FCC approves $1 billion eRate hike: Schools will get $2.25 billion in second-year discounts

Amid heavy lobbying from both supporters and critics of the eRate, the Federal Communications Commission (FCC) voted May 27 to fund this year’s program at $2.25 billion–the maximum figure allowed by its rules. The agency’s vote, though reassuring to educators, promises to fuel further attacks on the eRate by some members of Congress.

The $2.25 billion in funding represents an increase of nearly $1 billion from the current annual level, and critics say this increase will lead to higher phone bills. The eRate is paid for by fees collected from telecommunications companies, many of which have passed the program’s cost on to their customers.

Three commissioners supported maximum funding and two opposed. Commissioner Michael Powell said he would have supported a lower amount, but not $2.25 billion. Commissioner Harold Furchtgott-Roth, the other dissenter, opposed any increase to the funding level.

“Every billion dollars of direct fees is $10 per household, per year in America,” Furchtgott-Roth said. “You pay for it through higher phone rates” and lost opportunities for rate cuts.

But FCC Chairman William Kennard argued that the additional funding would help wire 528,000 poor or rural classrooms to the internet, benefiting some 40 million more students.

“It’s important to make sure that all of our kids have access to the technology that will improve their lives and make them competitive on the job market,” Kennard said. “Some people have argued we can’t afford to do this. We can’t afford to leave poor kids in America in the dark ages.”

Last year, the FCC scaled back the eRate after consumer groups and some lawmakers called for cuts or halts in funding. Instead, the commission authorized $1.93 billion for the program’s first 18 months, a rate of nearly $1.3 billion a year.

More than 32,000 applications already have been filed for the eRate’s second fiscal year, which begins July 1. Demand is estimated to be $2.44 billion–still more than the $2.25 billion available.

According to the FCC, the eRate will be able to fund all requests for telecommunications services and internet access again this year. Requests for internal wiring, like last year, will be fulfilled on a needs-first basis.

Debate over funding resurfaces

In the weeks leading up to the FCC’s decision, the political debate that threatened to undermine the program last year was heard yet again. That debate is likely to continue, despite–or because of–the agency’s ruling.

In an eMail message sent to its activist list May 17, the Republican National Committee (RNC) urged its members to oppose any increase in funding for the eRate. In the message, titled “Gore: Reach Out and Tax Everyone–Veep to Double Despised ‘Gore Tax,'” the RNC said that the vice president “is set to double the tax on your phone bill by hiking the ‘Gore tax’ and socking taxpayers with billions of dollars in new taxes.”

The message, which was also posted to the RNC’s web site, went on to say that “Gore also missed the news that over 80% of schools are already on the Net” and that the FCC “is set to finalize the Gore phone tax hike at the end of May, unless–of course–listeners keep Gore and the FCC’s phones ringing.”

Some Republican critics of the eRate last year dubbed the program the “Gore tax,” after the vice president who has been a strong supporter of the eRate.

A contingent of 33 senators, meanwhile–including four Republicans–

lobbied the FCC to fully fund the program. In a letter sent May 14 to Kennard, the senators–led by John Rockefeller, D-W.Va., and Olympia Snowe, R-Maine, two of the eRate’s original sponsors–argued that anything less than $2.25 billion in funding wouldn’t allow the program to reach the neediest schools and libraries.

Despite the FCC’s ruling, a movement is under way in Congress to change the way the eRate would be funded. Rep. Billy Tauzin, R-La., chairman of the House Telecommunications Subcommittee, has introduced a bill that would reduce an existing 3 percent telephone excise tax by one-third and use the remaining one percent to fund the eRate.

Tauzin’s bill, which would generate an estimated $1.9 billion per year in eRate funding, also would transfer control of the fund from the FCC to the Commerce Department’s National Telecommunications and Information Administration, which would distribute the money to the states in the form of block grants for them to administer.

A companion measure to Tauzin’s bill has been introduced in the Senate by Conrad Burns, R-Mont., chairman of the Senate Communications Subcommittee. But eRate supporters fear both bills would serve to undermine the program’s effectiveness. After five years, funding would be subjected to the annual appropriations process and would be capped at $500 million per year.

In a May 15 editorial, the New York Times argued, “[Burns’ and Tauzin’s] proposal would destabilize a program that works, and, worse, cut assistance even as telecommunications become increasingly important in education.”

A bipartisan poll commissioned by members of the Education and Library Networks Coalition, meanwhile, suggests that an overwhelming majority of Americans support the eRate. According to the poll of 1,000 households by Lake, Snell, Perry & Associates and the Tarrance Group, 87 percent of respondents said they support continuing discounts to needy schools and libraries, while 83 percent believe that internet access in schools and libraries will improve educational opportunities for all Americans.

Federal Communications Commission


Republican National Committee


Sen. John Rockefeller


Sen. Olympia Snowe


Rep. Billy Tauzin


Sen. Conrad Burns


Education and Library Networks Coalition


Dennis Pierce

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