minutes at home might take 3 hours or more using Vardaman High's spotty network, says math teacher Patti Harrell.

Take Patti Harrell’s math class back at Vardaman High.

Although some Vardaman teachers have given up on the school's long-dysfunctional network, Harrell has for years gone to great lengths to keep her students at least partially connected.

Because the district has mostly stopped buying new classroom technologies, Harrell uses her own: an old desktop computer she's refurbished, two laptops, a router and scanner that she purchased for the room, even a classroom projector that her students chipped in to buy her last year.

Since she can’t get online at school, Harrell also totes a hard drive back and forth each day, downloading YouTube videos and online lessons at home, then using them in class later.

And each night, in the mobile home-turned-log cabin that she and her husband rebuilt themselves, the 30-year veteran updates her class website, Harrell's Haven, so her students can access the day’s lessons and assignments on their phones.

“I want them to see [the technology] before they get to college,” she explains.

Still, it’s a far cry from what the teens might experience with faster, more reliable Internet.

A case in point sits just an hour up Highway 9. Schools in the college town of Oxford, Miss., get more than 30 times the bandwidth, for a small fraction of the price. As a result, textbooks there are a thing of the past. Students work on laptops, using adaptive software that customizes lessons to their individual skills and abilities. Internet research is an essential part of everyday life. High school juniors can actually sit down with a counselor and search online for college scholarships together.

Harrell can only sigh.

“If I’m in a place where I have to improvise, well, I’m going to make the best with what I have,” she said.

“But it would be heaven to have everything at your fingertips.”

Tied in Knots

To understand how the federal E-rate overhaul might finally unleash such possibilities in Calhoun County, you first have to understand the ungodly knot that has flummoxed the district for so long.

To begin, the slow copper lines currently serving its schools belong to different Internet providers: Wisconsin-based TDS Telecommunications Corp. in the southern half of the county, and the local Bruce Telephone Company in the north.

This causes two big problems for the district: Moore, who must run for election every four years, hasn’t wanted to upgrade some of the district’s schools while leaving others behind. But any comprehensive solution would require cooperation between the two rival companies.

To make matters messier, Calhoun County actually gets billed by a third carrier. That’s because the district, like most in the state, has long used Mississippi’s statewide contract with telecommunications giant AT&T.

On the whole, that “state master contract” generally works out well: 97 percent of Mississippi schools have fiber-optic connections, often at pretty affordable rates. But in a handful of small rural areas, state regulations protect the local telecoms from competition. So in Calhoun County, the district pays AT&T, but AT&T in turn must pay TDS and Bruce.

And those crazy $9,275 monthly bills that Washington bureaucrats couldn’t believe?

Those are a downside of the state's master contract with AT&T. When the deal was negotiated, no one bothered trying to bring the rates for old copper T1 lines down, because fewer than two dozen schools in the state were still using them.

In short, it’s a long-running mess — one that the small Calhoun County district has for years been unable to clean up on its own.

“It just seemed like every time we would come up with an answer, it got knocked down,” said Moore, the superintendent.

Unleashing Competition

Across the country, rural schools have repeatedly found themselves on the wrong end of that same confluence of forces: telecoms comfortable with the status quo. States that in many cases have made the problem worse. Districts without the technical expertise and bureaucratic know-how to change things.

And, for years, an FCC that allowed such problems to fester, via telecom-friendly E-rate rules and a troubling lack of transparency that has led to high-profile instances of fraud and abuse.

So when Chairman Wheeler and his fellow Democratic commissioners began talking about a dramatic overhaul of the program, it got people’s attention.

The most visible changes had to do with raising the E-rate’s annual spending cap, prioritizing support for broadband and Wi-Fi, and phasing down support for older services, such as telephones.

But in a series of proposals floated during 2013 and 2014, the FCC also signaled its support for rule changes aimed largely at helping rural schools.

To encourage new fiber build-outs, the E-rate’s limits on so-called “special construction” costs would be temporarily lifted.

No longer would telecoms be allowed to hide the rates they charged schools and libraries; all pricing would now have to be public.

Companies receiving federal subsidies for connecting rural homes and businesses would now be required to offer competitive rates to schools and libraries in their service areas.

And, then there was the potential rule change that got Gary Rawson's gears turning.

Mississippi state E-rate coordinator Gary Rawson

"The district came to me and said, 'What can we do to alleviate this problem?'" said Mississippi state E-rate coordinator Gary Rawson of his work with Calhoun County schools.

As Mississippi's E-rate coordinator and one of the people behind that state master contract, Rawson was intimately familiar with the challenges facing Calhoun County schools.

From his point of view, the district’s first step in getting faster, cheaper Internet was finding itself a new set of options.

So when the FCC signaled that it might support "self-provisioning" and allow school districts to use E-rate dollars to build or lease their own fiber networks, a light bulb went off.

The idea was that “the competition would come from the customers themselves,” Rawson said.

“It’s going to make a huge difference.”

Resistance From Telecoms

Perhaps the best evidence of the power of this seemingly technical rule change can be seen in how vocally it was fought by telecoms.

Essentially, the industry’s case boiled down to two arguments:

First, self-provisioning would lead to significant waste, in part by allowing federal dollars to subsidize the building of new fiber networks to places where nearby lines already exist. The poster child for this critique was Colorado’s EAGLE-Net, funded in 2010 with $100 million in federal stimulus support. That effort was suspended after audits found numerous problems, including a new fiber build-out to a remote, 11-student elementary school that already had access to two separate high-speed fiber-optic networks.

