Schools, get ready: the e-rate arrives in January

Originally published in Current, July 7, 1997

By Steve Behrens

Schools and libraries should begin preparing now to take advantage of the new "e-rate" educational discounts on telecom services that Congress approved last year.

That was the message from speakers participating in a PBS satellite videoconference produced last month by John Lawson of Convergence Services Inc., a lobbyist and consultant for pubcasters and educators. More than 1,000 downlink sites were registered for the briefing.

Under basic FCC rules adopted in May--and some that are still being written--public and nonprofit private K-12 schools and libraries will be eligible for $2.25 billion in discounts, as of Jan. 1, 1998. The size of discounts will vary from 20 to 90 percent, depending on the poverty level where they're located and whether it's a rural or urban area (table, page 14).

The rules implement the Snowe-Rockefeller-Exon-Kerrey Amendment adopted as a part of last year's big Telecom Act. Funds for the discounts will be collected from telephone companies and other telecom providers and put in a universal service fund. And companies providing services to schools and libraries will be reimbursed from that fund.

This roundabout method of funding subsidies is under attack by some telecom companies, which complain that Internet service providers and other computer interests get the benefit of e-rate subsidies but don't have to pay into the fund.

The benefits will be enormous for schools and libraries as well. If a school is eligible for a 60 percent e-rate discount and leases a $100-a-month ISDN line, for example, it will pay $40 to the service provider, and the service provider will be reimbursed the remaining $60 by the universal service administrator, which tends the fund, according to Bill Stern, v.p. of National Exchange Carrier Association. (NECA, which looks after the "lifeline" phone service discounts for low-income households, is interim administrator for now.)

Cutting the cost of transmission will make distance learning more widely affordable to schools, advocates expect.

Gordon Ambach, executive director of the Council of Chief State School Officers, said this spring that the e-rate will be so important to American education that it ranks with the land-grant colleges the G.I. Bill, and major federal education acts.

Though e-rate discounts were designed primarily for phone, wireless, satellite and other telecom services and Internet access, they will also help pay bills for installation and maintenance of internal connections necessary to use the services, including such items as computer networks, routers, hubs and file servers, according to speakers on the June 3 videoconference.

Computers, software and training of teachers in their use are not eligible for e-rate discounts, but another new federal grant program does cover them, said Henry Marockie, West Virginia's superintendent of public instruction. "These things go hand-in-hand, because what you can't get funded under the discount rates you can get funded for the most part under the Technology Literacy Grants," he said. Congress allotted $200 million for the U.S. Department of Education grants this year and put $425 million in the budget agreement for them next year.

E-rate discounts also won't cover educational content of distance learning. Services that sell both content and conduit for a single price should be thinking about unbundling those parts of the cost so that schools can take the discount on the telecom portion of the bill, Lawson said.

The $2.25 billion available next year in e-rate discounts is more than the FCC expects to use, according to Irene Flannery, the FCC attorney who wrote the e-rate order. Discounts will be available first come, first served each year until all but $250 million has been dished out. At that point, a universal service administrator appointed by the FCC will begin giving priorities to schools and libraries that have high poverty rates and that haven't used the discounts yet.

Speakers on the videoconference say that schools and school systems should make sure that they have an up-to-date, state-approved technology plan, which will be required of discount applicants.

Educators should assign "the brightest person available" to handle the process and champion the cause, advised Marockie. School systems should move quickly to computerize their surveys for school lunch subsidies, because that data will be used to determine e-rate discount levels. They also must get an attorney ready to monitor e-rate hearings on the state level.

Each state's public utilities commission must do an important piece of groundwork before the discounts are available in the state--adopting discounts on intrastate services that are at least equal to the FCC's interstate discounts, said Julia Johnson, a Florida utilities commissioner who serves on the Federal-State Joint Board. Only Florida and Connecticut have adopted intrastate discounts so far, she said.

Getting a state to take action won't be as hard as it sounds. The FCC-governed universal service fund will pay for discounts on intrastate as well as interstate service.

States, incidentally, can raise the discounts or expand eligibility to colleges if they set up intrastate funds, Johnson said.

In the meantime, the feds are designing application forms. But here's how the process will work generally. Applicants:

can group together to seek discounts jointly, though they will want to connect with others that have similar poverty rates to get their full discounts.

must follow technology plans certified by their states (or possibly by other authorities that the FCC is considering).

will submit, every year, informal descriptions of needed telecom services--or formal RFPs--to the universal service administrator, which will post the specs on a national web site for vendors to bid on.

must certify that they are eligible for the discounts, and will use the services for educational purposes only, and won't resell them.

can obtain services from vendors that bid the "lowest corresponding price" for the geographic area--the rate available to nonresidential telecom customers similarly situated.

will pay the bid price, minus the appropriate discount, to the selected service provider.

By putting notices on the web site, schools will be saying to vendors, "Here's what we need. What technology do you have?" said Kathryn Brown of the National Telecommunications and Information Administration.

Schools without approved technology plans can get help in creating them from a national volunteer group called Tech Corps, said Linda Roberts of the U.S. Department of Education.

A number of web sites offer more information on e-rates:

How much discount?
E-rates for K-12 schools under the Snowe-Rockefeller amendment will be based on local poverty rates (as figured for the school lunch program) and urban/rural status.
Percent of households in poverty within school district Percentage discount on telecom services
  Urban areas Rural areas
Less than 1% 20% 25%
1-19% 40% 50%
20-34% 50% 60%
35-49% 60% 70%
50-74% 80% 80%
75-100% 90% 90%


To Current's home page

Earlier news: The Federal-State Joint Board recommends how the FCC should implement the Snowe-Rockefeller amendment.


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