FCC Raises E-Rate Cap Despite Opposition

Their mission was the same: Help all students learn by providing them greater access to broadband in schools and libraries. But members of the Federal Communications Commission sharply disagreed about how to carry out that mission. 
The three Democrat commissioners wanted to increase the E-rate spending cap permanently by $1.5 billion to $3.9 billion. The annual cap limits how much funding the commission hands out to schools and libraries who qualify for discounted services, including broadband. 

And they got their wish. The new E-rate order went into effect after a 3-2 vote at a meeting on Thursday, Dec. 11. But the two Republican commissioners dissented, calling the order's approach fiscally irresponsible. 

"Enabling wasteful spending like this isn't courageous or compassionate," said Commissioner Ajit Pai. "It's just crazy."

While both Republican commissioners said they support the E-rate program, their major beef with this proposal is twofold: 

1. The E-rate cap increase is not offset by reductions in the Universal Service Fund, the pool where the E-rate program gets its money from. This means the entire fund's budget would grow from just over $8 billion to just under $10 billion per year. 
    
2. This order does not adequately safeguard the funds, and actually removes or decreases the safeguards put in place over the last two decades, Pai said. 

FCC Chairman Tom Wheeler dismissed their claims about safeguards, saying that the Republican commissioners were exaggerating to make their point. John Harrington, CEO of Funds for Learning, an E-rate consulting firm, has worked with hundreds of schools on the paperwork they need to turn in for E-rate, and said the entire process is audited and exhaustive.

"The controls that are in place in the E-rate program are far more intense than any other program that I'm familiar with," Harrington said. "It is highly regulated with a great deal of oversight."

As for the argument that the cap increase is not offset, the FCC did decide back in July to reduce support for telephone services and eliminate support for services including email and Web hosting.

On top of that, this is the first major modernization effort since E-rate started in the dial-up days of 1997. Now broadband is more expensive, just like gas, according to the U.S. Energy Information Administration. While gas prices rose from a little over a dollar to over $3 today, school districts still pay for school buses at the higher rate because students need transportation. And if the commissioners support the E-rate program, they need to spend more for Internet access, Harrington said.

What this decision means for schools

The order that passed today will raise the E-rate cap permanently by $1.5 billion annually and also increase the Universal Service Fee on phone bills by about 16 percent from $0.99 to $1.15 a month. Schools and libraries will now be able to collectively request up to $3.9 billion in discounts for services including broadband.

This means that next year, school districts are more likely to receive support for on-campus Internet connections, which has historically been hard to get because the supply of money has not kept up with demand. Schools and libraries typically request $5 billion each year for Internet access and discounts on Internet components, but the fund was previously capped at $2.4 billion, Harrington said.

Another important change removes the pressure on school districts to submit applications for connections and equipment they weren't sure they needed. Back in July, the FCC set a limit on the amount of money that schools and libraries could request over two years for internal connections. But that money was available on a first come, first serve basis, and there was no guarantee that the money would still be there when they needed something in 2017. An increased funding cap and new five-year time table reassures schools that the money will be there when they need it.

This story was originally published by the Center for Digital Education.