On July 11, 2014, the Federal Communications Commission (“FCC”) adopted a long-awaited order revising the rules governing E-rate, the federal government’s largest education technology program with an annual budget of $2.4 billion. Schools and libraries eligible for E-rate support should review the final FCC Order, which has not yet been released, closely to see how changes to this program will affect their technology budgets in the future.
The FCC’s E-rate order implements three primary reforms: (1) significant expansion of availability of funding for Wi-Fi networks; (2) maximization of the cost-effectiveness of E-rate spending through greater pricing transparency, by encouraging consortia and bulk purchasing, and through better enforcement of existing rules; and (3) streamlining and simplification of the E-rate application process and overall program administration.
Although the FCC’s order maintains the current distinction between priority one and priority two services (relabeled as “category one” and “category two”), it also earmarks $2 billion for Wi-Fi support, including caching servers, for the next two years. After that period, the FCC will “target” an additional $1 billion annually for the following three years, although the availability of this funding is contingent on the successful phase-out of support for non-broadband services, such as pagers and telephones, and through increased program efficiencies. According to the FCC, the revised E-rate rules could provide a 75 percent increase in Wi-Fi funding for rural schools over the next five years, and a 60 percent increase in funding for Wi-Fi in urban schools during that period.
The order also reportedly adjusts the discount for category two services to 85 percent for the highest poverty schools. In terms of fund administration, the order streamlines the process for multi-year applications, and increases document retention and site inspection requirements for eligible entities.
Significantly, the order does not resolve all issues on which the FCC previously sought comment, and in the accompanying FNPRM the FCC seeks comment on potential future increases to the E-rate funding cap to meet the revised goals of the E-rate program.
The FCC’s E-rate order received a mixed reaction from Chairman Wheeler’s fellow Commissioners. Commissioner Clyburn offered a guarded endorsement of the plan, while noting her concern that support for Wi-Fi could endanger the ability of schools and libraries to obtain support for robust connectivity to their buildings. Commissioner Rosenworcel concurred, in part, arguing that the FCC should have addressed an increase in the E-rate funding cap in the order, rather than deferring that issue for further consideration in the FNPRM. Both Republican Commissioners offered heated dissents, with Commissioner Pai arguing that the order unfairly favored urban schools, and Commissioner O’Rielly warning that the E-rate reforms will either increase consumer bills through larger USF fees or lead to a “funding cliff” for schools and libraries.