FCC Commissioner's Vision for E-Rate Reform

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Republican FCC Commissioner Ajit Pai laid out his vision for a more “student-centered” E-Rate system at the American Enterprise Institute this afternoon. His colleagues, Democrats Mignon Clyburn and Jessica Rosenworcel, have both expressed support for President Obama’s ConnectED initiative, which included a recommendation for E-Rate reform.  Commissioner Pai offered his vision in advance of the FCC’s open meeting this Friday, July 19, where they will discuss the process for reforming E-Rate.  

This is significant.  In the past, Republican commissioners have called for ending the E-Rate.  Today, the lone Republican Commissioner called it an essential program and created the support and space to debate how to reform it.

To improve the program-- which often receives criticism for being tedious, overly lengthy, dependent on consultants, and lacking in transparency--Commissioner Pai described four changes he would like to see in E-Rate:

  1. Change the funding formula.  Currently schools have to decipher what their discount rate is (depending on their student population), and hope their request is accepted.   Commissioner Pai would alter this, creating a guaranteed per-pupil amount for schools to spend, with some additional support to be given to rural and underserved schools.  Under Commissioner Pai’s proposal, money would follow the student from one school to another.
  2. Combine and change the allowable uses.  Under the existing guidelines (described here), schools apply for services in either “Tier 1” or “Tier 2.”  Commissioner Pai’s plan would destroy the tiered system (which he feels often leads to spending that doesn’t impact the classroom) and create one menu of allowable services.  These would focus on things like broadband, classroom-level connections, or other services to enable children to access Internet and technology more readily.  Telecom services look to potentially be the big loser here- Commissioner Pai noted that generally speaking, he favors moving money from voice and toward broadband or other technology.
  3. Simplify the application and process.  Districts spend significant resources (both time and money) developing and submitting their E-Rate proposals.  Commissioner Pai expressed a desire to have an application of “not more than one page,” cutting out the need for expensive E-Rate consultants to help navigate the process and increasing transparency and timeliness.
  4. Increase accountability and transparency.  The current system, which gives discounts of up to 90% to districts with high-need populations, does not do enough to incentivize smart purchasing decisions, according to Commissioner Pai.  By limiting this discount rate to only 75% (as he described it--one dollar from districts for every three dollars from the government), districts will be encouraged to critically consider their needs and be more price sensitive in their contracting decisions.  School officials will also be expected to verify that funds are being spent on programs that directly impact students (rather than cell phones for administrators, for example).  Commissioner Pai’s proposal also calls for information to be collected from schools and reported on an open website for parents and the community to easily understand what districts are doing with their E-Rate funds.

Addressing President Obama’s ConnectED proposal, Commissioner Pai  noted that unlike ConnectED, which sets a goal to have 99% of America’s schools connected to broadband with speeds of at least 100Mbps and with a target of 1Gbps, Commissioner Pai’s proposal sets no overarching goals or regulations, ostensibly to allow districts to make whatever investments they need within their schools.  The Commissioner noted that he felt districts may have priorities other than reaching an “arbitrary, nationalized” goal.

Improvements in efficiency and leveraging existing funds (including additional funds that have currently been collected but not disbursed) will provide added benefits to schools, according to Commissioner Pai.  He noted that the Universal Services fee, paid by consumers on their telecom bills, has more than doubled, and that Americans should not be asked to pay even more fees on their cell phone bills.

There is clear common ground for reforms. Many agree on the need to focus more on broadband than telecom, and to make the entire E-Rate process more simple.  As always, it’s the “how” (especially around raising the cap or finding other sources of funds) that is likely to get messy.

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