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The Cost of Connecting Just Got Higher

It was not a good week for educational technology funding for schools and libraries.

> New FCC rules will require that E-rate applicants pay more for telecommunications and Internet access services that come bundled with equipment. Instead of getting the benefit of free or subsidized equipment prices like everyone else in America — think of the cable modem in your house or your reduced-price cell phone – now schools and libraries will have to reduce their E-rate funding requests by however much this equipment is worth. The concern is that somehow, someway, service providers must be taking advantage of schools and libraries, and that the solution to this is to reduce funding support for eligible services while adding a new complexity to the application review process. Certainly, it is important to guard the fund; however, the FCC’s existing competitive bidding and cost-effectiveness rules are robust enough to keep schools from paying too much for eligible services.    

> Prominent associations call for lower E-rate discount rates and for rationing out E-rate support for internal connections over five year periods. Lowering E-rate discount rates will not help poor schools connect their students. The Funds For Learning analysis of FY2014 E-rate funding requests shows a clear trend. Schools pay between $1.00 and $1.50 per student each month for telecomm and Internet services. Schools that serve the poorest communities (i.e. the 80% to 90% E-rate discount schools) are fortunate that they can leverage their E-rate discounts to receive higher value services. But as our analysis shows, schools with a lower discount rate don’t spend that much more out-of-pocket. They simply reduce their services. This makes perfect sense. Schools are, for the most part, living on fixed incomes. They leverage the E-rate program as they can. Lowering their discount rates does not increase their buying power. It lowers it. Despite this fact, associations who represent schools and libraries are, again, calling for lower discount rates for internal connections. They also suggest that schools receive one shot at new networking equipment once every five years. Because these new rules would start in 2015, under their proposal some schools would wait until 2019 to receive internal connections support.

> $800 million?! Two high-profile groups, the Consortium for School Networking (CoSN) and EducationSuperhighway, dropped a bombshell this week when they announced that it would only take $800 million per year for four years to deliver connectivity to all of America’s public school district students. Their analysis does not include support for maintenance of existing network infrastructure, which is a necessity, and it is completely silent on the need for telephony support – plus it excludes the cost of connecting charter and private schools!

A simple review of E-rate funding request data paints a remarkably different picture of the true need that exists within schools and libraries. Demand for internal connections at just a small percentage of schools totals more than $2 billion per year; the total demand from all schools would be significantly higher.  A 2013 Funds For Learning analysis based on actual E-rate funding request data estimated the need for internal connections at $7.7 billion in E-rate discounts.


Because the new E-rate rules are not yet in place, it is absolutely vital that E-rate stakeholders directly weigh in on these matters. A convenient way for schools and libraries to let their voice be heard is to complete this short survey. Applicants should also consider visiting the FCC in-person, or at least sending them a letter. Or, for those wanting to more actively engage in the process, please consider joining the E-rate Reform Coalition.

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