First Lifeline, Now Broadband Program for Schools and Libraries in the FCC’s Crosshairs

Gigi Sohn is an internationally-known communications attorney and former Counselor to the Chairman of the Federal Communications Commission. Currently, she is an Open Society Foundations Leadership in Government Fellow. In the coming months, Ms Sohn will be writing articles for The Digital Beat examining the importance of open, democratic, accessible, and affordable communications networks.

Recently I wrote about how the new Federal Communications Commission majority revoked the approval of nine companies to become Lifeline providers and how that would weaken the Lifeline program and widen the digital divide. Now it appears that the E-Rate program, which makes broadband services more affordable for America’s schools and libraries, is in the FCC majority’s crosshairs. And much like the case of Lifeline, the majority is using procedural steps and administrative tools to weaken the E-Rate program.

First, an E-Rate Primer

The FCC’s E-Rate program was a bipartisan provision of the Telecommunications Act of 1996. In two orders in July and December 2014, the FCC modernized the E-Rate program and increased its budget for the first time since the program’s inception. The modernization orders had three goals:

1. Ensure affordable access to high speed broadband in schools and libraries;
2. Maximize the cost-effectiveness of E-Rate Spending and
3. Make the E-Rate application process and other administrative processes fast, simple and efficient.

The orders made numerous changes to the E-Rate program, but I’ll single out a couple that are most relevant here. The FCC adopted a number of rules intended to ensure that schools and libraries are getting the lowest possible prices for connectivity. For example, the rules require that schools and libraries report on the prices they pay for equipment and services and further required that those prices be posted on a public website by the Universal Service Administrative Company (USAC), the non-profit entity that implements all of the FCC’s universal service programs including E-Rate. This allows schools and libraries across the land to compare and contrast what they are paying for broadband.

The new rules also expanded the competitive options schools can use to obtain broadband in a way best suited to local needs. For example, the new rules allow for schools and libraries to build their own networks if and only if they can show that it is the most cost effective way to get broadband. In fact, a school or library is required to get a bid for service from an existing provider before it can build its own network. The idea was that the mere threat that a school or library could engage in “self-construction” would incentivize incumbents to keep their prices competitive. The savings realized from such competition not only redounds to the benefit of the schools and libraries that utilize the E-Rate program, but it also ensures that the ratepayers that support the E-Rate program get the most bang for their buck.

These reforms took effect in 2015, and many school districts have relied on them in E-Rate funding cycles since then. The interest has been particularly strong in rural areas – not surprising given the many examples of rural schools paying thousands of dollars per month for just a tiny fraction of the bandwidth available to urban and suburban schools.

Chairman Pai Revokes E-Rate Progress Report

On February 3, FCC Chairman Ajit Pai “revoked” a number of “controversial” reports and orders that were adopted in the waning days of the Obama Administration. Among those items was a 14-page report that examined the progress made in achieving the goals of the E-Rate program since the FCC adopted the modernization orders. Unlike the other items Chairman Pai revoked, the progress report neither made nor suggested new policy, but instead looked at verifiable data from the program and found significant progress towards the three goals of E-Rate modernization. Most relevant here, the report documents, on page 11, the economic benefits to schools of making competitive options (like self-construction) available. The result -- an over 50 percent price decline in what schools pay for broadband.

FCC Commissioner O’Rielly’s February 9 Letter to USAC

On February 9, FCC Commissioner Michael O’Rielly sent a letter to Chris Henderson, the CEO of USAC. Commissioner O”Rielly does not mince words, noting that he dissented from both E-Rate modernization decisions. His reason? A majority of FCC commissioners at the time rejected his recommendation that schools and libraries not be permitted to build their own networks where an incumbent broadband provider was already providing service.

Despite the fact that the FCC under then-Chairman Tom Wheeler rejected Commissioner O’Rielly’s recommendation, he asks ten detailed questions about the self-construction option: Does it result in significant “overbuilding” of broadband networks? How does USAC review requests by schools and libraries to exercise this option?

The Last Word

The February 3 revocation of the E-Rate progress report and the February 9 letter to USAC from Commissioner O’Rielly go hand-in-hand. Commissioner O’Rielly has made clear that he does not believe the competition brought on by the mere threat of a school building its own network is desirable, and asks a series of questions that appear to be intended to 1) intimidate USAC into denying more self-construction E-Rate funding requests, even though those rules are still on the books and 2) discourage schools and libraries from making those requests in the first place.

The data-driven progress report, on the other hand, demonstrates that when schools and libraries simply raise the prospect of competition, prices for connectivity drop precipitously. This inconvenient data doesn’t support the FCC majority’s worldview -- or the desires of some incumbent broadband providers to return to the pre-reform era of public subsidies for their networks and only their networks -- or the majority’s effort to undermine the E-Rate program. Hence the decision to bury it.

Stay tuned for more on this soon….

Gigi B. Sohn is an Open Society Foundations Leadership in Government Fellow. From November 2013 through December 2016, Gigi served as Counselor to the Chairman in the Office of FCC Chairman Tom Wheeler. In that capacity, she advised the Chairman on a range of telecommunications and media issues, represented him in a variety of public forums around the country, and served as the primary contact in the Chairman’s office for outside stakeholders. Chairman Wheeler called Gigi “the conscience of the Chairman’s office” for her tireless advocacy on behalf of pro-consumer and pro-competitive policies. Gigi served from 2001-2013 as the President and CEO of Public Knowledge. Prior to that, she served as a Project Specialist in the Ford Foundation’s Media, Arts and Culture unit and as Executive Director of the Media Access Project.