Second, the telecom industry argued, self-provisioning could create perverse incentives for companies not to serve rural areas, by taking two of those communities' best potential customers (schools and libraries) off the private market.

Despite the opposition, the FCC approved the changes in December 2014.

By that point, Rawson was already encouraging Calhoun County to get out in front of the new rules, even though many aren’t set to take effect until next school year.

In February 2015, the district took the plunge, issuing a request for bids from private providers willing to offer either faster, cheaper, fiber-based service to its schools — or a new fiber-optic network that the district could own or lease itself.

The results were almost immediate.

At the time, TDS and the Bruce Telephone Company were providing Calhoun County schools 3 megabits-per-second of bandwidth, delivered over copper lines, at a cost of $1,325 per school.

Just two months after Calhoun County issued its request for new bids, the same companies, faced for the first time with potential competition, presented Calhoun County with a new offer: 1 gigabit-per-second fiber connections, at a monthly cost of $600 per school.

Shaking Things Up

Exactly what happened in Calhoun County, and why, and what lessons it may hold for the rest of the country, depends on who you ask.

“Until we talked about building our own line, I don’t think [the companies] were serious,” said Moore, the superintendent. “Washington gave us leverage.”

Not surprisingly, officials from Bruce and TDS tell a different story. The real impact of the FCC’s changes, they say, was in spurring Calhoun County to finally look for options other than what was available via that state master contract.

To get connected to fiber, said Kevin Timmons, a network manager at the Bruce phone company’s parent entity, all Calhoun County had to do was ask.

“Bruce Telephone is ready to provide that fast Internet service,” said Timmons, touring a site where workers were already feeding hundreds of feet of heavy black lines into underground tubes.

“The cables are in the ground."

Laying Down Wires
Rural Internet Sign Laying Broadband Lines

The Bruce Telephone Company is in the midst of a four-year effort to lay high-speed fiber-optic lines across much of Calhoun County.

TDS, meanwhile, acknowledged that for a long time, figuring out a solution for Calhoun County hadn't been a priority. But Lonn Reas, a regional business manager for the company, laughed off the notion that his company’s sudden willingness to make big changes was spurred by the threat of competition for the small district’s business.

“Really, what did we have to lose?’” Reas said.

The solution, he maintained, “came out of folks saying, ‘We hear on the news that we need to provide higher-speed bandwidth to our schools.’”

Ultimately, that might point to the larger truth coming out of Calhoun County.

The FCC’s dramatic moves have shaken things up for school districts, telecoms, and states alike. It may not be neat or linear, but something is finally being done to improve rural schools’ access to affordable high-speed Internet.

And as a result, signs of progress can now be seen all over the country.

Nationally, the gaps in access to minimally adequate bandwidth between rich and poor and rural and urban/suburban districts have largely been closed, according to the analysis by EducationSuperHighway. The median national rate for school Internet access has also dropped by half, to $11/mbps.

At the state level, more than three dozen governors have pledged to make the issue a priority, and 20 are already taking action. California, for example, is connecting hundreds of K-12 schools to a state-run fiber network. Georgia is doing the same with PeachNet, a high-speed network that serves higher education institutions. Arkansas has enlisted private service providers in an effort to upgrade its rickety K-12 broadband network.

And in New Mexico, public officials are following the lead of other states and looking to support bulk purchasing of school bandwidth, possibly via new regional hubs that would make it easier for more providers to reach rural and remote areas with affordable Internet service. It's a product of the "win-win" approach for schools and service providers being pushed by the FCC and advocacy groups. Even companies such as WNM Communications, which has come under fire for charging schools sky-high rates for basic connectivity, say they're hopeful.

"Collaborative efforts among all the parties — schools, service providers, the states — are what's going to make this happen," said John Francis, the company's executive vice president.

Still a Long Way to Go

All that energy has generated optimism in Washington.

“We’re on a two-to-three year horizon for seeing big progress,” said Jon Wilkins, the managing director at the FCC.

But lest anyone think the battle has been won, there’s still the reality being lived each day back in Vardaman High.

E-Rate Binder

Having their initial application for federal funds denied was "heartbreaking," said Calhoun County Schools E-rate coordinator Kim Poteete, who also serves as the small district's alternative schools director, crisis managment coordinator, discipline committee chair, and federal programs coordinator.

When Calhoun County got its signed contracts for faster, cheaper Internet last April, the district thought its long ordeal was finally over.

But in September, its application for federal E-rate funds was denied.

The district’s technology coordinator and its E-rate coordinator had made a small but significant mistake on their application documents.

As a result of the snafu, work on the new fiber lines for Calhoun County schools was halted. The district won an appeal, but now its application has to be reconsidered, pushing back progress by months.

It’s yet another example of yet another barrier: The E-rate’s cumbersome red tape means that such clerical errors are common, especially for small districts who try to fill out the paperwork on their own.

In the meantime, teachers like Patti Harrell have been left to labor on, unable to get online for even the most basic tasks.

Packing up her laptops and hard drive in preparation for another evening of downloading lessons and videos at home, she can only hope that faster, cheaper Internet will come soon to Vardaman High.

“If I ever get to be in one of those places where you’ve got everything, I’m going to do as much with it as I can,” Harrell said.

“But we still don’t have it here.”

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