Schools weigh in on proposed eRate changes

Schools and libraries that apply for federal eRate discounts should be able to choose how their funding will be disbursed, and any unused or unclaimed funds should be carried over to the next funding year, according to school leaders and education groups who filed comments with the Federal Communications Commission (FCC) earlier this year.

In reviewing the eRate’s rules, the FCC had asked members of the public for their feedback on several proposals by the agency to improve the program, as well as their own ideas for how to make the program simpler and more efficient.

The eRate provides up to $2.25 billion in discounts on telecommunications service and internet access to the nation’s schools and libraries each year, but many applicants have chafed under its strict rules and complicated paperwork.

Besides streamlining the program, the FCC would like to reduce the occurrence of fraud, waste, and abuse. The agency also wants to ensure that funding is distributed fairly to those applicants who need it the most. During the last three program years, requests for discounts have exceeded the amount of funding that is available.

The deadline for submitting comments was April 5. The FCC received nearly 120 responses in all, and a sampling of comments posted to the agency’s web site reveals that respondents overwhelmingly agreed on the following suggestions:

1. Applicants should be able to choose for themselves how they will receive eRate discounts—either by paying for services in full and then seeking reimbursement, or by paying only those portions of the charges not eligible for discounts when service begins.

Current program rules leave this detail to be worked out between applicants and their service providers. But because funding is disbursed directly to service providers, and not applicants, the potential exists for service providers to require applicants to pay for services in full and then seek reimbursement.

Requiring service providers to give applicants their choice of payment options makes sense and would not overly burden the providers, a large majority of respondents said. One respondent wrote, “I have seen too many schools not get reimbursement from the service provider due to bankruptcy.” Others noted that service providers are free to take part in the eRate program at their discretion, and if they don’t want to change their billing procedures to incorporate discounts on services as these services are delivered, they don’t have to participate.

Several respondents noted that for applicants truly to have a choice in the matter, the Schools and Libraries Division (SLD) of the Universal Service Administrative Co.—the group that administers the eRate—must process all applications before the start of each program year, something that hasn’t happened in any funding year to date.

2. The appeals period should be extended to 60 days, and successful appeals should be fully funded.

Currently, applicants must file an appeal within 30 days of the date their funding commitment letter was issued—but respondents overwhelmingly agreed this is an unreasonable expectation. Extending the deadline for appeals to 60 days makes sense, one respondent wrote, “particularly since many denials involve complex decisions.”

3. Audits should not occur at the recipients’ expense unless fraud is detected.

The FCC had proposed requiring independent audits at the recipients’ expense when there is a “strong reason” to believe that problems exist. But a vast majority of respondents said this would not be fair to applicants, most of whom already are overburdened with expenses and would not be in a position to pay for such an audit. Only those entities found to have intentionally violated program rules should pay for audits, respondents said.

4. Any unused or unclaimed funds should be carried over to the next program year.

Funds that go unused or unclaimed by applicants in a given program year should not be returned to telecommunications carriers, respondents overwhelmingly agreed. Given that the current funding cap of $2.25 billion is insufficient to meet the high demand for eRate discounts each year, any unused funds should be applied toward the following program year.

“Carriers are free to recover their contributions to the fund from their customers,” one respondent wrote. “Carriers should not be allowed to double dip by imposing a universal service charge on their customers and also receiving reimbursements from the eRate program.”

Respondents were more evenly divided on other issues. Although most agreed that voice-mail and wireless services should be eligible for discounts, a sampling of responses showed opinions were mixed on whether to allow discounts on wireless services for “educational purposes” only.

Some respondents said the FCC should limit the eligible use of wireless services to educational purposes only to protect the program’s integrity; others argued that so-called “non-educational” uses of wireless technology—such as the use of cell phone service by school bus drivers—are vital to the educational mission of school districts.

“It is not unusual in Montana for children to travel by school bus 30 or 40 miles each way to and from school over secondary roads in remote areas during harsh weather conditions,” wrote one respondent. “Safety and education cannot be separated.”

Opinions also varied on whether the FCC should establish an online menu of eligible services from which applicants can choose when they apply. While some respondents said this would be helpful in sorting out which equipment is eligible and which is not, others said a computerized list actually would make the process more cumbersome.

“Technology keeps changing at such a rapid pace that the SLD would expend too many valuable resources attempting to keep the Eligible Services List current,” one respondent wrote. SLD staff members “need to focus their efforts on reviewing and approving applications in a more timely manner.”

Most respondents seemed to agree that some sort of punishment is warranted for repeated rules transgressors, but opinions differed on what an appropriate punishment might be—and how to decide which applicants or service providers would deserve it.

Other issues on which responses were divided include:

  • Eligibility of internet access bundled with content—even if such bundled packages represent the most cost-effective alternative for internet access.

  • Transferability of funds to other eligible services, or to other eligible schools within the same district. Most respondents favored some sort of restrictions on this, but opinions differed about what these restrictions should be.

  • Whether the FCC should deny funding for internal connections to applicants who have received funding for these services already within a certain time period. Supporters of this measure said it would allow more schools to receive funding for internal connections, which did not reach beyond the 86-percent discount level last year. Opponents said it would create a barrier to high-need schools that choose to complete wiring projects in phases rather than all at once.

  • Sharing of excess bandwidth with the community during after-school hours, as long as this does not increase the program’s costs. An earlier ruling by the FCC gave permission for rural Alaska residents without access to toll-free, dial-up internet access to tap into the excess capacity of satellite-based school internet access purchased with eRate funds, but only outside of regular school hours. Many respondents seemed to favor an expansion of this ruling to encompass all eRate recipients, provided this does not add to the cost of services purchased with eRate funds. An expansion of this ruling would allow schools to enable local community groups that run after-school programs to tap into their unused bandwidth, for example, further extending internet access according to the program’s intent. But some respondents cautioned against this approach; one said the FCC’s earlier decision “opens a Pandora’s Box—rescind it.”

School leaders and other eRate stakeholders have until May 6 to file their responses to any of these comments with the FCC. To review the comments, go to, click on “Search for filed comments,” and enter “02-6” in the field labeled “Proceeding.”


Federal Communications Commission

Schools and Libraries Division

Dennis Pierce

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