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E-rate program

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Overview Edit

Since 1998 the Universal Service Schools and Libraries Program (aka the E-rate program) has provided discounts for telecommunications, Internet access, and internal connections for qualifying schools and libraries throughout the nation.[1] It has been a significant federal source of technology funding for schools and libraries. Specifically, the E-rate program provides about $2 billion each year toward telecommunications services, Internet access, and data transmission wiring and components used for educational purposes. Schools and libraries apply each year for E-rate funding. Once an application is approved, the program reimburses a discounted portion of the cost of services or equipment.

In section 254 of the Communications Act of 1934, as added by the Telecommunications Act of 1996, Congress instructed the FCC to establish support mechanisms with the goal of ensuring the delivery of affordable telecommunications service to all Americans, including consumers in high-cost areas, low-income consumers, eligible schools and libraries, and rural health care providers. The Telecommunications Act of 1996 instructed the FCC to establish a universal service mechanism to ensure that schools and libraries have affordable access to telecommunications services to use for educational purposes at discounted rates.[2]

The Commission also has determined that it has the authority to designate services eligible for E-rate support as part of its authority to enhance, to the extent technically feasible and economically reasonable, access to advanced telecommunications and information services for all public and non-profit elementary and secondary school classrooms and libraries.

Funding Edit

Congress mandated in 1996 that the Federal Communications Commission (FCC) use the federal Universal Service Fund (USF) to provide discounted eligible telecommunications, Internet access, and internal connections to eligible schools and libraries. Schools and libraries can obtain E-rate funding for broadband under either the telecommunications or the Internet access category.[3] The program is funded through statutorily-mandated payments into the Universal Service Fund by companies that provide interstate and international telecommunications services.[4] Many of these companies, in turn, pass on their contribution costs to their subscribers through a line item on subscribers’ telephone bills.

FCC designated the Universal Service Administrative Company (USAC), a not-for-profit corporation, to administer the E-rate program. USAC uses a subcontractor, Solix, Inc., a for-profit company, to carry out certain key aspects of the program, such as reviewing and approving funding applications and invoices.

Eligible Services List Edit

Since the initial implementation of the E-rate program in 1998, and consistent with the Commission’s rules and requirements, USAC has developed procedures and guidelines to ensure that E-rate funding is provided only for eligible services. Initially, the Commission directed USAC, in consultation with the Commission, to determine whether particular services fell within the eligibility criteria established under the Act and the Commission’s rules and policies.[5] USAC began to update and post to its website on an annual basis a list of services and products eligible to receive discounts under the E-rate program, now known as the Eligible Services List (ESL).[6] In consultation with the Wireline Competition Bureau, USAC updated the list to reflect any changes in rules that had occurred during the previous year and to address issues that arose in the application review process.[7]

On December 23, 2003, the Commission adopted section 54.522 of its rules, formalizing the process for updating the Eligible Services List (ESL) for the E-rate program.[8] Specifically, under Section 54.522, the Commission must seek comment on the Universal Service Administrative Company's (USAC) proposed ESL and issue a public notice attaching the final ESL for the upcoming funding year at least 60 days prior to the opening of the application funding window for the E-rate program.[9] This process was adopted to provide greater transparency in the development of the ESL, to simplify program administration, and to facilitate the ability of both vendors and applicants to determine the services that are eligible for discounts.[10] It also provides applicants and service providers an opportunity to bring to the Commission’s attention areas of ambiguity in the application of program rules in a rapidly changing marketplace.[11]

In its current form, the ESL is divided into five main categories — telecommunications service, Internet access, internal connections, basic maintenance of internal connections, and miscellaneous.[12]

Under the current ESL, E-rate participants can receive discounts on e-mail service; web hosting services; cabling, connectors, and related components used for eligible voice, video, and data transmission; and components used to distribute information from Internet access facilities to individual classrooms or public areas of a library.[13] Interconnected VoIP service and text messaging are also eligible services under the E-rate program.[14]

Subsequent developments Edit

Since 2001, in accordance with the Children's Internet Protection Act (CIPA), to be eligible for E-rate discounts for Internet access and internal connection services, schools and libraries that have computers with Internet access must certify that they have in place certain Internet safety policies and technology protection measures.[15] As required by CIPA, section 54.520(c) of the Commission's rules requires that the Internet safety policy must include a technology protection measure that protects against Internet access by both adults and minors to visual depictions that are (1) obscene; (2) child pornography; or, with respect to use of the computers by minors, (3) harmful to minors.[16] In addition, section 54.520(c)(1)(i) requires a school to certify that its Internet safety policy includes "monitoring the online activities of minors."[17]

In 2008, Congress passed the Protecting Children in the 21st Century Act. Among other things, section 215 of the Protecting Children in the 21st Century Act, titled "Promoting Online Safety in Schools," revised section 254(h)(5)(B) of the Communications Act of 1934, as amended (the "Act"), by adding a new certification requirement for elementary and secondary schools that have computers with Internet access and have applied for discounted services under the E-rate program.[18] In addition to the existing CIPA certifications required of schools in section 254(h)(5) of the Act, the Protecting Children in the 21st Century Act requires the school, school board, local educational agency, or other authority with responsibility for administration of the school to certify that, "as part of its Internet safety policy, [it] is educating minors about appropriate online behavior, including interacting with other individuals on social networking websites and in chat rooms and cyberbullying awareness and response."[19]

In March 2010, an FCC task force released a National Broadband Plan that acknowledges the complexity inherent in the E-rate program and recommends, among other things, that FCC streamline the application process.

