2017: E-Rate’s make or break year

The underappreciated but critically important E-Rate program faces a fork in the road in 2017. Created during the Clinton administration, E-Rate originally intended to make it easier for schools to purchase dial-up internet connections. However, the program languished for many years while internet and education technologies improved by leaps and bounds. In 2014, the Obama administration revamped the program by nearly doubling the available funding and incentivizing the adoption of 21st-century technologies. The funding mechanism and presumably better E-Rate results portend a positive year for the program, though political uncertainty under a new administration signals there may be some rough waters ahead.

E-Rate does not receive funding from the standard congressional appropriations process. A 1996 law requires telecommunication companies to contribute to the Universal Services Fund, which in turn provides the funding for E-Rate and other programs. Overall, this arrangement is equivalent to a tax, but it’s insulated from the tumult of the congressional budgeting process. The unique funding mechanism decreases the likelihood that E-Rate would attract negative attention from congressional Republicans. However, the new Republican leadership at the Federal Communications Commission could choose to cut spending. Returning E-Rate funding to pre-Obama reform levels, but keeping most of the modernization reforms, would be compatible with the position of new FCC Chairman Ajit Pai, a Republican. Pai has explained that his 2014 vote against the Obama E-Rate reforms was due to concerns about financial waste in the program rather than questioning the overall usefulness of the program.