FCC to Ponder Launching Rulemaking In July to Reform E-Rate Funding Program

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By Paul Barbagallo  

The Federal Communications Commission in July will vote to begin a rulemaking process to consider sweeping changes to the federal E-Rate program, acting FCC Chairwoman Mignon Clyburn announced June 28.

The move comes less than a month after President Obama formally called on the FCC to overhaul and expand the E-Rate program to connect 99 percent of the nation's public-school students to ultra-fast broadband internet service within five years.

In a statement released by Clyburn's office late June 28, the chairwoman said her proposal “answers that call to close our education system's bandwidth gap by modernizing the E-Rate program and providing our schools and libraries with a path towards affordable access to high-speed broadband.”

“Since its inception, the E-Rate program has succeeded in connecting nearly all U.S. classrooms to the Internet, and in 2010 we took a number of initial steps to cut red tape and help schools get faster speeds for less money,” Clyburn added. “But now, to ensure a robust future for our children, we must equip them with the necessary tools to compete and flourish in an increasingly global and high tech economy.”

The $2.25 billion-a-year E-Rate program currently subsidizes telecommunications services and basic internet connections for schools and libraries, one of four programs that make up the FCC-administered Universal Service Fund, but has been seen as inadequate to meet the needs of teachers and students.

According to a recent survey conducted by the FCC, 80 percent of schools and library also believe that their broadband connections simply do not meet their current bandwidth demands.

The Obama administration believes that without legislation, the FCC could reform the E-Rate program to provide schools and libraries with new, lightning-fast connections to the web--at speeds of 100 megabits per second with a “target” of 1 gigabit per second, a speed that is 60 to 100 times faster than most schools or homes now receive. In a conference call with reporters earlier this month, White House officials declined to put an overall cost on the program, saying the FCC would make that final determination, but predicted that the program could end up costing several billion dollars, and may require a temporary surcharge included in consumers' telephone bills.

Search for Savings

Though the notice of proposed rulemaking that Clyburn has circulated to the other commissioners has not yet been made public, the document is expected to pose a number of questions about how the agency could modify the E-Rate program to find savings for the reforms the president has advocated, including streamlining administrative and purchasing processes.

The FCC has already moved to cut wasteful spending in the larger Universal Service Fund, where possible. The FCC is on target to save $400 million this year following efforts to trim the federal Lifeline fund, one of the four Universal Service Fund programs created to subsidize phone service to poor Americans. The FCC in February 2012 approved a number of changes to the Lifeline program, including limiting the $10 monthly subsidy to one phone line per home, requiring proof of income eligibility from new subscribers, and creating a national database to prevent duplicative subsidies. These and other changes helped the FCC cut $214 million in spending in 2012, according to the agency.