E-rate/Schools and Libraries Program

The Federal Communications Commission announced a settlement with Verizon for possible violations of the FCC’s competitive bidding rules for the E-rate program. Verizon agreed to pay $17.68 million to resolve parallel investigations by the FCC and the Department of Justice, $17.325 million of which will be repaid to the Universal Service Fund (USF). Verizon has further agreed to withdraw any rights it may have to hundreds of millions of dollars in requested and undisbursed E-rate support.

A point often lost when we talk about the digital divide is what happens when we actually bridge the divide. Too often, we declare mission accomplished when we’ve connected a home that has been forever without, but I challenge you to take a more nuanced view. We should only claim victory when a consumer is meaningfully using their connectivity to take advantage of the economic, educational, and health care opportunities it affords....

One of our primary goals at the Federal Communications Commission is to be good stewards of ratepayer dollars. That means moving away from the past practice of using our high-cost program to fund multiple networks in the same geographic area. We should not support a company that is serving an area where another provider is providing quality service without a subsidy. That is fundamentally inconsistent with protecting consumers and it does not enable the market to work as intended.

The Federal Communications Commission’s Wireline Competition Bureau presents this report on voice services in the schools and libraries universal service support mechanism (more commonly known as the E-rate program), as directed by the FCC in its 2014 E-rate Order. During the phasedown of voice services which began in funding year 2015, fewer applicants have applied for voice services, though most of the applicants who no longer apply for voice services continue to seek E-rate support for other services. Further, the majority of the applicants who did not receive E-rate support for any service other than voice services in funding year 2014 now receive E-rate support for services other than voice.

With this Public Notice the Wireline Competition Bureau seeks comment on the sufficiency of budgets for category two services under the E-rate program (more formally known as the schools and libraries universal service support program). In the E-rate Modernization Orders, the Commission adopted five-year, pre-discount budgets for schools and libraries. When the Commission adopted these rules in 2014, it established a five-year test period to allow the Commission to determine whether the applicant budgets were effective in ensuring greater access to E-rate funding for internal connections. The Commission directed the Bureau to report on the sufficiency of these applicant budgets before the filing window for funding year 2019 opens. In particular, the Commission directed the Bureau to use FCC Form 471 data from funding years 2015 through 2018 to analyze trends across different types of applicants or regions in the nation, particularly schools that serve students with special education services.

In preparation for this report, we seek comment on the sufficiency of the category two budgets. Specifically, we seek comment from applicants, service providers, and other interested parties about how applicants have used their budgets and the percentage of category two services purchased by applicants that were or will be covered by the budget. Interested parties may file comments on or before October 23, 2017 and reply comments on or before November 7, 2017. Comments and reply comments should reference WC Docket No. 13-184.

In 2013, only 4 million students had access to broadband that provided internet fast enough to allow for digital learning in the classroom. Now, four years later, that number has catapulted to 39.2 million, thanks to the modernization of a federal program and a broad bipartisan coalition of federal and state lawmakers and policymakers dedicated to the cause.

"America made a historic promise to our students in 2013 to connect every school district to high-speed internet," said Evan Marwell, CEO of EducationSuperHighway. "We've made great progress since then,” he said. “However, our work is far from over. It is critical that federal and state leaders, schools, and service providers continue the hard work necessary to close the connectivity gap." But that gap now spans just 6.5 million students and it’s expected to be eliminated by 2020 based on current growth models. Under the Obama administration, in 2014, the Federal Communications Commission voted to modernize its E-Rate program, which provides funding for schools and libraries to connect to the Internet. The commission approved a $1.5 billion boost in funding and set new standards in an effort to expand access, including setting minimum recommended bandwidth levels, requiring fiber connections to every school in order to allow bandwidth to grow over time, and setting up wireless connections in every classroom to support “one-device-per-student” programs.

On July 17, 2017, Senate Commerce Committee Chairman John Thune (R-SD) sent Federal Communications Commission Chairman Ajit Pai a letter with five questions about Universal Service Fund collections and disbursements and “a description of any regulations limiting allocation of undisbursed USF funds to a particular program or use.” On Sept 5, Chairman Pai replied.

