The National Broadband Plan (the "Plan") proposes to modify the Universal Service Schools & Libraries (E-rate) program, which was created in 1996 to subsidize telecommunications, Internet access and related services provided to K-12 schools and libraries. The Federal Communications Commission (FCC) seeks to expand the range and permitted uses of subsidized E-rate services, such as: permitting schools to allow public use of services, supporting off-campus wireless access by students, expanding funding of on-premise equipment, and increasing flexibility to use lower-cost solutions including equipment needed to light dark fiber.

The Plan also seeks to encourage innovation by funding “best ideas” projects that help to integrate broadband services into education. Of particular interest to current E-rate participants are proposals to streamline the application process for smaller projects, fund “Priority 1” services on a multi-year basis, and increase the annual $2.25 billion cap on E-rate funding by indexing it to inflation. Finally, the Plan seeks to expand federal funding—whether through the E-rate program or another federal mechanism—to community colleges, as well as settle eligibility issues for tribal libraries.

Background

Contributions to the federal universal service fund support four programs: Schools and Libraries (also known as “E-rate”), Rural Health Care, High Cost, and Low Income. Only E-rate and the Rural Healthcare program, however, currently provide direct support for broadband services. (For more on this, see our advisory, "Focus on Overhauling High-Cost Universal Service.") The $2.25 billion annual E-rate program has been widely credited with having increased broadband connectivity at the nation’s schools and libraries, but the Plan recommends multiple reforms to upgrade the program consistent with the goal of expanding broadband services.

Analysis

The Plan seeks to encourage further expansion of broadband to schools, libraries, as well as the general public. These reforms center on revising program eligibility criteria and disbursement rules. To that end the FCC identified the following needed reforms:

  1. Broadband service goals: The Plan recommends that the FCC set “goals for minimum broadband connectivity” for E-rate funding recipients, which are to be based on speed and quality, but also other factors such as the number of users at peak times. The Plan does not specify a particular throughput goal for E-rate recipients, which gives the FCC flexibility in managing funding resources or funding particular types of projects. The goals are to be adjusted every three to five years.
  2. Increase program flexibility: The Plan seeks to introduce more flexibility regarding the use and types of funded facilities and equipment. For example, in an already-pending proceeding, the FCC is poised to permanently authorize general community use of E-rate funded services at school facilities during off-hours (which was recently permitted on a temporary basis). The FCC suggested that the public could use these services for purposes such as job search/application, digital literacy programs, and access to online government services; it is unclear whether it would try to restrict community use to those purposes. The Plan suggests that community use of E-rate funded services and facilities should be free of charge, but under the temporary rules, the FCC allowed schools to recover overhead costs (such as increased electricity costs). (Comments in that proceeding are due April 5, and replies on April 19.) The Plan also urges the FCC to expand support for “internal connections,” which are facilities and equipment located on school/library premises establishing links to individual locations (such as individual classrooms). Due to today’s funding limitations, only the applicants with the most dire financial need typically receive funding for internal connections. Finally, the Plan advocates program changes to seek lowest-cost broadband solutions, such as permitting funding for equipment used to light dark fiber and establishing state, regional, Tribal and local networks to “increase school and library purchasing power.”  
  3. Wireless home access for students: The Plan supports wireless broadband access through “portable learning devices” that can be used off campus, which is prohibited under existing E-rate rules. It suggests establishing a pilot program to determine the level of demand as well as cost-effectiveness of expanding the program to support such services.  
  4. "Best ideas” funding: FCC presentations had indicated a second possible pilot program to fund “best ideas” that combine network functionality with educational value. The Plan itself does not mention a pilot program, but rather, focuses on funding innovative projects that encourage strategic integration of broadband into education and spread best practices.  
  5. E-rate or other funding for community colleges: Under current law, community colleges are ineligible for E-rate funding. The Plan recommends that Congress expand federal financial support to community colleges for broadband, whether that means revising the universal service statute or Congress creating another funding mechanism. This is similar to one of the pilot programs recently proposed in the “E-rate 2.0” bill introduced by Rep. Edward Markey, which would revise the statute to provide E-rate funding for five years.
  6. Improve efficiency: The E-rate application process can be time-consuming and frustrating. The Plan seeks to somewhat simplify this process by introducing a streamlined application process for requests involving “small amounts” and moving to a multi-year approval process for “Priority 1” services (e.g., telecommunications services, Internet access) to reduce the annual flurry of paperwork.
  7. Funding cap indexed to inflation: The Plan also seeks to increase the $2.25 billion annual cap on the E-rate program by indexing it to the rate of inflation. (The cap does not include funds rolled over from prior years.)
  8. Collect/publish better data on use of funds: The Plan recommends that the FCC collect and publish data on how schools and libraries connect to the Internet, precise levels of connectivity and the ways in which they use broadband services.
  9. Clarify status of tribal libraries: In certain states, tribal libraries are not eligible for E-rate funding due to state law restrictions. The Plan recommends that Congress consider amending the federal Communications Act to ensure that all tribal libraries are eligible.

The Plan will likely influence E-rate proceedings currently pending before the FCC, and many of the recommendations to upgrade the E-rate program will require separate rulemaking proceedings. The FCC will be releasing a series of notices to launch each of its future proceedings. Davis Wright Tremaine will be participating in those proceedings on behalf of our clients.