The August 20, 2013 Federal Register (“FedReg”) included a notice officially establishing the comment and reply cycle associated with the Federal Communications Commission’s (“FCC” or “Commission”) recently released Modernizing the E-Rate Program for Schools and Libraries Notice of Proposed Rulemaking (“NPRM”).1 According to the FedReg notice, comments are due September 16, 2013 and reply comments are due October 16, 2013. This is the Commission’s latest effort to modernize and streamline the E-Rate program.

The catalyst for this ambitious initiative is President Obama’s Connected initiative (the “Initiative”)2, which establishes that within five years 99 percent of U.S. students will have access to broadband and high-speed Internet access (at least 100 MBPS with a goal of 1 GPS within five years) within their schools and libraries. The Initiative includes: 1) providing the training and support for teachers needed for the effective use of technology in the classroom and 2) encouraging the development and deployment of complimentary devices and software to enhance learning experiences and 3) resurrecting the U.S. as a world leader in educational achievement.

The E-rate program was created in 1997 to “ensur[e] that schools and libraries ha[d] the connectivity necessary to enable students and library patrons to participate in the digital world.”3 According to the NPRM, the program commenced when “only 14 percent of the classrooms had access to the Internet, and most schools with Internet access (74 percent) used dial-up Internet access.”4 Seven years later, “nearly all schools had access to the Internet, and 94 percent of all instructional classrooms had Internet access.” A year later, “nearly all public libraries were connected to the Internet….”5

The E-rate program requires recipients to file annual funding requests. Those funding requests are categorized as either Priority One or Priority Two. Priority One funds may be applied to support telecommunications services, telecommunications and Internet access services, including but not limited to, digital transmission services, e-mail services, fiber and dark fiber, interconnected VoIP, paging, telephone service, voice mail service and wireless Internet access. Priority Two funds are allocated for support of internal connections, including, but not limited to, cabling/connectors, circuit cards and components, data distribution, data protection, interfaces, gateways and antennas, servers and software. The funds are calculated as discounts for acquiring, constructing and maintaining the services. Discount eligibility, which ranges between 20-90 percent, is established by the recipient’s status within the National School and Lunch Program (“NSLP”) or an “alternative mechanism”.6 The NPRM indicated that, “the most disadvantaged schools and libraries, where at least 75 percent of students are eligible for free or reduced price school lunch, receive a 90 percent discount on eligible services, and thus pay only 10 percent of the cost of those services.”7

The advent of high-capacity broadband has transformed Internet access into a portal by which students can experience interactive and collaborative learning experiences regardless of their geographic (rural or urban) location while preparing them to “compete in the global economy.”8 As with most improvements, this transformation is encumbered in the ways and means for acquiring, constructing and maintaining such technology. The E-rate program, including its administration and funding provisions, has remained relatively unchanged since 1997. The initial, and still current, cap on funding was $2.25 billion dollars. The FCC has indicated that requests for funding have exceeded that cap almost from the beginning. In 2013, requests for E-rate funding totaled more than $4.9 billion dollars.