New Priorities for E-rate Funding?

The Federal Communications Commission created the E-Rate program in response to the Telecommunications Act of 1996 which required the FCC and the states to ensure that affordable, quality, telecommunications services are available to all Americans. At the time, the FCC provided eligible schools and libraries discounts on the purchase of all commercially available telecommunications services, Internet access, and internal connections. The discounts range from 20% to 90%, with the higher discounts being provided to the most disadvantaged schools and libraries and those in high cost areas. Total support for schools and libraries was capped.

In addition, the FCC created a two-tier priority system to encourage the use of E-Rate funding for basic Internet connectivity.

First Priority for Funding

• Telecommunications Services: These are services that are used to communicate information electronically between sites. The services must be provided by a Telecommunications Carrier, that is, an organization recognized by the FCC as providing telecommunications services on a common carriage basis. Examples of Telecommunications Services include basic telephone service and digital transmission services such as T-1 lines.
• Internet Access: "Basic conduit access" to the Internet, including e-mail, is eligible for discount, and can be provided by an eligible Telecommunications Carrier or any commercial organization.

Second Priority for Funding

• Internal Connections: Internal Connections consist of the wiring and components that expand data access within a school or library, such as to individual classrooms within a school. Internal Connections can be provided by any commercial organization.
• Basic Maintenance: Basic Maintenance of Internal Connections consists of services “necessary to enable the continued operation of the eligible equipment.” It includes: repair and upkeep of eligible hardware, wire and cable maintenance, basic technical support, and configuration changes.

But today, few schools are able to receive support for internal connections. Lack of internal connections funding -- due to increasing restrictions on the availability of priority two support -- have become a barrier to adoption of higher speed connections for many schools and libraries.

In its current E-rate reform proceeding, the FCC is seeking comment on whether it should more fundamentally shift the way it prioritizes E-rate support by eliminating the distinction between priority one and priority two services. Under this approach the FCC would instead allow schools and libraries to choose from one consolidated menu
of services.

The FCC asks, Would this approach allow more schools access to funding for internal connections? Would this additional flexibility be beneficial? How should the FCC determine the amount of support that each school or library receives? How would the FCC prioritize among funding requests to the extent they exceeded the funding cap? Would such an approach necessarily require a per-student or per-building limit, or other form of budget for individual applicants, as discussed above?

Internal connections are needed to make effective use of high-capacity connectivity to schools. High bandwidth connectivity to a school or library serves little purpose if students and patrons inside are not able to use it effectively because internal wired and wireless connections are missing or insufficient.

The State Educational Technology Directors Association (SETDA) notes that “[a] modernized E-Rate program must be structured to support the delivery of broadband to and within all school buildings.” Comcast suggests in their comments that “the Commission should eliminate the distinction between priority one and priority two services.” Comcast notes that “[f]unding internal connections, such as inside wiring and Wi-Fi services, at the same priority level as other network components will allow students in each classroom to have access to digital educational tools.” According to the LEAD Commission, schools need updated wiring to accommodate high-speed broadband, and Wi-Fi networks have reduced the cost of internal connections by 44 percent.

In our recent comments in the E-rate proceeding, the Benton Foundation argues that the FCC should use the priority system to build a modern E-Rate program that can take advantage of new technologies that drive costs down.

Cost is not the only factor for a change in the priority system, efficient networking allows for proper use of external investments. According to the New America Foundation’s Open Technology Institute (OTI) “schools and libraries [should] have the ability to not only connect their premises, but also to spread that connectivity adequately within their facilities with sufficient hardware.”

Any recalibration of the priority silo system, Benton argues, will require the FCC to consider the following key factors:

1. Any change in the priority system should allow school and libraries more flexibility with purchasing decisions.
2. Changes to the priority system should remain technology neutral so the program can easily adjust by responding to developments in infrastructure technology and networking equipment.
3. The priority system must be designed so that it can adequately fund both external and internal connections.

My colleagues at the Benton Foundation are tracking the debate on modernizing the E-rate program to meet the educational needs of today and tomorrow. We hope you’ll join the discussion about getting America’s students ahead by connecting them to the tools they need to succeed in the 21st century.

Amina Fazlullah is the Director of Policy at the Benton Foundation, working to address the communication needs of vulnerable communities. Since 2010 Ms. Fazlullah has led the Benton Foundation's work on reforming the Federal Communications Commission's universal service programs with a specific focus on the Lifeline and E-rate programs. She works on the Benton Foundation's efforts to develop and support important consumer protection policies which help vulnerable communities access, adopt and utilize broadband and voice services. Ms. Fazlullah is also responsible for the Benton Foundation's efforts around spectrum policy and children's online privacy.