A Year in Review: Bringing Big Broadband to Better Education

As 2014 comes to a close, we’re looking at the major accomplishments of the Federal Communications Commission and the first year of Tom Wheeler’s chairmanship.


A Year in Review: Bringing Big Broadband to Better Education

On December 11, 2014, the Federal Communications Commission completed a comprehensive reform of the E-rate program, the nation’s largest program supporting education technology. Mandated by Congress in 1996 and implemented by the FCC in 1997, the E-rate provides discounted telecommunications, Internet access, and internal connections to eligible schools and libraries, funded by the Universal Service Fund (USF). Over the past year and a half, the FCC has been reviewing the program to ensure that our nation’s students and communities have access to high-capacity broadband connections that support digital learning while making sure that the program remains fiscally responsible and fair to the consumers and businesses that pay into the USF.

A Presidential Priority

The real work of modernizing the E-rate reaches back to the earliest days of the Obama Administration. On December 6, 2008, then-President-elect Barack Obama, on the heels of learning that the U.S. had lost 2 million jobs since the start of the Great Recession, delivered a radio address that outlined his ideas for economic recovery.

“To help our children compete in a 21st century economy,” Obama declared, “we need to send them to 21st century schools.” He added, “Here, in the country that invented the Internet, every child should have the chance to get online, and they’ll get that chance when I’m President – because that’s how we’ll strengthen America’s competitiveness in the world.”

Fast forwarding to June 6, 2013, President Obama traveled to Mooresville, North Carolina, to call for a new initiative, which he dubbed ConnectED, to connect 99 percent of America’s students to the Internet through high-speed (no less than 100Mbps and with a target of 1Gbps) broadband and high-speed wireless within 5 years. He specifically asked the Federal Communications Commission to modernize and leverage the E-Rate program to meet that goal. The President also called on businesses for support. (See more details on ConnectED)

“We can’t be stuck in the 19th century when we’re living in a 21st-century economy,” President Obama said. “In a country where we expect free Wi-Fi with our coffee, why shouldn’t we have it in our schools?” he asked.

President Obama later reiterated his call in the 2014 State of the Union Address and again in February during a visit to Buck Lodge Middle School in Adelphi, Maryland. There has been no question over the past 18 months that using technology to improve educational outcomes is a top priority for President Obama.

“This is not connectivity for connectivity’s sake,” noted Cecilia Muñoz, the director of the White House Domestic Policy Council, and Gene Sperling, the Director of the National Economic Council. “It is laying the foundation for a vision of classrooms where students are engaged in individualized digital learning and where teachers can assess progress lesson by lesson and day by day. It’s about creating learning environments where students can both succeed and struggle without embarrassment, where barriers for children with disabilities are removed, and where we can bring the most modern, innovative, and up-to-date content into the classroom.”

By providing ubiquitous, high-speed broadband to our schools and libraries, we can help ensure that no matter who you are, in which zip code you were born, the color of your skin, or the income of your parents, every child can take advantage of high speed learning, and every child has a chance to succeed.

Here’s how Gene Sperling summed it up:

“This same technology, this same access to broadband, this same capacity of people to have individualized learning devices connected to the Internet in their school -- which is probably feeding disadvantage, increasing disparity, increasing inequality -- can so easily, if we’re being committed, be something that increases equality, that gives more kids in lower-income neighborhoods the chance to soar because they can be at the same desk, with the same learning tablet, with the same content as kids in the most upper-middle-class neighborhoods. So shame on us -- really, shame on us if we let the wonders of educational technology and broadband lead to more inequality as opposed to less -- as opposed to more opportunity, more leveling of giving everybody a chance. That is a great challenge.”

The Acting Chairwoman Tees the Issue Up

On July 19, the FCC, under Acting Chairwoman Mignon Clyburn, initiated a public proceeding to review and modernize the E-rate program with three goals:

  1. Increased Broadband Capacity: ensuring schools and libraries have affordable access to 21st century broadband. The FCC proposed: simplifying rules on fiber deployment to lower barriers to new construction; prioritizing funding for new fiber deployments that will drive higher speeds and long-term efficiency; phasing out support for services like paging and directory assistance; ensuring that schools and libraries can access funding for modern high-speed Wi-Fi networks in classrooms and library buildings; and allocating funding on a simplified, per-student basis.
  2. Cost-effective Purchasing: maximizing the cost-effectiveness of E-rate purchases. The FCC wanted to know how to: increase consortium purchasing to drive down prices; create other bulk buying opportunities; increase transparency of prices and spending; improve the competitive bidding processes; and craft a pilot program to incentivize and test more cost-effective purchasing practices.
  3. Streamlined Program Administration: streamlining the administration of the E-rate program. The FCC also proposed to speed the review of E-rate applications; provide a streamlined electronic filing system and require electronic filing of documents; increase the transparency of the E-rate administrator’s processes; simplify the eligible services list and find more efficient ways to disburse E-rate funds; reduce unused E-rate funding; and streamline the E-rate appeals process.

