The challenge of a 21st century E-Rate.

Author:Zager, Masha

SINCE ITS INCEPTION IN 1997, E-RATE, FORMALLY KNOWN AS THE SCHOOLS AND LIBRARIES PROGRAM OF THE UNIVERSAL SERVICE FUND, has been one of the most popular programs for funding telecommunications. Governed by the FCC and administered by Universal Service Administrative Co., it funds connectivity for schools and libraries at rates based on local poverty levels and urban/rural status.

With the help of E-Rate, most U.S. schools and libraries now have Internet access, which enhances the educational services that schools and libraries can provide and supports those institutions' administrative functions. Indeed, rural telecom companies responding to last year's "NTCA Schools and Library Survey" said they were deploying some form of broadband services to 96% of K-12 schools in their service areas and 98% of public libraries.

Not Perfect

As useful as E-Rate has been, it's far from perfect. The program had flaws from the outset, and it has failed to keep up with the rapidly changing telecom world. Over the last several years, the FCC has tried to address some of E-Rate's problems. It issued a modernization order in July 2014 that failed to increase overall E-Rate funding. However, last November, FCC Chairman Tom Wheeler proposed a 62% increase in E-Rate funding, increasing the fund cap to $3.9 billion. Wheeler had set ambitious connectivity targets (100 Mbps per 1,000 students in the short run) and, in a recent speech, he addressed the need to close the gap for rural schools and libraries and to tackle the affordability challenge--goals that will be difficult to meet without additional funding. At its December open meeting, the commission approved the increase. On the whole, observers are positive about the direction of these changes but agree that still more changes are needed.

In the meantime, the commission has designated $2 billion for internal networking over the next two years, funded through "improved financial management practices that free up excess reserves"--in other words, rolling over accumulated funds that were awarded but never spent. In the out years, the agency hopes to increase money for internal networking by phasing out obsolete services and by making the overall program more efficient.

According to the FCC, this will "potentially provide a 75% increase in Wi-Fi funding for rural schools over the next five years and a 60% increase for urban schools." However, the out year projections are somewhat vague, or as Jeffrey Mitchell, an...

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