The WasteWatcher: The Staff Blog of Citizens Against Government Waste

E-Rate Program Reform To Take Center Stage at FCC

The WasteWatcher is the staff blog of Citizens Against Government Waste (CAGW) and the Council for Citizens Against Government Waste (CCAGW). For questions, contact blog@cagw.org.


On Friday, July 19, 2013, the Federal Communications Commission (FCC) will be meeting to discuss, among other items, reforms to the Universal Service Fund (USF)’ E-Rate program, which was highlighted in the July edition of Wastewatcher.  It is expected that the outcome of this meeting will be a Notice of Proposed Rule Making (NPRM) to obtain comment on how the program can be re-organized to meet the goals of the President Obama’s recently announced connectED program to bring broadband Internet access to classrooms across the nation.

The E-Rate program is one of four programs that receive funding through the Universal Service Fund (USF).  The other programs include the rural health fund, the high-cost fund, and the Lifeline/Linkup program.  The E-Rate provides funding to provide communications services for schools and libraries.  Telephony services are considered priority one services, and other services, including broadband connectivity are designated as priority two services.  The USF receives contributions from service providers to pay for grants and loans by the federal government for these services, based on a rate calculated quarterly, and often passed along to consumers in the form of a fee (or hidden tax) on their telephone bills.

FCC Commissioner Jessica Rosenworcel laid out her reform proposal to the E-Rate program began discussing E-Rate reform on April 11, 2013 before attendees at the Washington Education Technology Policy Summit.  In a preamble to the proposal, she stated that in 1996, when the Telecommunications Act was enacted, only 14 percent of schools were connected to the Internet.  By 2012, that number had increased to 95 percent showing the increase in technology to the schools, although 80 percent of those schools do not believe their Internet connections are sufficient to meet their needs

In her statement, she called upon the FCC to perform additional auditing to find savings and root out waste in the program; increase broadband capacity to schools by delivering 100 percent access to 100 Mpbs per every 1,000 students by 2015 and 1 Gbps per every 1,000 students by the end of the decade; developing new and creative public-private partnerships to provide students and teachers access to content and devices; reduce the administrative paperwork and expense by simplifying the process for applicants; and, finding ways to make broadband access more affordable to low-income households.

On July 16, 2013, FCC Commissioner Ajit Pai unveiled his reform proposals for the E-Rate portion of the USF at an event sponsored by the American Enterprise Institute (AEI), as a cost effective alternative to the Administration’s connectED program that would expand broadband and Internet use in schools using the USF’s E-Rate program funding.  Rather than expanding the funding stream by increasing fees paid by subscribers to the Universal Service Fund, Commissioner Pai offered some common sense reforms that would reduce the bureaucratic red tape, and place the funding directly where it is needed most.

Citing delays in processing complicated applications, programs that are heavily focused on bureaucracy instead of the students, and misplaced or out-of-date priorities in the administration of E-Rate funds as well as lack of oversight in the program, Commissioner Pai called upon his fellow commissioners to increase transparency and oversight in the program, and reform the program to a more “Student-Centered E-Rate Program.”

Commissioner Pai’s proposal would require that the E-Rate budget be allocated across every school in the country, divided up on a per student basis, with rural schools and poorer communities receiving a higher per student rate than more urban or affluent communities; re-direct funding currently being used for telephone services towards technology to prepare the nation’s students for the future; simplify the E-Rate application process; and, add real accountability for schools by requiring them to spend $1 for every $3 in funding they receive through the program, with school administration officials certifying the funds are used to the direct benefit of students.

The Senate Committee on Commerce, Science and Transportation is also reviewing the E-Rate program, and on July 17, 2013, held a hearing “E-Rate 2.0:  Connecting Every Child to the Transformative Power of Technology.”  Among the key points made during the hearing was a focus on simplifying the application process for the E-Rate program; the need for funding to equitably reach all communities, particularly those in extremely rural regions of the country; the need to put technology into the hands of students; and, ensuring that the United States retains its technological competitiveness in the global economy.  Witnesses also called for increased funding to the E-Rate program and lifting of the current funding cap of $2.3 billion annually in order to address the current financial needs of existing applications as well as future growth in the program.

Ultimately, the near future of the E-Rate program lies with the FCC, and the work they will begin on the 19th will move the process forward.  As Commissioner Pai stated in his remarks before the AEI, the NPRM is the beginning of the process, and the goal is to implement the final reforms by fall of 2014, in time for the start of the school year.  Commissioner Pai called for full public participation in the process, asking to hear from all interested parties including teachers, parents, the telecommunications industry, policy folks and government officials on the NPRM following its release by the FCC.

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