The New Chairman Picks Up the Ball, Runs

Tom Wheeler became chairman of the FCC on November 4, 2013. In his first statement in this position he highlighted the FCC's role in education. And, in his first major policy address, Chairman Wheeler said, "We ... will have failed as a nation if our schools aren’t capable of providing a 21st century education.... That’s why the Commission is improving our universal service programs, including the E-rate program for schools and libraries. We are modernizing a program originally conceived to deliver plain old telephone service into programs to ensure broadband access to all Americans, including American schools."

Committed to meeting the goal of connecting 99 percent of America’s students to high-speed broadband within five years, Wheeler embarked on a two-pronged approach to reforming the E-rate program:

  • Structural and administrative improvements in the program’s efficiency, functionality, and oversight; and
  • Refocusing support on Gigabit fiber and Wi-Fi connectivity.

As part of National Digital Learning Day (February 5), Chairman Wheeler predicted a vote on E-rate changes in the spring and a separate consideration of increasing the fees paid by consumers or phone companies to finance the effort. Wheeler said that any increase in the fees would be preceded by a restructuring of how the current $2.4 billion annual program spends its money. “Should it be necessary to increase the permanent funding levels for the E-rate program, we will do what is appropriate,” he said.

"When 80 percent of teachers and administrators in schools participating in the E-rate program say they do not have the bandwidth necessary to meet their educational needs, we have a problem that must be fixed," Chairman Wheeler said. "When roughly half the E-rate schools access the Internet at speeds that are slower than what many Americans have in their homes -- and try to serve hundreds of students (as opposed to the few users in any one home) -- we have a crisis that undermines our nation’s future. We cannot -- we will not -- let those statistics continue," he said.

Wheeler proposed three ways to improve the E-rate:

  1. Accelerate review and approval of the E-rate applications that get the most students the most broadband;
  2. More efficiently review old applications; and
  3. Focus funds on libraries.

“The intent is not to tear down the existing program and start over,” Wheeler explained. “Rather, we should restructure the program in a way that results in a process that effectively targets high capacity connections to all libraries and schools and to provide resources to make sure high-speed Wi-Fi delivers that connectivity within the classroom and the library.” To emphasize the importance of Wi-Fi, the FCC’s Trent Harkrader wrote, “We have to be thinking about getting high speed connectivity all the way to students’ desks and to open library work spaces, not just to the school or library door.”

E-rate supporters wanted the FCC to address program expansion as well, however. Senator Jay Rockefeller, who helped craft the legislation that created the E-rate, responded to Wheeler’s speech saying, "While I welcome Chairman Wheeler’s announcement today of an important down payment for our students’ future, I strongly believe any update of E-Rate also must devote additional long-term support to the program. The case for increasing E-Rate support already has been made. For more than a decade, demand for E-Rate support by our Nation’s schools and libraries has outstripped supply by two-to-one." Sen Ed Markey (D-MA) said, “Now is the time to expand and accelerate high-speed connections to ensure that all Americans -- both young and old -- have the digital skills they need to compete in the 21st century economy.”

The FCC Modernizes E-rate Administration

At its July 11 open meeting, the FCC adopted new E-rate administration rules, streamlining the program, making it faster, simpler, and more efficient. The new rules focused on cost-effectiveness of all E-rate spending through greater pricing transparency, encouraging consortia and bulk purchasing, and better enforcement of existing rules. The reform also migrated E-rate support from traditional non-broadband services to focus on external broadband connections and Wi-Fi connectivity to students.

The new rules:

  • Significantly expanded funding for Wi-Fi networks and distributed it fairly to all schools and libraries while recognizing the needs of the nation’s rural and poorest school districts;
  • Maximized the cost-effectiveness of E-rate spending through greater pricing transparency, encouraging consortia and bulk purchasing, and better enforcement of existing rules; and
  • Streamlined and simplified the E-rate application process and overall program administration.

