'E-rates' recommended: 20-90% telecom discounts for schools and libraries
Originally published in Current, Nov. 25, 1996
If the FCC accepts the recommendation of a joint federal/state board, most K-12 schools and public libraries will be eligible for "E-rate" telecom service discounts of 20 to 90 percent next school year.
The FCC, directed by Congress to make the final decisions by May, last week sought public comments on the recommendations. Comments are due by Dec. 16 and reply comments by Jan. 10.
The commission is likely to accept the joint board's recommendations; three of the four FCC members were members of the board.
This process--laid out in the Snowe-Rockefeller Amendment to last winter's big Telecom Act--is shaping the main achievement of the nonprofit sector's campaign for a "public lane on the infrastructure."
The recommendations don't promise free telecom service to the schools and libraries, but lobbyists say they're pleased that the proposal:
- applies to every kind of telecom service--data, voice or video, outside the building or inside, and
- gives the greatest assistance to "have-not" schools that need help the most.
The Clinton Administration had advocated free Internet access for all schools. But Vice President Gore approves of the resolution: "While it's true that it's not completely free for all schools, the package covers more services than we were originally proposing," he told the Washington Post.
Schools, on average, would get a 60 percent discount, but the savings would vary considerably between 20 and 90 percent--the biggest going to the 16 percent of schools with the least resources or located in high-cost areas. Only the wealthiest 3 percent of schools would be given the minimum discount.
"We really see this as a huge victory for the schools," says National School Boards Association lobbyist Michelle Richards. With a unanimous commitment by the Federal-State Joint Board on Universal Service on Nov. 7 and bipartisan support in Congress, she regards the discount as a long-term commitment that schools can rely on.
Video as well as Internet
Rather than excluding advanced services from subsidy, the recommendation would permit schools and libraries to choose two-way video hookups if appropriate. "It really empowers the schools to make the best decisions that make the most sense for their educational mission," says Richards.
Consumer advocates also supported the recommendation. "The schools that are neediest, with least means, will get the biggest discount," says Mark Cooper, director of research for the Consumer Federation of America. "All will be responsible for at least part of the cost ... so they are likely to act responsibly."
The joint board set an annual cap of $2.25 billion on discounts, which Cooper predicts is "very generous," though a sudden boom in spending to start up distance learning could use a year's full subsidy, he says.
Getting a break on telecom service, however, helps schools with only a fraction of the cost of K-12 electronic learning systems. Line charges for telecom connections to the school amount to just 7 to 15 percent of ongoing expenses, and operation of the network within a school adds another 4 or 5 percent, according to a McKinsey & Co. study. Teacher training and curricular content are far larger parts of the cost.
The subsidies will be underwritten by a universal service fund supported by mandatory contributions from all telecom providers. The joint board endorsed a policy of "competitive neutrality," meaning that all of the competing carriers will contribute equitably. Exactly how much, the FCC will determine.
The universal service fund also will back telecom subsidies to some 9,600 rural hospitals, clinics and other health care providers, aiming to bring their rates down to the level of their urban counterparts. But the joint board found that it needs more information on costs and the scope of services before it can make recommendations.
With billions in federal and state aid recommended by the joint board, the universal service fund would also expand "lifeline" subsidies on telephone service for low-income households. By doubling the lifeline subsidies, many more low-income households can be made eligible for aid, according to Cooper.
Tuned to pass Congress
"Public lane" proposals proposed under the Democrat-controlled Congress in 1994 would have provided free or discounted telecom service to a much broader range of nonprofit and government services.
Colleges and public broadcasters were among those sectors dropped to give the bill a better chance of passage in 1995. Senators from rural states put the amendment across: author Olympia Snowe (R-Maine) and cosponsors John Rockefeller (D-W.Va.), Bob Kerrey (D-Neb.) and James Exon (D-Neb.).
In negotiation with opponents including Sen. John McCain (R-Ariz.), the backers ruled out any K-12 schools that have endowments of more than $50 million.
Many details in the implementation of the bill remain to be decided by the FCC. The commission last week asked for comments on ways to define "high cost" areas for school and library rates, and to define "competitive neutrality" in spreading the burden among telecom carriers, among other matters.
This month's recommendations came out of eight months' deliberations by the Federal-State Joint Board on Universal Service. Board members included FCC members--Chairman Reed Hundt, Rachelle Chong and Susan Ness--and utility regulators from five states and a state-appointed consumer advocate. The state members, appointed by the FCC in March, were Julia Johnson, Florida; Kenneth McClure and Martha Hogerty, Missouri; Sharon Nelson, Washington state; and Laska Schoenfelder, South Dakota.
Current Briefing: Will there be a public lane on the information superhighway?
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