eRate changes prompt new voice options for schools

Beginning with the 2015 funding year, schools will see their discount percentage on eligible voice services reduced by 20 percentage points each year, until they no longer receive any voice-related support.

So, if your school district qualifies for a 90-percent discount on telecommunications services, next year you’d get a 70-percent discount on your phone bill. In 2016, you’d get a 50-percent discount; in 2017, you’d get a 30-percent discount; in 2018, you’d get a 10-percent discount; and in 2019, you won’t receive any eRate discounts on telephone service.

But if your school only qualifies for a 20-percent eRate discount, you’ll get no eRate support for your phone bill next year. Even the poorest schools will only have four more years of eRate discounts on voice-related services—and most schools will have only one or two more years of voice support.

This rule change is controversial, and many school leaders had urged the FCC not to adopt it.

“If phone service is eliminated from the program, we have school districts that will absolutely have to make a choice between funding infrastructure and keeping teachers,” wrote John W. Hughes III, president of the New Hope Technology Foundation, in comments filed with the agency earlier this year. “This is particularly true for our small, rural districts.”

The five-year phase-out of voice support isn’t set in stone. The FCC says it will evaluate the effects of this change after two years and will decide at that time whether to continue.

In making this change, the FCC aims to transform the eRate from a telecommunications program to a broadband program. The agency acknowledges that schools will have to pay more for voice-related services, but the savings they’ll realize on broadband services could help offset this cost, officials say.

Although hosted VoIP service no longer will be eligible for eRate support, some observers think the new rules create a key opportunity for VoIP providers like Cisco, Mitel, Shortel, 8×8, and others.

John Harrington, president of the eRate consulting firm Funds For Learning, believes the new rules might strengthen the business case for VoIP, because without eRate support for phone service, schools will need to explore more cost-effective options for their voice services—and VoIP lets them leverage their investments in their broadband networks in a very cost-effective way.

“If you can reduce your phone bill, you’ll need to now more than ever,” Harrington said. “This could help accelerate the adoption of VoIP.”

(Next page: Advantages—and limitations—of VoIP)

Dennis Pierce

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