The FCC action was taken in time to support $2 billion in Wi-Fi upgrades across the country beginning in the 2015-2016 school year. The FCC said the cost of the program would be covered by unused funds and administrative cost-cutting. After internal discussion, the agency decided to continue to prioritize requests for Internet access to schools over requests for Wi-Fi.

To close what the FCC called the “Wi-Fi Gap”, the new rules:

  • Set an annual funding target of $1 billion for Wi-Fi while ensuring support continues to be available for broadband connectivity to schools and libraries;
  • Directed at least $1 billion in support for Wi-Fi for Funding Years 2015 and 2016 to connect over 10 million students and thousands of libraries each year by establishing reasonable budgets for applicants;
  • Allowed support for Wi-Fi purchased as a managed service and caching servers through the new internal connections funding mechanism;
  • Increased support targeted for Wi-Fi in rural school districts substantially – a nearly 75 percent increase; and targets a nearly 60 percent increase in urban and suburban districts;
  • Began a multi-year transition of all program funding to broadband, by gradually phasing down support for non-broadband services; and
  • Adopted clear broadband goals to measure overall program success, while maintaining local flexibility to determine the needs of individual schools and libraries.

In June, Chairman Wheeler pointed out that nearly 60% of schools in America lack sufficient Wi-Fi capability to provide students with 21st Century educational tools. He noted that far too many schools have no Wi-Fi at all and, for those that are lucky enough to be connected wirelessly, such networks often don’t meet the capacity needs of students and teachers. “Solving this challenge is a national priority,” he said. “Unfortunately, the present E-rate program does little to advance Wi-Fi connectivity. Luckily, my fellow Commissioners and I are in a position to act to close the Wi-Fi gap.” But Wheeler also noted that to have an impact in the 2015 school year, the FCC would need to act in the next few weeks to adopt new rules modernizing E-Rate, including the program’s mechanism for distributing support. “If we don’t move quickly on new rules,” he warned, “we will miss the opportunity for Wi-Fi to have its greatest impact in the coming funding year. The consequences of delay would be huge.”

What About E-rate Funding?

In July, the FCC voted to maintain the E-rate’s budget at $2.4 billion while allowing for adjustments for inflation. For the coming three years, the program would target $1 billion annually to Wi-Fi by phasing out support for non-broadband services, such as pagers and phones, and through increased efficiencies. In total, the program improvements would target an additional $5 billion for Wi-Fi over the next five years, which the FCC estimated would be sufficient to expand Wi-Fi networks in all schools and libraries. The FCC estimated that the new focus would provide a 75 percent increase in Wi-Fi funding for rural schools over the next five years and a 60 percent increase for urban schools, delivering Wi-Fi to an additional 10 million students in 2015 alone.

Also in July, the FCC launched what is called a Further Notice of Proposed Rulemaking (FNPRM) in which it started to consider additional reforms in the E-rate program. The FNPRM sought public comment on:

  • Long-term program funding needs necessary to meet goals and funding targets established in the Order;
  • Further steps to facilitate the use of cost-effective consortium-based purchasing; and
  • Alternative methodologies for allocating support for library Wi-Fi connectivity.

In September, Chairman Wheeler said the two main issues before the FCC were:

  • Closing the Rural Fiber Gap for schools and libraries: The FCC estimates that 40% of schools in rural areas lack access to fiber networks. And of those that could access fiber, only about a third do so, principally because of high costs. The net result is shocking: 75% of rural public schools today are unable to achieve ConnectED’s high-speed connectivity goals.
  • Tackling the Affordability Challenge: Although the Telecommunications Act says that schools and libraries should get access to services “at rates less than the amounts charged for similar services to other parties,” data shows that E-rate applicants pay widely varying prices.

In mid-February, we got a glimpse at the severity of the funding gap. The E-rate administrator, the Universal Service Administrative Company (USAC), determined that, for the first time, there would be insufficient E-rate funding to fully support any internal connections requests from the previous year’s batch of applications (funding year 2013) after meeting demand for "priority one services" -- telecommunications services and Internet access. Although the FCC had recently announced that it was in the process of freeing significant new funding for broadband investment, the Commission knew it would take some time before that funding became available – and the FCC knew that those funds would be insufficient to cover even just the 2013 internal connections applications at the head of the line. That’s because those applications – from just the highest poverty schools and libraries eligible for 90% discounts on equipment – totaled over $1.7 billion in funding year 2013. Even if USAC “scraped together” every last dollar available, only a portion (about 60%) of each of these applications could be supported – that would mean even the applicants at the top of the queue would only get about 60% of their requested funds, and their required match would be more than four times larger than expected.

