E-Rate Modernization: It’s About Time

Over the last decade, a diversity of groups, from the State Education Technology Directors Association to the LEAD Commission to the Department of Education, among many others, have advocated that the FCC modernize the E-Rate program. Now that the FCC is finally set to act, how do the prospects for improvement appear? We put that question to Blair Levin (1), who was the Chief of Staff at the FCC when the program was initially conceived and implemented, and also was the principal architect of the National Broadband Plan, which proposed a number of E-Rate related changes now being considered by the FCC. Here is his response.

The prospects for improvement soon are good. My reaction is that it’s about time, which I mean in two different ways. Before explaining the double meaning, let me review where we are.

If one reads press accounts, the narrative is controversy over how the FCC is proceeding, with some of the program’s major recipients expressing dissatisfaction. Dig a little deeper, however, and one can see in the FCC effort one of the few places in D.C. where there is a broad, bi-partisan consensus and the government is acting in a thoughtful and decisive manner to improve an important program.

First, as Chairman Wheeler suggested when he took over last year, the first priority should be improving how the program uses existing funds. His team did a through review and found about $2 billion that would not have been available absent a change in management practices. This change will free up funds to upgrade how the program connects students and library users to new opportunities. To their credit, FCC staff also significantly expedited the process of reviewing applications, approving a billion in support for the current funding year twice as fast as in any previous funding year.

Second, Wheeler wisely chose to target those found funds on a piece of the puzzle that had been suffering the most from underinvestment: internal connections (generally Wi-Fi). An overwhelming bi-partisan consensus, including education and library groups such as EdLiNC, specifically recommended using that money to pay for a Wi-Fi upgrade.

Third, the extensive record revealed a broad bi-partisan consensus on the right framework for modernization, including focusing funds on broadband capacity and connectivity, instead of traditional legacy services, using transparency and consortia purchasing to lower costs, and streamlining the program by allowing multi-year funding and simplifying the application process. The nature of that consensus can also be seen in the considerable overlap between the views articulated by Democratic Commissioner Rosenworcel and Republican Commissioner Pai, both of whom did a important service to their country by providing a clear and early airing of their views. The current proposal circulating at the FCC reflects and builds on that consensus.

There are disagreements, as one would expect. Two objections are particularly worth noting. The first is that current proposal does not include a permanent increase in the E-rate funding cap, and therefore, the budget can’t meet the long-term goals of the program. Some suggest we should not move forward now as modernization without a cap increase is not worth doing and there can only be one bite at the apple to modernize the program.

I respectfully disagree. Chairman Wheeler has made clear he is committed to reviewing the long-term funding needs of the program. But unless the FCC acts this summer, the Wi-Fi connectivity everyone agrees we should fund will not start until 2016, delaying a better education for tens of millions of students. As one observer wrote “it would be incredibly unfair to ask students to put high-speed Internet access on hold for another year or two while the adults in Washington, DC try to get their act together." There is no advantage in delaying access to in-building connectivity for millions of students and library patrons now when funds are available today to make a real difference.

A second objection is that while closing the Wi-Fi gap is a laudable goal, the numbers don’t add up to connect all in five years. Those who make this objection, however, should consider the basic math.

Funding the classrooms and libraries’ Wi-Fi needs will take about $1 billion annually. As noted, the FCC already has $2 billion in reserve to spend over the next two funding years. Funds for the next three years come from a combination of two things: (1) phasing down support for the nearly 50% of $2.4 billion of E-Rate funds that currently go to non-broadband, legacy services (paging, email, etc., and over a multi-year period, voice service) and repurposing that support for Wi-Fi; and (2) achieving significant cost savings in the program through programs such as volume discounts through consortia-enabled bulk purchasing, and improved pricing transparency.

That may not turn out to be enough to pay for Wi-Fi and broadband connectivity to all eligible schools and libraries; indeed, I suspect it will not be in the long run. Unfortunately, the program’s original budget cap did not include a Consumer Price Index adjustment, (which, pursuant to a recommendation of the National Broadband Plan only started being adjusted in 2010) so the program’s annual buying power is almost a billion dollars short of what it should be. But even critics have noted that there is enough money to pay for the first two years. I have confidence that Chairman Wheeler will be true to his word and, having made the necessary adjustments to improve the efficiency of the program, evaluate the long-term needs and act to procure additional resources, as necessary.

I have sympathy for those who argue we should be acting faster and immediately increase funding; they represent a constituency that understands the value of program and everyday sees the problematic impact of underinvestment. Nonetheless, I think we should all appreciate the thoughtful approach the FCC team is taking. In an era when all levels of government are being asked to do more with less, we should recognize the wisdom of proceeding with a plan that is based on getting as much out of every dollar that we can, targeting additional funds that are already available to meet the greatest current need, and analyzing what additional actions may be necessary to build on those initial steps. Pragmatism may not always draw the loudest applause, but in my experience, achieving long-term, sustainable, results requires this kind of step-by-step approach.

I have only read the public reports of the proposal, and therefore not all the details and I am sure, as with any such document, one can argue about those details. Further, while I strongly favor moving forward now, we should be candid and admit that one consequence of doing so without a long-term budget is that some of the formulas in the current proposal will have to be revaluated in light of the ultimate budget. I hope our country acts to take advantage of the huge benefits of bringing abundant bandwidth to anchor institutions, particularly schools and libraries, but in doing so we have to understand how every capital investment program, whether in the private or public sector faces the challenge of setting out a plan and then course correcting as new evidence emerges. The math I cited earlier reflects certain assumptions, which like all such assumptions, may prove too optimistic or too conservative. We will, and should, continue to debate, how best to adjust the E-Rate expenditures, and I have faith in the FCC team to understand the need for flexibility and to course correct down the road, as it has done, for example, with problems in the universal service reform effort of 2011.

We are also going to debate the long-term funding needs of the program. While some will argue that debate is about money, it is really about time. That is, we know that all classrooms and libraries will eventually have to have the kind of connectivity and internal connections the overwhelming consensus of commentators has proposed. The question is how long will it be before all students and library users, regardless of whether rural or urban or middle-class or poor, will have facilities that provide them the opportunities to learn using the tools of modern communications.

Those who, like me, are open to new funding to accelerate that moment, have to answer questions about the size of a budget that will be necessary Those who have already decided no additional funds should ever be spent should be required to answer the question of which students should be left behind for a long time to come? (They should also be forced to answer why the government, unlike any other enterprise, should set an IT budget based on what it was almost two decades ago.)

The argument about the relative trade off of time and money is an important one and we should all feel an obligation to provide the FCC the best possible information to make that decision wisely.

What we can’t argue about is that our school children have been waiting too long for the kind of technology that can transform their education for the better. This is the second way in which we should understand that as to what the FCC is about to do, it’s about time. Interim Chair Clyburn deserves praise for getting the current proceeding rolling and Chairman Wheeler has done an excellent job in taking the ball and not missing a beat in keeping the momentum going. Those who argue for further delay should recognize this: the ideas for modernizing the E-Rate program have been debated since before the Kindle and iPad were introduced over a half a decade ago; the best of those ideas were incorporated in the National Broadband Plan and the Department of Education Technology plan, both of which are already more than four years old. There was a consensus on the need to change years ago. The time to merely state aspirations is long past. The time to start acting is overdue.

1. Mr. Levin is also a Fellow with the Communications and Society Program of the Aspen Institute and an Advisor to the LEAD Commission, but in this posting he is speaking solely for himself.

By Blair Levin.