In July, the FCC voted to modernize the E-Rate program resulting in significant changes to the way technologies are prioritized and funded under the service. The revisions that are likely to have the largest impact on K-12 schools across the country are the phaseout of support for voice telecommunications and the funding cap on category two goods and services. Before we get into the details of these changes, it’s important to first understand how the E-Rate program works.
Back to Basics
The idea behind E-Rate, established in 1997, is that all schools and districts are eligible to receive assistance in the form of discounts on equipment and services that provide connectivity to the classroom.
“Think of it as a rebate or a coupon that can only be applied to certain types of goods and services with a timeframe associated with that,” says John Harrington, CEO of Funds for Learning, a firm that provides E-Rate consulting services to schools.
Discounts are based on economic need so the more students that qualify for free and reduced rate lunch, the higher the discount. Schools in high poverty areas may be eligible to receive up to a 90 percent discount on certain technology products and services. On the other end of the funding spectrum are the more affluent communities. Although still eligible for assistance, those school districts may only receive the bottom discount of 20 percent. Again, discount rates are based on economic need.
“The FCC’s desire is that schools and libraries are getting the services they need at the best possible price so the whole process kick offs with a competitive bidding process,” says Harrington.
Districts then submit what is called a 471 form that specifies what types of goods and services the district would like to receive discounts for and which vendors they would like to work with. The district then calculates its expected discount rate and the form goes through a lengthy review process. Once approved, districts begin another set of paperwork to actually receive the discounts.
The application process for E-Rate funding begins at least one year in advance. Once schools begin to receive the discounts, the district’s vendors bill them for services at a reduced price and then bill the E-Rate program for the difference. The FCC has allotted $2.4 billion in funds for E-Rate since 1997 and that number remains the same today. The modernization of E-Rate shifted the distribution of the fund, but did not increase its overall size.
What Does This Mean for You?
If you’re a school district still receiving discounts on voice telecommunications (your phone), be prepared to come up with a plan “b”. The FCC is phasing out support for voice services over the next five years. Each year the funding for voice will be reduced by 20 percent until funding is eliminated completely. Although technology is moving rapidly toward voice over IP (VoIP) services, many schools do not have the infrastructure—and now the money—to make the transition and rely instead on older analog systems. The phaseout of support for these systems has raised concern.
“I think it’s going to have a huge impact on districts. [The money] has to come out of their general fund. They don’t have any other place to go for it, but to pay it right out of their wallet,” says Catherine Banker, director of Education Compliance, VectorUSA, a California-based company that designs, builds and maintains integrated video, data and voice networks. The money to pay for voice telecommunications has to come from somewhere and it will very likely be cut from the classroom.
If schools can’t receive assistance for traditional phone systems then why don’t they switch to VoIP? Both hosted VoIP and VoIP equipment were removed from E-Rate funding eligibility, leaving schools in exactly the same place they started.
“It’s not a cheap installation,” says Banker. “Those who have allowed technology money into their bonds can probably use some of their bonds to pay for a phone system, but on the whole, bonds are difficult to pass.” This is especially true in high poverty areas where there is not a large homeowner base to support the schools.
“In high poverty areas they are stuck with analog systems and they’re going to be paying the price,” adds Banker.
E-Rate modernization also comes with a cap on funding for category two services and equipment in fiscal year 2015. Category two includes: routers, switches, wireless access points, internal cabling, racks, wireless controller systems, firewall services, uninterruptible power supply and related software. Managed Wi-Fi, caching, and maintenance will also be eligible for at least the next two years. Funding requests are now limited to $150 per a student, which is a pre-discount rate figure.
The Good News…and Some More Bad News
The good news is the FCC has decided to fund wireless internal connections, which haven’t been funded for the last two years.
“It had to do with some of the ways the dollars were prioritized,” explains Harrington. “What you had was schools that could get discounts on high speed Internet access to the front door of the building, but weren’t getting any support to bring that connectivity into the school building itself.”
Wireless is now supported as a category two service, which will accelerate the speed at which Wi-Fi becomes a staple in K-12 schools and libraries. However, the adoption of a robust wireless network is not without its challenges. Fifty-seven percent of school districts that responded to a survey by the Consortium for School Networking (CoSN) said they do not believe they have the Wi-Fi capacity to handle a 1:1 deployment, a fact the FCC is aware of and stated in its modernization order. According to Banker, many school sites need extensive wiring and equipment upgrades and the limited funding they will receive through E-Rate will not be enough to complete such a task.
It is also unclear whether funding for Wi-Fi will be available after 2016 so schools should apply for assistance now while they still can. Although there may be a number of questions in the air, Harrington says the FCC has taken a step in the right direction, albeit a small one. The organization is currently seeking comment on the size of the E-Rate fund.
“The biggest downside is that the FCC did not increase the size of the fund itself,” says Harrington. “It’s basically been flat since 1997 and the world is so different today than it was in 1997 in terms of connectivity and the role of communications within a school district or library system.”
The likelihood of the FCC increasing the size of the E-Rate fund is impossible to predict. For now, it’s most important K-12 schools take advantage of the funding they can get for Wi-Fi and begin to look for alternative ways to cover existing voice telecommunication costs.