More than 39 million students in America now have access to high-speed Internet at school, a 5.1 million student increase over last year. This research shows that 94 percent of school districts nationwide now meet the minimum 100 kilobits per second (kbps) per student goal set by the Federal Communications Commission in 2014. The report confirms that America continues to make extraordinary progress in narrowing the K-12 digital divide. Overall, 39.2 million students, 2.6 million teachers, and 74,000 schools are now achieving the minimum connectivity goal that gives students equal access to digital learning opportunities. However, 6.5 million students are on the other side of the digital divide without access to high-speed Internet. A divide that is particularly wide in the 1,587 rural K-12 schools that don’t yet have the infrastructure necessary to revolutionize the way teachers teach and students learn.

“America made a historic promise to our students in 2013 to connect every school district to high-speed Internet,” said Evan Marwell, CEO of EducationSuperHighway. “We’ve made great progress since then; however, our work is far from over. It is critical that federal and state leaders, schools, and service providers continue the hard work necessary to close the connectivity gap.” Governors and state leaders across the country have taken notice and played a crucial role this year in bringing high-speed learning opportunities to every classroom. Today, a total of 46 governors have committed to upgrading their schools for the 21st century. Taking advantage of E-rate Modernization, governors have allocated nearly $200 million in state matching funds for special construction that can help connect the hardest-to-reach-schools.

The Universal Service Administrative Company, the nonprofit organization responsible for administering the E-rate program and other federal universal-service funds, announced August 8 that it would transfer more than $9 billion it oversees out of the private banking market and into the US Treasury.

Moving the funds into the Treasury was one of the recommendations in a report on problems with the Lifeline program recently issued by the Government Accountability Office. Among the reasons GAO cited for recommending such a move: lower fees, better management practices and regulatory safeguards, and the opportunity for the federal government to use the funds as an offset for its debts. The Aug 8 announcement prompted some concerns in a K-12 sector already jittery about the direction of the FCC—and especially its plans for the E-rate—under President Donald Trump and the chairman he appointed, Ajit Pai.

"While there might be some efficiencies associated with switching the E-rate program to a Treasury-managed account, we have concerns that program beneficiaries would lose the benefit of the significant interest that universal-service funds accrue in the private market," said Reg Leichty, a lawyer and lobbyist for the Consortium for School Networking, a professional association representing school technology officers. Leichty also expressed concern that the transfer of funds into the Treasury could be a step towards Congress assuming responsibility for universal-service funds, including an annual determination of how much should be allocated for initiatives such as the E-rate. "We would not want this successful program to be subject to the whims of the annual appropriations process, which has not functioned well for a significant period of time," he said.

The LEAD Commission wants senators to put a spotlight on E-rate when it puts the spotlight on Federal Communications Commission nominees in a hearing July 19. It wants the members of the Senate Communications Subcommittee to get FCC Chairman Ajit Pai to commit to supporting the E-rate program, which subsidizes high-speed broadband to schools and libraries. The commission was created back in 2012 in response to a challenge from then FCC chairman Julius Genachowski and Department of Education secretary Arne Duncan to help technology "transform" education. “In a technology-driven, and globally competitive economy, connecting our schools and libraries with access to high-speed internet and WiFi is essential to learning and student success,” said LEAD commissioner Jim Coulter. “E-rate has been a critical part of expanding access to basic internet connectivity for students, and we strongly believe that E-rate funding should continue."

Applying for E-rate funding is not simple, especially for applicants seeking fiber-based services. Applicants must have an in-depth knowledge of dark vs. lit fiber, self-provisioning, and special construction, and that’s just the beginning. The vast majority of schools and libraries have to hire consultants to guide them through the labyrinth of E-rate rules and procedures. So the last thing we should want is to make the E-rate application even more difficult. Unfortunately, that is exactly what is happening.

E-rate fiber applications are being delayed or denied even though they follow the Federal Communications Commission’s policies, past precedent, and the Eligible Services List (ESL). As a membership organization made up of schools, libraries, associations, broadband companies and E-rate consultants, we hear these complaints constantly. The Schools Health and Libraries Broadband Coalition (SHLB) will file comments later this week on the proposed ESL for Funding Year 2018 asking to maintain the existing rules and policies governing applications for fiber-based services. The rules and policies adopted in the 2014 E-rate Modernization Orders are intended to help schools and libraries increase their bandwidth and obtain low-cost fiber services, which will be especially helpful in rural markets. We will encourage the FCC to maintain the 2014 rules and policies and to provide consistent guidance to E-rate applicants.