E-Rate Gets Big Funding Boost, New Rules

Last Updated: January 28, 2015

This article appeared in the January 2015 Rural Policy Matters.

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Schools and libraries will see a significant increase in funding to improve technology and high-speed internet access thanks to a December decision by the Federal Communications Commission (FCC).

The E-Rate program was created in 1996 to provide schools and libraries with resources for computers and telecommunications services. It is the federal government’s largest educational technology program.

But annual funding for the program had been capped for years at $2.25 billion and needs in most schools far outstripped financial resources. Further, many E-rate policies and rules had not kept pace with needs associated with evolving technology.

This past summer the FCC approved a number of rule changes to emphasize broadband and wi-fi connectivity.

The funding increase raises the annual E-rate spending cap to $3.9 million and will be largely directed toward improving high-speed access. Fees for consumer telecommunications services will cover the costs. Those fees will cost most U.S. households about 16¢ a month or $1.90 a year per phone line.

In addition, funding for older technologies like pagers and voicemail will be phased out, freeing up some additional monies for more up-to-date technologies.

Many education and technology groups have applauded both the funding increase and the new rules.

New rules: more flexibility, transparency

The rule changes reflect a shift in E-rate emphasis toward connectivity and high-speed access. They also address some of the most challenging problems rural areas face is gaining broadband services. This is especially the case with getting fiber optic cable in remote communities and those with low population densities.

While no new funding is specifically set aside to help rural school districts get broadband, several of the rule changes are intended to make it easier and more affordable for them to do so. Some of these changes include:

  • Allowing schools to build their own high-speed networks when it is financially advantageous or other affordable options are not available;
  • Making it easier for schools and libraries to use “dark fiber” cable, that is cable not currently in use;
  • Requiring telecommunications carriers that receive subsidies to offer rates in rural areas that are “reasonably comparable” to those in urban areas;
  • Making it easier for applicants to get upfront money for construction costs;
  • Offering “last mile” incentives to extend broadband in certain circumstances;
  • Increasing vendor transparency, particularly around pricing.

Widespread disparities in school technology and high-speed access

Schools vary widely in the quality of telecommunications services available to their students. This reality relates both to the financial ability of the district to purchase services and to the costs of those services, which vary widely by location and circumstance. Several studies and surveys released this year document these disparities.

Ethnicity, Income, Rural Locale. Earlier this year the Alliance for Excellent Education and the LEAD Commission issued a report that documents some of these disparities as they relate to student ethnicity and location. The report, Schools and Broadband Speeds: An Analysis of Gaps in Access to High-Speed Internet for African-American, Latino, Low-Income, and Rural Students, found that only about 34% of students across the country have access to high-speed internet (100 Mbps or more) and that access varies significantly. For example,

  • Schools serving large populations of African-American and Latino students are nearly half as likely as predominately white schools to have access to high-speed internet;
  • Low-income students are nearly twice as likely to have slow internet access as students attending affluent schools;
  • Students attending schools in remote rural areas are twice as likely to have slow access as students in suburban areas.

Capacity and Costs. The majority of U.S. schools lack the technology infrastructure they need to provide curriculum resources, online testing, and communications. According to a survey conducted earlier this year by the Consortium for School Networking (CoSN), the chief impediments are affordability and adequate funding.

The survey documented large disparities in both access and costs. For example,

  • Connectivity costs are higher in rural districts than in urban and suburban districts. Ten percent of rural districts pay over $250/Mbps per month. Only 37% of rural districts pay less than $10/Mbps per month. But, 49% of urban/suburban districts pay less than $10/Mbps per month.
  • Wi-fi is much less likely to meet current technical standards in rural than urban/suburban districts.
  • Rural districts were less likely than urban/suburban districts to receive multiple bids for services. Six percent of rural districts received no bids at all and 26% received only one bid. Among urban/suburban districts, 59% received three or more bids, but only 35% of rural districts received at least three bids.

Bargaining power in wealthier districts. In April of this year the non-profit organization EducationSuperHighway issued a paper, Connecting America’s Students: Opportunities for Action, which examines data based on districts’ E-rate requests. The paper found that districts with lower poverty rates tend to have better technology infrastructure and get better rates for telecommunications services than districts with higher poverty rates.

The paper includes comparisons of districts that had already met the Obama administration’s ConnectED initiative to promote high-quality educational technology and training. The paper reports that higher-wealth districts are more likely than low wealth districts to meet ConnectED goals. Wealthier districts have much larger technology budgets and pay less for technology services than other districts. For example,

  • Schools meeting ConnectED goals spend about $7.16 per student on technology while other schools average $1.59 per student.
  • Schools meeting ConnectED goals pay about one-third as much for broadband as other schools.

The report found that districts that received multiple bids for technology projects paid between two and three times less for certain services than other districts.

Read More:

News coverage:







Schools and Broadband Speeds: An Analysis of Gaps in Access to High-Speed Internet, Alliance for Excellent Education and the Lead Commission, including access to Executive Summary, full report, and state-by-state e-rate information, updated in December 2014

CoSN survey of E-rate and infrastructure survey:

EducationSuperHighway report, Connecting America’s Students


Read more from the January 2015 Rural Policy Matters.