In Partisan Vote, FCC Passes a Modified E-Rate Proposal for Spending Funds on Wi-Fi Connectivity

FCC, Universal Service July 15th, 2014

, Reporter, Broadband Breakfast News

WASHINGTON, July 15, 2014 – The Federal Communications Commission on Friday voted to modernize of its E-Rate program Friday, reallocating funds from technologies considered obsolete to Wi-Fi based connectivity in schools and libraries. However, owing to strong skepticism from opponents over funding, the proposal was scaled back to $2 billion, down from its original $5 billion.

The 3-2 vote came when FCC Chairman Tom Wheeler secured support from the other two Democratic-appointed commissioners. But Republican-appointed Commissioners Ajit Pai and Michael O’Rielly dissented.

Wi-Fi versus Broadband Connectivity

Previously, education groups like National Association of Federally Impacted Schools and the National Education Association had criticized the proposal for leaving rural and suburban schools with no funds for basic internet connectivity, sometimes referred to as Priority I services. The final proposal agreed that funds for Wi-Fi and internal connections, called Priority II service would not be funded at the expense of Priority I services.

“Part of the problem is [our schools] are not all totally hooked up to the point where they can even consider Wi-Fi or modernized things to do with the Internet,” said NAFIS Executive Director John Forkenbrock.

In past years, nearly 50 percent of the FCC’s $2.4 billion E-Rate funds went to non-broadband legacy services including paging, email and voice service. Opponents to the proposal – among both educators and Republicans –questioned whether cutting back on these services would be sufficient to fund a new E-Rate Wi-Fi program for as many as five years.

Even with the reduced proposal budget of $2 billion from 2016 to 2018, Pai and O’Rielly blasted the agency’s Wi-Fi spending. Both said that some of the $2 billion for Wi-Fi would have to be collected through higher fees on phone bills.

“It always seems to be easier for some people to take more money from American people via taxes and fees, rather than do the hard work,” O’Rielly said. “If more money is justified for E-Rate, let’s dig in and find offsets, not stick it to hardworking poor and middle-class Americans.”

The Need for E-Rate Reform

Democratic-appointed Commissioner Jessica Rosenworcel took the opposite view: not enough of the proposed funds are being allocated toward Wi-Fi. She called for increased annual funding overall to meet the demand that is roughly double the E-Rate’s expenditure.

“We can’t expect to compete if we educate the next generation with a support system frozen in the age of dial-up,” said Rosenworcel.

NEA President Van Roekel said the FCC was right to not hastily alter the fundamental structure of the E-Rate program without guaranteed funding. He said that more needs to be done in the long term.

“If we are serious about ensuring equity in our schools, all the demand for ongoing internet connectivity must be met—especially in high-needs schools,” Roekel said. “Shifting our goals to establish Wi-Fi in targeted school districts, without increasing the cap, could undermine the historical importance and significance of the E-Rate Program.

Similar sentiments were shared by Sen. Edward Markey, D-Mass., who said that “while the need to promote Wi-Fi in all schools and libraries is more important than ever, it should not come at the expense of bringing broadband to the brick and mortar building itself. To truly ensure our students and the public can best compete in our interconnected 21st century economy, the FCC must still take action to increase the program’s permanent funding cap.”

But at Friday’s meeting, Wheeler said that significant change to the program was necessary.

“No responsible business would stick with an information technology plan developed in 1998,” Wheeler said. “We owe the same rigorous self-examination to our schools and libraries.”

Significant Criticism Preceded Vote

In the lead up to the agency vote on Friday, more than a dozen education advocacy groups wrote the FCC a joint statement saying that the proposed changes “will only dilute an already over-subscribed E-Rate program.” While “nominal savings may be realized by eliminating legacy services,” it doesn’t guarantee additional funding.

In particular, NAFIS took issue with Wheeler’s proposal to take funds from Priority I internet access and shift them to Priority II internal connections and wireless internet.

Wheeler’s previous proposals could have imposed harm if it had phased down support for the internet access portion of Priority I services, said Mary Kusler, who heads the government relations department at the National Education Association.

“For 18 years this has been an incredibly successful program. However, for the past 18 years, there has been over $5 billion worth of applications” every year, she said, ”so we’ve essentially had double the requests for discounts than money available. What we see in [Wheeler's] proposal is an attempt to divert the attention away from that connectivity point to this idea of ensuring Wi-Fi access…and while Wi-Fi is certainly a piece of the puzzle, we are very concerned that it’s really only connecting those that already have connectivity.”

Aspen Institute fellow Blair Levin expressed much greater optimism about modernization in a blog post with the Benton Foundation. He said funding for old legacy services constitutes roughly $1.2 billion of E-Rate spending and would be a significant source of cost saving.

The Universal Service Administrative Corporation estimated that it committed $9.8 million for email services and almost $28 for web hosting in the funding year 2011. Another $934,000 that same year went to paging services in response to more than 500 E-Rate requests despite the technology being viewed as obsolete today. Another 100 requests called for $95,000 in funding commitments to dial-up services.

Considerably more savings can be seen by phasing down support for telephone services, said Kusler, calling it a “double edged sword.” Although it will allow more money to be devoted to internet connectivity, “at the same time, it’s a fixed cost at the local level that is not gonna go away. So if school districts start having to pay their full share of telephone bills, they’re going to have to make up that funding somewhere else.”

Levin added that another major source of cost savings will come through programs like “volume discounts through consortia-enabled bulk purchasing, and improved pricing transparency.”

In the lead up to Friday’s meeting, Sens  Jay Rockefeller, D-W.V., and Markey warned that a per-student or square foot distribution method for Wi-Fi could result in a sub-optimal solution.

“As the founders of the E-Rate program, we applaud your commitment to schools and libraries across the country. Nothing short of our international competitiveness and children’s future are at stake with E-Rate modernization. That is why it is so important for you to take the time necessary to get this right.”

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