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FCC Chair Vows to Shift E-Rate Funding to Broadband, Away From Phone, Voice Services

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Cross-posted from the Digital Education blog

In a speech this week, the chairman of the Federal Communications Commission reiterated plans to phase out E-rate funding for outmoded services and pledged to create a more equitable system for helping rural schools, amid grumbling about the agency's vision for the program.

Tom Wheeler, addressing a conference of the Council of Chief State School Officers, also said plans are underway to create a "strike force" within the Universal Service Administrative Company to ensure that money is wisely spent and rules are followed for the E-rate and other programs.

The USAC administers the E-rate, which has a $2.4 billion yearly budget, at the direction of the commission.

Eighty percent of funding for wireless technology in recent years has flowed to urban school districts, Wheeler estimated.  Those school systems are worthy of support, but the current funding system is "far from equitable" because funds were not reaching all parts of the country, Wheeler said, according to a transcript of his remarks given Monday at a state education chiefs' event held in Arlington, Va.

"The statute under which we operate is clear that Congress intended the principle of universal connectivity to be applied for schools and libraries in all parts of the country," Wheeler said.  "Unfortunately, it is not so today. It will not be so tomorrow without rethinking how we allocate funds...[W]e need to recognize the universal service mandate of the program."

Those remarks come a little more than a week after the county's largest teachers' union, the National Education Association, raised concerns about a notice put forward by the FCC calling for public input in restructuring the program. One of the 3 million-member union's concerns is that while the FCC is pushing hard for improving high-speed broadband in schools, many rural districts are not receiving basic connectivity through the program.

Also noteworthy from Wheeler's speech:

  • Despite clamoring in some quarters for a major cash infusion into the E-rate, the FCC official emphasized that the agency will search for savings in the program before it considers an expansion that requires raising telecommunications fees. "Simply sending more money to the E-Rate program to keep doing business as it has been for the last 18 years is not a sustainable strategy," Wheeler said.
  • The FCC is reviewing the administration of the USAC, and searching for a new CEO to lead the organization. Wheeler said he will soon announce a "strike force" to review spending policies and procedures across USAC-administered programs.
  • The USAC is already putting in place a process to streamline E-rate applications, with an emphasis on promoting high-speed broadband connections and on applications from consortia.
  • Wheeler said the E-rate program's funding of services that are no longer central to schools' and libraries' needs is siphoning money that could be going to improved broadband access, a more pressing need.

The FCC is spending about $600 million annually on outdated services, argued Wheeler, who acknowledged that moving away from that spending is certain to antagonize various factions within the education community.

Some services "fall into the 'nice-to-have' category, but certainly are not 'must-have' if our priority is broadband deployment," Wheeler said. "Mobile phones are now ubiquitous in our nation. E-Rate support does not mean the difference between teachers having mobile phones and not having them. But we spend over $175 million a year of E-Rate funds to pay for mobile phones."

He also pointed to the hundreds of millions of dollars spent annually on e-mail, text-messages, 1-800 services, and older voice services.

"Should we take money away from assuring broadband in every classroom to pay for these legacy activities?" he asked. "It is hard to walk away from such subsidies, I know, but we need to keep our eye on the prize."

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