On April 17, 2014, USAC submitted an estimate of demand for the E-rate program for Funding Year 2014 (July 1, 2014 to June 30, 2015) of $4.825 billion, which included estimated demand for priority one services (telecommunications, telecommunications services and Internet access) of $2.630 billion. USAC also projected that $600 million in unused funds from previous funding years would be available to carry forward to increase disbursements to schools and libraries. The FCC then announced that $200 million in unused funds would be carried forward to ensure funding would be available for all eligible priority one funding requests received from schools and libraries in Funding Year 2014 in excess of the annual cap.

The FCC's July NPRM sought long-term funding solutions after months of pooling some stopgap measures to accelerate broadband, Wi-Fi and education deployment in schools and communities:

The Funding to Match the Mission

In November, the New York Times reported that Chairman Wheeler would propose that the E-rate’s annual spending cap would be raised by $1.5 billion, to $3.9 billion (a 62 percent increase). The new spending would lead to an increase of roughly 16 percent in the monthly fee on consumers’ phone bills. FCC officials say consumers would pay less than $2 a year in additional fees per phone line, or less than $6 extra per household, on average; currently the average household pays about $36 a year. But the amount an individual household pays can vary widely, with fees assessed on both home and mobile service. The White House released a statement saying, "This proposal -- scheduled for consideration by the FCC in December -- constitutes an essential step to provide the resources needed to meet the [ConnectED] goals.”

As we noted at the start, on December 11, the FCC approved additional E-rate funding for libraries and schools to purchase broadband connectivity capable of delivering gigabit service over the next five years. The newest FCC rules raise the spending cap on the E-rate program from the current $2.4 billion to $3.9 billion -- the first reset of the cap
since it was initially set at $2.25 million in 1997, an amount that wasn’t adjusted for inflation until 2010.

In addition to spending, the FCC action also improves the overall administration of the program and maximizes the options schools and libraries have
for purchasing affordable high-speed broadband connectivity by:

  • Suspending the requirement that applicants seek funding for large up front construction costs over several years, and allowing applicants to pay their share of one-time, up-front construction costs over multiple years;
  • Equalizing the treatment of schools and libraries seeking support for dark fiber with those seeking support for lit fiber. Dark fiber leases allow the purchase of capacity without the service of transmitting data – lighting the fiber. Dark fiber can be an especially cost-effective option for smaller, rural districts;
  • Allowing schools and libraries to build high-speed broadband facilities themselves when that is the most cost-effective option, subject to a number of safeguards;
  • Providing an incentive for state support of last-mile broadband facilities through a match from E-rate of up to 10% of the cost of construction, with special consideration for Tribal schools;
  • Requiring carriers that receive subsidies from the universal service program for rural areas – called the High Cost Program – to offer high-speed broadband to schools and libraries located in geographic areas receiving those subsidies at rates reasonably comparable to similar services in urban areas; and
  • Increasing the certainty and predictability of funding for Wi-Fi by expanding the five-year budget approach to provide more equitable support for internal connections – known as category two – through funding year 2019.

Conclusion

Ultimately, the work at the FCC will be judged by educational outcomes. But we know this: the FCC's E-rate reform means schools and libraries will have an easier time applying for telecommunications support; E-rate funds will be maximized; and schools and libraries will have affordable access to high-capacity broadband that supports digital learning. Now every child will have access to individualized learning.

In April 2013, FCC Commissioner Jessica Rosenworcel challenged the commission to reboot, reinvigorate, and recharge the E-rate program. She called for E-rate 2.0 which meant, she said, more funding, clear capacity goals, a simplified application process and public-private partnerships. All these elements have been enacted over the past 18 months. But the final part of E-rate 2.0 is student broadband access in the home. In their public statements in favor of the December 11 E-rate vote, Commissioners Rosenworcel, Clyburn and Wheeler all voiced support for turning now to modernizing the FCC's Lifeline program to support affordable home broadband connections for low-income students.

Next week, we'll pick up our review of 2014 -- and peak ahead at 2015 -- through the lens of Lifeline.


Notes:
  1. The USDA’s Distance Learning and Telemedicine Loan and Grant program provides funding to rural hospitals, clinics, schools and libraries for equipment and technical assistance for telemedicine and distance learning. Grant recipients must demonstrate that they serve rural America, prove there is an economic need and provide at least 15 percent in matching funds.

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