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An Alternative to E-Rate 2.0: Another FCC Commissioner’s Vision for Restructuring the Schools and Libraries Program

The Federal Communications Commission (FCC) is gearing up for a monumental task: revamping the E-Rate program, which subsidizes broadband connectivity to connect schools and libraries across the US. As the rulemaking process gets underway, various stakeholders (including two FCC Commissioners) have laid out their own proposals, which differ widely in two key areas: funding and establishing national targets for connectivity.

In April, FCC Commissioner Jessica Rosenworcel proposed a substantial upgrade to the program--she calls it “E-Rate 2.0”--in order to help fund next-generation connectivity at schools and libraries across the country. Under both Rosenworcel’s plan and as part of President Obama’s recently-announced ConnectED initiative, the goal of the new E-Rate would be to provide gigabit speeds to 99 percent of schools by the end of the decade. The plan has been well-received by many educators, although questions remain about where additional funding could come from. Last week, FCC Commissioner Ajit Pai laid out an alternate vision for E-Rate that focused largely on structural changes to the program.

Commissioner Pai emphasized a “student-centered approach” to reforming E-Rate, suggesting that excess bureaucracy and structural issues lie at the heart of E-Rate’s problems. While he highlighted several critical areas where the current program could be improved or streamlined, his proposal to overhaul the current funding structure of the program was arguably the most significant change he presented. At the same time, he challenged one of the central tenets of his FCC colleague’s proposal: that a gigabit of bandwidth per 1,000 students is an important target for schools.

The size of the E-Rate program was one key point of difference between the proposals. Without increasing the cap on E-Rate--a program which, as part of the Universal Service Fund, gets its money through contributions on consumer phone bills--Commissioner Pai has suggested that efficiencies in program administration and a redistribution of the current funding will suffice. He proposes a shift to per-pupil funding, with an additional “bump” for rural and low-income students; as he said at Tuesday’s event, “because we want a student-centered E-Rate program, we should divvy up the money on a per-student basis.”

A more equitable funding system is an important goal, but distributing E-Rate money on a per-pupil basis might not prove effective in achieving equitable service.

In the education world, per-pupil funding is a common way to administer dollars for variable costs in schools – costs that are associated directly with each student. For desks and textbooks, this is a fairly easy calculation: if you have 1,000 students, you’ll need 1,000 books and 1,000 desks. But there are many potential pitfalls in using per-pupil funding for step costs, which are costs that increase or decrease once a certain threshold has been reached. Indeed, as Chicago Public Schools move this year to per-student funding, there is some concern that the new budget structure will exacerbate schoolinequality by further reducing budgets of schools with shrinking enrollment.

Moreover, paying for broadband connectivity using per-pupil funding introduces a host of other complications. Broadband service is not priced in a way that costs would increase or decrease proportionally based on student enrollment. In general, while a bigger broadband pipe costs more overall, the price per megabit of capacity goes down (meaning that with more students, schools would get more “bang for the buck” in terms of bandwidth). For small rural districts, schools with enrollment shortfalls, and districts that have opted for smaller class sizes, this funding structure could prove challenging and ultimately increase inequities by making it more difficult for smaller schools to pay for adequate connectivity.

Additionally, while the markets for desks and textbooks are fairly transparent, the pricing structure for enterprise-level broadband service is anything but. Even with a mandate to provide schools low-cost service, service providers have often failed to charge the lowest corresponding price to schools in the same district—let alone from state to state. In addition, the price often depends on whether the service provider is a big ISP, a local municipal network, or a non-profit coop. Take the case of Wisconsin, where the future of WiscNet, the non-profit co-op that provides low-cost service for about 300 public schools and 15 library systems, is in jeopardy. If WiscNet goes under, schools and libraries could be forced to pay AT&T or CenturyLink more than twice as much to maintain the same level of connectivity.

It’s difficult to come up with a reliable per-pupil funding formula when so many costs vary independent of the size of the student body. As part of Commissioner Pai’s push for transparency and accountability, the FCC should publicize not only how schools are spending their E-Rate dollars, but also what they’re being charged for the services they receive. A little sunlight could help reduce that variability and ultimately increase the efficiency of the E-Rate program.

And then there is the question of speed. Commissioner Pai limited his discussion of next-generation technologies to the problems with differentiating between Priority 1 (which fund Internet and telecommunications services) and Priority 2 (which give money for internal connections and maintenance) funding requests since E-Rate received applications asking for twice as much money as was actually available last year. His concerns about whether schools should be spending their dollars on telephone services instead of classroom connections are valid. But nearly 80 percent of E-Rate schools report that they don’t have the capacity to meet current demand, and many schools still rely on speeds that are similar to the average home user’s. He barely mentioned fiber optic infrastructure, which is the only technology that’s truly future proof and capable of delivering speeds that meet not only today’s needs but also tomorrow’s.

During the event last week, Commissioner Pai drew a contrast between his vision for E-Rate and the ConnectED initiative: “Faced with the choice between a one-dimensional national benchmark or local autonomy that benefits local students, I favor the latter.” Fortunately, these two options are not mutually exclusive: the national benchmark actually ties connectivity to students, advocating for differentiated bandwidth goals based on the number of students served by different localities. Ensuring that there’s sufficient bandwidth to connect more than just the teacher’s desktop computer seems like a critical goal for a student-centered program.

As the FCC and various stakeholders begin the critical process of program reform, they will have a number of different perspectives to reconcile. As Commissioner Pai emphasized throughout his remarks, however, the key consideration is what will benefit students: providing them with access to the 21st century tools and resources they need to succeed in the future.

This post originally appeared on New America Foundation's In the Tank blog."