There is growing evidence that the eRate’s low-price requirement has been widely neglected by federal regulators.
[Editor’s note: Since we posted this story, there have been new developments. You can read the update here.]
At the dawn of the internet era, Congress set out to avert a digital divide between rich and poor students. In a landmark bill, lawmakers required the nation’s phone companies to provide bargain voice and data rates to schools and to subsidize the cost of equipment and services, with the biggest subsidies going to the schools with the most disadvantaged children.
More than a decade later, as schools struggle for funding amid widespread budget cuts, there is growing evidence that the program’s crucial low-price requirement has been widely neglected by federal regulators and at least one telecom giant.
A decade after the program started, AT&T was still not training its employees about the mandatory low rates, which are supposed to be set at the lowest price offered to comparable customers. Lawsuits and other legal actions in Indiana, Wisconsin, Michigan, and New York have turned up evidence that AT&T and Verizon charged local school districts much higher rates than it gave to similar customers or more than what the program allowed.
AT&T has charged some schools up to 325 percent more than it charged others in the same region for essentially the same services. Verizon charged a New York school district more than twice as much as it charged government and other school customers in that state.
The companies say they comply with the rules of the program, known as eRate.
Meanwhile, the federal government has made scant effort to enforce the requirement that companies give the preferential rate to schools. The Federal Communications Commission (FCC), which oversees the program, has yet to bring an enforcement action against any carrier for violating the low-price rule, according to interviews and documents, some obtained under the Freedom of Information Act. And the FCC, acting through the private company that administers the program, has provided little if any guidance to companies on how to apply the best-price rule. Indeed, in 2010, companies such as AT&T and Verizon sought clarification on the rule.
“Time and again, we find that schools are rarely advised by the telephone companies of their best available rates,” said Howard Rotto, whose New York consulting firm has represented dozens of schools in the Northeast for four decades. “When representatives of the carrier do not even know of the existence of their best pricing,” Rotto asked, “how can such a rate ever be offered or known?”
At the most basic level, the victims of this failure are the nation’s schoolchildren who receive suboptimal broadband access. Many requests for assistance cannot be funded under the current program. If lower prices were charged, more schools could benefit.
But there’s another set of victims: the vast majority of people with a cellular or landline phone contract.