Congress Underestimated Cost of E-Rate Program, Libraries Tell FCC

“The required funds necessary to support the Congressional intent of the E-rate program were severely underestimated,” ALA said. “Immediate steps should be taken to increase the size of the fund to meet the intent of the program. While demand information exists for the twelve years of the program, it should be noted that current program demand does not provide an accurate representation of need. Many eligible entities do not participate due to program complexity or specific requirements. Other entities have ceased filing for certain services given the knowledge that funds are unavailable for their requests.”

ALA said other challenges include limited funding “even with E-rate discounts” to purchase more bandwidth in areas where infrastructure exists. Plus, in many places, they can’t obtain the bandwidth they need because networks don’t exist, the group said. Many libraries also don’t have the staff to navigate through the complex E-rate program, ALA said: “In addition, we are concerned that the funding cap on the E-rate program will soon be reached, further limiting schools and libraries from receiving the needed financial support for fundamental telecommunications services and Internet access.”

“The cost associated with moving from a 56 kb circuit to 1.5 Mbps is one thing,” ALA said: “Moving from 1.5 Mbps to 20 Mbps or to 100 Mbps or even to a gigabit -- depending on the size and need of the library -- is another.”

Dell agreed more funds must be provided to fully fund the E-rate program. “The annual cap of $2.25 billion established for E-rate funding in 1996 is now insufficient to meet the needs of schools and libraries,” Dell said. “There is simply not enough money in the program to support educational demand. On average, there are approximately 40,000 applications for funding per year, and these requests can exceed $4 billion per year.” Dell advised raising the cap to $4-5 billion.

AT&T said the FCC should give strong consideration to making broadband, including the E-rate program, the major focus of the USF. “In addition to modifying parts of the program to make it more broadband ‘friendly,’ the Commission may want to consider gradually phasing out support for basic legacy, circuit-switched voice services so that limited resources can be directed to broadband deployment,” AT&T said. AT&T also said the program should not be expanded to pay for libraries to build wide area networks to serve their communities. “The prohibition against funding WANs built or used by applicants to provide telecommunications services is prudent and should remain in place,” AT&T said. “Insofar as the federal USF continues to be funded by contributions from service providers based on their provision of interstate telecommunications and telecommunications services, as a simple matter of fairness those service providers should not be forced to subsidize a competitor -- government-funded or otherwise.”

The FCC should allow E-rate reimbursement by local anchor institution networks that provide broadband to schools and libraries, said the National Association of Telecommunications Officers and Advisors. NATOA said the change would promote broadband deployment throughout local communities, and could happen without statutory amendment. Local networks shouldn’t have to participate in competitive bidding, it said. True competitive bidding under standard procurement policies would probably not be feasible, because the public entity would be proposing to build facilities and the commercial provider would be charging for services at commercial rates.”

To support the expansion, the FCC should raise the $2.25 billion cap on E-rate funding “to the maximum level sustainable under the current funding regime,” NATOA said. “The cap is not statutory and nothing in the statute would preclude an increase to $3.0 billion or more.” Also, the FCC should shift the focus of E-Rate to broadband services and provide support based on actual costs of extending networks, NATOA said.

The FCC shouldn’t expand E-rate to include entities other than public libraries and K-12 public and private schools, said the Education and Libraries Networks Coalition. Only Congress can expand eligibility, it said. And E-rate already lacks funds for existing eligible entities, it said. “Each year … annual demand routinely exceeds the program’s $2.25 billion spending cap.” The coalition urged the FCC to raise the cap, which hasn’t been adjusted since 1997.

If E-rate’s scope is broadened, the fund must increase in size, said the State E-Rate Coordinators Alliance. “The funding history of the program makes clear that each year, the financial needs of schools and libraries, as measured by the aggregate amount of funding requested, has exceeded the available annual funding,” it said. “Consequently, unless the program’s purposes and the funding cap are drastically increased, any expansion of the program focus and responsibilities would dilute the current continuing impact on keeping schools and libraries connected.”

The National School Boards Association supports “strengthening the E-Rate program to ensure efficient operation of the program, improve the quality and speed of connectivity in our nation’s schools, and address the technology gaps that remain.” However, “given the important role telecommunications companies play in the availability of E-rate discounts, compounded by the current economic climate, it is difficult to envision a scenario where sustainable funding increases could address current unmet needs as well as support the options for expansion described in the Public Notice.”

Qualcomm asked the FCC to shift the focus of the E-rate program from wireline to wireless. “The original E-rate program was geared toward the wiring of schools. The program has achieved that purpose with great success,” Qualcomm said. “But, for the 21st Century, learning can and should be wireless, not wired, and mobile, not fixed. Learning should take place anytime, anywhere. The E-rate program should not favor wired and/or fixed technologies and, in fact, should fund wireless and mobile devices, modems, services and applications.” Qualcomm also said the entire USF should be converted to a broadband program, with an emphasis on mobile broadband.