For example, the National Broadband Plan notes that E-rate’s procedural complexities can sometimes result in applicant mistakes and unnecessary administrative costs as well as deter eligible entities from applying. In the National Broadband Plan, the task force suggests that FCC can ease the burden on applicants for Priority 1 services[20] that enter into multi-year contracts, and that applications for small amounts could be streamlined with a simplified application similar to the “1040EZ” form the Internal Revenue Service makes available to qualifying taxpayers.

In May 2010, as part of its efforts to begin implementing the vision of the National Broadband Plan, the FCC released a Notice of Proposed Rulemaking (NPRM) to solicit comments about potential changes to the E-rate program.[21] The FCC stated in the NPRM that it is time to reexamine what is working well in the current program and what can be improved.

On September 23, 2010, the FCC adopted an order in response to the May 2010 NPRM. According to FCC’s press release, the order improves the ability of schools and libraries to connect to the Internet in the most cost-effective way, allows schools to provide Internet access to the local community after school hours, indexes the E-rate funding cap to inflation, and streamlines the E-rate application process.[22]

In July 2013, the FCC initiated an update of the E-Rate for broadband in schools and libraries.[23]

References Edit

  1. 47 C.F.R. Part 54, Subpart F; see also USAC, Schools and Libraries' Eligible Services List for Funding Year 2009, Nov. 21, 2008 (full-text) (Funding Year 2009 ESL). The Eligible Services List (ESL) indicates whether specific products or services are eligible to receive discounts under the E-rate Program.
  2. See 47 U.S.C. §254(h).
  3. Schools and libraries can apply discounts toward broadband connections that include digital subscriber lines (DSL), cable modems, fiber optics, integrated services digital networks (ISDN, BRI, PRI), satellite services, T1s, T2s, T3s, and fractional T1s. Funding Year 2009 ESL at 2, 3, 7.
  4. The FCC has determined that the Universal Service Fund is a permanent indefinite appropriation (i.e., funding appropriated or authorized by law to be collected and available for specified purposes without further congressional action). See 47 U.S.C. §254(d) and 47 C.F.R. §54.706.
  5. See "Schools and Libraries Universal Service Support Mechanism," CC Docket No. 02-6, "Second Report and Order and Further Notice of Proposed Rulemaking," 18 FCC Rcd 9202, 9213, §31 (2003) (Schools and Libraries Second Report and Order); see also 47 U.S.C. §254(c).
  6. See USAC website, "Eligible Services List"[1]; see also "Schools and Libraries Third Report and Order," 18 FCC Rcd at 26926, §34.
  7. "Schools and Libraries Third Report and Order," 18 FCC Rcd at 26926, §34.
  8. See 47 C.F.R. §54.522; "Schools and Libraries Third Report and Order," 18 FCC Rcd at 26929, §40. This process was first implemented in E-rate funding year 2005.
  9. 47 C.F.R. §54.522.
  10. "Schools and Libraries Third Report and Order," 18 FCC Rcd at 26929, §40.
  11. Id. In the "Universal Service Fund Comprehensive Review NPRM," the Commission sought comment on, among other things, whether to make changes to the ESL process. "Comprehensive Review of Universal Service Fund Management, Administration, and Oversight," WC Docket Nos. 05-195, 02-60, 03-109, CC Docket Nos. 96-45, 02-6, 97-21, "Notice of Proposed Rulemaking and Further Notice of Proposed Rulemaking," 20 FCC Rcd 11308, 11323-11326, paras. 34-43 (2005).
  12. See, e.g., "Eligible Services List, Schools and Libraries Support Mechanism for Funding Year 2009"[2]. The ESL lists examples of services or products that are eligible for E-rate support, while the Commission’s rules generally include only broad categories. For example, the Commission’s rules designate "telecommunications services" as supported services, and the ESL provides an illustrative list of specific telecommunications services or technologies, such as Centrex and frame relay, that are eligible for E-rate support. Thus, the ESL categories provide additional, practical guidance for beneficiaries and service providers in determining the eligibility of specific services or products.
  13. Id. at 6, 7, 10, 11.
  14. See "Schools and Libraries Universal Service Support Mechanism," CC Docket No. 02-6, Notice of Proposed Rulemaking, 23 FCC Rcd 11703 (2008).
  15. Congress included CIPA as part of the Consolidated Appropriations Act, 2001, Pub. L. No. 106-554, codified at 47 U.S.C. §§1701 et seq. Section 1721 of CIPA amends section 254 (h) of the Communications Act of 1934 (as amended). 47 U.S.C §254(h).
  16. 47 U.S.C. §254(h); 47 C.F.R. 54.520(c)(1)(i), 54.520(c)(2)(i).
  17. 47 U.S.C. §254(h)(5)(B)(i); 47 C.F.R. 54.520(c)(1)(i). The statute does not extend this requirement to libraries. 47 U.S.C. §254(h)(5)(B)(i).
  18. Protecting Children in the 21st Century Act §215; 47 U.S.C. §254(h)(5)(B).
  19. Protecting Children in the 21st Century Act §215.
  20. Priority 1 services include telecommunications services, such as local, long-distance, and wireless (e.g., cellular) telephone services, as well as data links (e.g., T-1 lines) and Internet access services, such as Web hosting and e-mail services — all of which receive first priority for the available funds under FCC’s rules.
  21. Schools and Libraries Universal Support Mechanism; A National Broadband Plan for Our Future, Notice of Proposed Rulemaking, 25 FCC Rcd 6872 (2010).
  22. FCC Enables High-Speed, Affordable Broadband for Schools, and Libraries, News Release (Sept. 23, 2010).
  23. FCC, "FCC Launches Update of E-Rate for Broadband in Schools and Libraries" (July 23, 2013) (full-text). See also FCC, Notice of Proposed Rulemaking: In the Matter of Modernizing the E-rate Program for Schools and Libraries (July 19, 2013) (full-text).

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