Heather E. Hudson
Director, Communications Technology Management Program
School of Business and Management
University of San Francisco
hudson@usfca.edu
415-422-6642
The Telecommunications Act of 1996 mandated discounts for high speed connectivity for schools, libraries, and rural health care centers. Innovative although somewhat complex mechanisms were developed to implement this mandate. This paper identifies some of the key features of these programs and how they have been implemented, issues to be addressed, and recommendations for the future of the program.
Hudson identifies a number of key issues concerning these programs:
1. Should these Programs remain under the FCC?
Some federal officials have proposed that the E-rate should be merged with other Department of Education technology programs. However, because of its direct role as a key component of universal service policy, the E-rate should remain independent of other government departments and under the administration of the FCC.
2. Should E-Rate Funds support Capability and Content?
Some educators advocate expanding E-rate funding beyond connectivity to support training, technical support, and content. However, given the pressures on the funding base and ongoing requirements for connectivity subsidies, E-rate funds should be limited to supporting connectivity, while other sources should be tapped for these additional important needs.
3. Why should Key Elements of the E-rate Process be Retained?
The E-rate funds allocation process has unique features that should be retained:
- Awards to the user: The E-rate funds are awarded to the user (school or library) rather than directly to the carrier or vendor. This approach serves to empower the schools and libraries as customers of the carriers, rather than supplicants. In some cases, schools and libraries have become “anchor tenants” for these carriers, encouraging them to bring broadband into previously unserved communities.
- Competitive bids: The E-rate process requires competitive bids for approved services through the USAC website. This approach not only creates incentives to minimize costs, but also encourages new entrants in addition to incumbents and large vendors to provide equipment and services for schools.
4. How Can the E-Rate Process be Improved?
Waste, Fraud and Abuse
The E-Rate Program has been subject to allegations of waste, fraud and abuse. Some school districts have purchased equipment that was unnecessary, too costly or beyond their capability to manage. Equipment vendors have been accused of fraud and price-rigging. In 2003, USAC, with support from the FCC, convened a task force to recommend steps to strengthen and improve E-rate compliance procedures and protections from waste, fraud and abuse. In December, 2003, the House Committee on Energy and Commerce requested the Government Accountability Office (GAO) to prepare a report on the FCC’s management and oversight of the E-Rate Program. The GAO found evidence of some mismanagement of E-rate funds, bureaucratic delays in disbursing funds, and some waste of E-rate resources. Its report called for the FCC to strengthen its management and oversight by determining comprehensively which federal accountability requirements apply to the E-rate, establishing E-rate performance goals and measures, and taking steps to reduce beneficiary appeals. In March 2005, the House Committee held hearings on the GAO report.
USAC and the FCC have taken significant steps to rectify these problems. They are also being addressed through the FCC in its Notice of Proposed Rulemaking (NPRM) on USF management, administration and oversight.
At the Federal Level
Although there are strengths in the E-rate allocation process, the program has proved difficult to implement and administer. Some educators and librarians have found that it places a heavy burden on them in terms of time, effort and expertise. The application process is demanding, and requires careful monitoring and attention to detailed specifications and submissions.
The required technology plan was intended to force schools to think through how they would address the “other C’s” including teacher competency and relevant content, as well as how they would fund ongoing technical support and maintenance. Yet some schools have simply outsourced the preparation of the technology plan, or used a “cookie cutter” model that satisfies the requirement but not the intended benefit of preparing the plan.
At the State and Local Level
One strategy that the school districts and state coordinators could use more effectively is mentoring. A resource person who can provide advice, critique draft submissions, and trouble-shoot the process can make a major difference.
Many school districts state that they would have difficulty finding funds to pay for connectivity if E-rate funds and discounts were discontinued. While this claim demonstrates the value of the E-rate subsidy to the schools, it also shows that school districts need to examine how they allocate their available technology dollars, and whether they can diversify their funding sources or include connectivity costs in their annual budgets.
5. Should the Rural Health Care (RHC) Program be continued?
Should a program that has disbursed less than 10 percent of its authorized funds since 1998 be continued? The answer is not as simple as it would appear. First, the amount of $400 million per year was a very rough estimate without much foundation. Second, there has been very limited publicity about the program. Third, its application procedures have been very complex, and until recently, the discount for high speed connectivity in many rural areas was minimal.
The FCC has now changed the formulas for calculating the discounts, and included discounts for Internet access. It has also now announced a two-year pilot program to support investment in broadband infrastructure to link health providers and to provide guidance for the future of the program. The RHC should be allowed to continue at least through the next two years, subject to findings from the pilot program, which should include independent evaluation.
6. Should the USF fund infrastructure?
The RHC pilot program includes funding for broadband infrastructure. In addition to linking health facilities, these networks, as the FCC points out, could also provide vital links for disaster preparedness and emergency response and facilitate the goal of implementing electronic medical records nationwide. Extension of broadband networks to connect schools and libraries has also brought broadband to neighborhoods and rural communities that previously lacked access. The FCC should continue to explore how USF funding for schools, libraries and rural health care can contribute to the national goal of providing universal access to broadband.
Recommendations
- Continue the Universal Service Fund organizational programs for schools, libraries and rural health care as a permanent component of universal service.
- Keep responsibility for the Universal Service Fund programs for schools, libraries, and rural health care at the FCC, but establish advisory committees with membership from the Departments of Education and Health and Human Services as well as from professional educational, library and health care organizations, and experts on utilization of information and communication technologies (ICTs) in these fields and evaluation of ICT programs and impacts.
- Continue the following E-rate policies:
- Limit funding to connectivity and related facilities
- Maintain discounts based on poverty and rurality
- Maintain competitive bidding process for vendors.
- Require a triennial review of FCC and USAC administrative, application and oversight procedures to improve efficiency, effectiveness and transparency of funds disbursement.
- Require that a small percentage of USF funds be used for outreach to make more educators, librarians and rural health care providers aware of the programs and how to participate, and for evaluation to update and analyze data on program utilization and to assess impacts of USF support.
- Identify sources of federal funds to support the other factors critical to effective utilization of ICTs: capacity-building for teachers and others in using ICTs, development and exchange of effective content for education and other development applications, and contextual applications (based on factors such as language, culture, ethnicity, disabilities).