Reconsidering the E-Rate Program

E-Rate is the forgotten child of the universal service family. While commentators and Congress have spilled significant ink examining the government’s broadband build-out and affordability initiatives, E-Rate has been quietly subsidizing broadband service to schools and libraries for a quarter century. Promoting community connectivity and education is a worthwhile policy goal. But with program costs exceeding $2 billion annually, paid from an increasingly unstable Universal Service Fund (USF), it’s important to measure whether these expenditures actually improve student learning—something the Federal Communications Commission has not yet measured and which private studies doubt. At first glance, data suggest the program was a success. But as the Government Accountability Office (GAO) noted, “A key unanswered question. . .is the extent to which increases in connectivity can be attributed to E-rate.” Despite prompting from the Office of Management and Budget, the FCC never isolated the effect of E-Rate subsidies from other funding sources, such as state and local budget outlays. It even admitted to the GAO, “there was no way to tell whether the program has resulted in the cost-effective deployment and use of advanced telecommunications services for schools and libraries.” A comprehensive program evaluation would also seek to determine to what extent E-Rate spending merely displaces state and local spending that would occur with or without the program. Admittedly, assessing E-Rate can be a politically sensitive topic. Like Lifeline, E-Rate is a noble program with an important mandate. But that should not exempt the program from careful examination and scrutiny.