History of the E-rate Program

The E-rate program, officially known as Universal Service Funding for Schools and Libraries, was created as a result of the Telecommunications Act of 1996.  In the act, a fourth Universal Service Fund program was established to get schools and libraries connected to the internet.

The program policies and rules are designed to promote competition between service providers and to give applicants the most cost effective means to connect to the Internet.  The E-rate program is funded with $2.25 billion dollars annually from the Universal Service Fund.  This program is supported by assessments on telecommunications companies, not the federal budget.  The program will continue indefinitely until Congress decides to end it. The E-rate program enjoys broad support from all program stakeholders and Congress.

E-rate is the largest and most reliable source of technology funding for K-12 public and private schools in the United States. Since the E-rate program was created, the percentage of U.S. public school classrooms that are connected to the Internet has grown from 27 percent to more than 90 percent.

The underlying concept of the E-rate program is to provide discounts for goods and services that are used for educational purposes as defined by the FCC.  E-rate discounts can range from 20 to 90 percent on certain types of services and products.  This means that the applicant will always have some payment burden when receiving approved services. 

The types of services and products eligible for E-rate discounts fall into four broad categories. These are telecommunication services, internet access, internal connections, and basic maintenance.  Also, if the applicant is requesting service for internet access or internal connections, the applicant will be required to comply with the Children's Internet Protection Act

An applicant will calculate its discount rate based off the number of students eligible for the National School Lunch Program.  The discount rate also takes into consideration the poverty level of the area and if the applicant is in a rural or urban area.  The applicant's discount rate is important since only the applicants with the highest discount rates will be eligible for Priority Two funding.

Want to know more? Read about the organizations overseeing the E-rate Program and the general E-rate process.