E-Rate Funding Increase Backed by Schools; Telcos Worry About CAF Cuts

Calls by education and library groups, and FCC Commissioner Jessica Rosenworcel in a speech Wednesday, to increase E-rate funding are running into opposition from telcos, in comments filed in the E-rate modernization Further NPRM. The Independent Telephone and Telecommunications Alliance and USTelecom said they worry expanding E-rate could cut into other USF programs like the Connect America Fund.

"It is premature for the Commission to discuss any changes in E-Rate Program funding,” USTelecom said in its filing (http://bit.ly/XDEjJ5), as the comment period closed Monday. Most filings were not yet posted at our deadline, but USTelecom and some key commenters made their comments available to us Wednesday as they dealt with issues left unresolved by July’s E-rate modernization reform (CD July 17 p5). Pending issues could “substantially impact” the amount that’s needed for the program, USTelecom said, including the agency’s data collection effort on the connection needs of schools and libraries. The commission should fund E-rate “within the current budget and defer funding size questions to a later date, until such time as it has a better grasp on the E-Rate Program’s actual needs,” USTelecom said.

The comments deal with some “basic questions,” including “what size should E-rate be?” said Michael Romano, NTCA senior vice president-policy, in an interview. NTCA sought more data on the needs of schools and libraries before further changes (http://bit.ly/1qgdT6H).

The commission should “under no circumstances deplete other funded programs to increase E-Rate Program funding levels,” USTelecom said. “Any reduction in CAF funds “would be contrary to the goals of the high-cost program, rural healthcare program and the E-Rate Program by detrimentally impacting broadband build-out in high-cost rural areas."

Web services and service providers don’t contribute to USF at the same level as others, ITTA said, increasing “the contribution burden on traditional services and providers, putting them at a competitive disadvantage.” The Federal-State Board on Universal Service is studying the issue. In a blog post (http://fcc.us/1rZpfDr) last week, Commissioner Mike O'Reilly, a critic of the growth in USF spending, backed a USF spending cap, but also said the increase in the contribution rate highlights “that contribution reform is necessary.” NCTA would oppose requiring broadband providers to pay into the USF, because it might slow deployment, said a spokesman.

"As Commissioner [Michael] O'Rielly noted, the increases in the contribution factor we have seen in recent years are not sustainable,” said Micah Caldwell, ITTA vice president-regulatory affairs. Rosenworcel, speaking Wednesday to Latinos in Tech Innovation & Social Media, said E-rate has suffered from a lack of funds. While the commission took steps earlier this year to make the program more efficient, she said in prepared remarks that “the bigger problem is that the E-rate fund ... has barely been adjusted for inflation since the program began. That’s cruel. It has cut down the purchasing power of schools by roughly $1 billion per year, cutting short the good that an updated E-Rate can do. We need to fix this—because we can’t expect to out educate and out innovate the world if we do it on a budget frozen in the age of dial-up” (http://fcc.us/1qZ2YTY).

The commission’s July order was a critical first step,” said Bob Wise, president of the Alliance for Excellent Education and former Democratic governor of West Virginia, in a news release about the group’s filing (http://bit.ly/1mbcwvb). “But now it must permanently increase funding for E-rate so that at least 99 percent of the nation’s students have access to high-speed broadband in their schools and libraries within the next five years.” The alliance said funding for internal connections went to only 4 to 11 percent of the schools each year between 2008 and 2012, and no more than 3 percent of the public library locations.

"The original designers of the E-rate program could not have envisioned the significant role that broadband services would play in today’s society,” the Urban Libraries Council said in its comment, seeking more funding. ULC said “the original budget designs of the E-rate program no longer serve the needs of schools and libraries.” The group also submitted a study saying the program’s funding formula for urban libraries is too low (CD Sept 17 p17).

"While other countries are racing ahead, America must act with a sense of urgency to bring gigabit broadband to every school, Wi-Fi to every classroom and digital learning opportunities to every child,” EducationSuperHighway said. The group focused on creating broadband connections to schools and libraries, saying 17 percent of schools with fiber connections meet the commission’s goal of 100 kbps per student with Internet access. The cost of broadband needs to be reduced, the group said, saying the “key factor” preventing school districts from meeting the commission’s bandwidth goals is the price of high-speed connections. For Wi-Fi connections inside schools, the program’s $150-per-student funding formula should be maintained, the group said. An American Association of School Administrators filing also backed increasing E-rate funding. (kmurakami@warren-news.com)