The FCC has denied a petition by the state of Iowa asking that the Iowa Communications Network (ICN), which offers subsidized telecommunications services to the state’s schools and libraries, be eligible for direct universal service support under the eRate program. The ruling, which was issued Feb. 18, reaffirms the agency’s position that federal eRate funds cannot be used to support state education networks.

As a state-subsidized network, ICN provides schools and other beneficiaries with telecommunications services at steep discounts. For example, ICN charges schools and libraries $5 per hour for video rates that normally cost $75. Because ICN offers telecommunications services to other state entities as well—such as businesses and private organizations—the state argued it should be eligible for direct support like any other “telecommunications carrier,” such as GTE or Sprint.

In issuing its ruling, the FCC argued that the phrase “telecommunications carrier” refers only to a “common carrier” for purposes of universal service—that is, an entity that provides telecommunications services on an indiscriminate basis. In contrast, the agency said, ICN serves clients on an individualized basis, determines whether and on what terms to serve each client, and is under no regulatory compulsion to serve all clients indiscriminately—and is thus a “private carrier.”

Iowa had argued that an unfavorable ruling would put the state’s schools and libraries at a disadvantage when compared to other states’ schools. But the FCC noted that the competitive bidding process required by the eRate assures that Iowa schools will take their services from the most competitive provider—whether that provider is ICN or another entity.

While states are barred from receiving direct reimbursement for discounted telecommunications services provided over their own networks, the FCC noted, states can receive support by acting as the collective purchasing agent for their schools’ and libraries’ telecommunications services, internet access, or internal connections.