IT Infrastructure

E-Rate Undergoing Major Policy, Budget Upgrades

By Benjamin Herold & Sean Cavanagh — January 06, 2015 6 min read
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Federal officials have dramatically overhauled the E-rate program to prioritize expanded support for broadband and wireless connectivity, through the approval of a series of changes that have been widely hailed by education, library, technology, and industry groups as much needed and long overdue.

The capstone came last month, when the Federal Communications Commission approved a $1.5 billion annual funding increase for the program, which subsidizes schools’ and libraries’ purchases of telecommunications services.

“The increase in support is significant. It is justified. And it is smart,” FCC Chairman Tom Wheeler said in a statement accompanying the decision. “In the 18 years since the E-rate was established, technology has evolved, the needs of students and teachers have changed, and basic connectivity has become inadequate.”

The commission voted to raise the E-rate’s annual spending cap from $2.4 billion to $3.9 billion and approved a series of potentially significant rule changes in a contentious 3-2 vote Dec. 11 that broke down along partisan lines. Those moves followed the FCC’s July decision to overhaul the mechanics of the E-rate to prioritize broadband and Wi-Fi connectivity while phasing out support for older technologies.

The new money for the program will come from increased fees on telecommunications providers. Those charges are typically passed on to consumers via their phone bills. The FCC estimates that most U.S. households will pay an additional $1.90 per year, per phone line.

The new aid is expected to begin flowing to schools and libraries this coming summer. Most of the new rules approved by the commission—including several changes that could benefit rural schools, which continue to struggle with access to fiber-optic cable, generally regarded as the best means of providing high-speed connections—will take effect in 2016.

In the short term, experts on broadband service for schools say, the most noticeable changes will likely result from the program’s new emphasis on supporting schools’ internal Wi-Fi needs, which were neglected under the program’s previous structure. With the rise of online testing, 1-to-1 student computing, and digital instruction, improving schools’ Internet infrastructure has become a national priority.

Currently, 63 percent of public schools in the United States, serving more than 40 million students, are unable to deliver the level of bandwidth that the administration of President Barack Obama now recommends, according to the FCC.

Rising Digital Demand

A wide range of groups applauded the FCC’s moves to modernize its rules and dedicate more money to the E-rate program.

“The clear and compelling voice of America’s public school districts was heard,” Thomas J. Gentzel, the executive director of the National School Boards Association, based in Alexandria, Va., said in a statement.

How the E-Rate Overhaul Will Work

The Federal Communications Commission approved in December a series of sweeping changes to the E-rate, the second time in less than six months the agency adopted policies designed to modernize the 18-year-old program. The changes made last month to the program will:

Boost its total funding cap to $3.9 billion a year, from $2.4 billion, with annual adjustments for inflation;

Create new opportunities for schools and libraries to secure E-rate funding to use “dark fiber,” cable currently not being used by anyone—a step the FCC believes will help small and rural districts;

Allow schools and libraries to apply for E-rate aid to build their own high-speed broadband networks, or portions of such networks, when that is the most cost-effective option;

Require that all telecommunications companies that receive subsidies through a specific federal “high cost” program offer high-speed broadband to schools and libraries in those communities at “rates reasonably comparable” to the prices offered in urban communities; and

Offer incentives for state support of various broadband projects through a match of E-rate funds of up to 10 percent of the cost of construction, with a special focus for tribal libraries and schools.

SOURCE: Federal Communications Commission

For years, ed-tech advocates have pushed for more E-rate money, noting that demand has far exceeded available funds.

Prior to last month’s increase, the E-rate’s annual spending cap was frozen for years at $2.25 billion, and adjustments for inflation only began in 2010. Mr. Wheeler and his fellow Democrats on the commission, Mignon Clyburn and Jessica Rosenworcel, voted in favor of the change. Opposing the spending-cap increase were Republicans Ajit Pai and Michael O’Rielly.

While affluent families may not notice the small increases in their phone bills, “families in middle America are sick of being nickeled and dimed by Washington politicians,” Mr. Pai said in a dissenting statement.

Mr. Pai also worried that the new aid will end up going largely to meet schools’ internal Wi-Fi needs, rather than helping schools with poor or nonexistent connections to the Web. He questioned whether the changes will benefit rural schools, noting that no specific safeguards to ensure that the “fiber gap” is closed were part of the FCC’s December rule-making.

And relaxing the requirements for how E-rate applicants must demonstrate they have secured matching funds from other sources could lead to waste and fraud, Mr. Pai said.

In an interview with Education Week, Patrick R. Halley, the associate chief of the FCC’s wireline-competition bureau, who helped lead the recent E-rate modernization efforts, minimized such concerns.

Schools’ requests for aid for internal wireless-network-related equipment should be paid for with E-rate money that was already allocated prior to the December spending-cap increase, Mr. Halley said. Phasing out support for “legacy” technologies, such as phone lines, pagers, and email services, should free up $3.5 billion over the next five years, he said, and the commission has already ordered that $2 billion in existing reserves go to support internal Wi-Fi projects.

While none of the new E-rate money will be set aside specifically to help rural districts access external high-speed broadband networks, Mr. Halley acknowledged, the combination of more overall money for the program and new rule changes should help.

For example, schools have historically been prohibited from using the E-rate to build their own fiber-optic networks. That rule has been a particular problem for rural districts, more than one-fourth of which can’t find more than one bidder for broadband-connectivity services on the private market, according to a recent survey by the Consortium for School Networking, a Washington-based association for school technology officials.

The new rules will ease that prohibition by allowing for “self-provisioning” when no other affordable high-speed option is available.

Beginning in 2016, the Universal Service Administrative Co., which administers the E-rate, will also publish the prices and terms that providers charge schools and libraries for program-supported services. Given the “wildly different” prices that even neighboring schools have ended up paying for similar services under the current system, Mr. Halley and others said the change would bring new transparency to the program.

‘Massive Upgrade’ Predicted

The application window for requests for E-rate funding for the 2015-16 school year will be open from January to March of 2015.

John Harrington, CEO of Funds for Learning, an Edmond, Okla., company that consults districts on the E-rate, said schools that had been skeptical that new federal aid would arrive are now eagerly preparing revamped applications.

“A lot of projects really are shovel-ready,” he said.

Many school officials’ immediate focus, Mr. Harrington said, will be improving their on-campus wireless networks, which he described as the source of the bottleneck that many teachers and students experience in the classroom.

Technical rule changes that will provide greater flexibility for large up-front capital expenditures will help get projects moving, he said, as will a new rule allowing E-rate-financed efforts to begin as early as April of a given funding year—before the money has even been approved.

The FCC’s actions are a big step in the right direction, Mr. Harrington said, but establishing high-speed external connections for all U.S. schools could still take time.

“They won’t be able to get it all at once,” Mr. Harrington said. “But over the next few years, we will see a massive upgrade in schools’ Internet connections.”

A version of this article appeared in the January 07, 2015 edition of Education Week as E-Rate Is Undergoing Major Policy and Budget Upgrades

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