Why E-Rate for Higher Ed Needs to Move with the Times

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How different was life just one year ago? Nothing stagnant is viable in a world where change is inevitable. When education-focused government programs like E-rate are locked into a time that no longer exists, they are equivalent to books on a shelf, too high to reach—underutilized and not fulfilling their purpose.

E-rate is the Schools and Libraries Program of the Universal Service Fund. The lofty goal of the program is to bring down the cost of broadband for these anchor institutions—but, this school year, more than half of U.S. students are receiving instruction entirely remotely, according to polling by Ipsos Public Affairs. Millions of students across the country are in need of broadband connectivity to learn from home, due to changes ushered in by the pandemic. With fewer students frequenting schools and libraries in-person, policymakers should reassess the E-rate program’s design to better serve the educational needs of today. Updates, even if only temporary as a start, must be implemented on an emergency basis so the program can support the digital classrooms of today.

As of January 2021, only about two-thirds of E-rate benefits that schools applied for in 2018 and 2019 had been granted. One can surmise that schools are being denied benefits, because our reality has outgrown the program structure. And even before the pandemic hit, the funding mechanism of universal service was broken.

E-rate and other universal service programs—including Lifeline, which provides a $9.25 per month benefit for low-income Americans to offset the cost of phone and broadband service—rely on an ever-increasing “tax” on traditional landline phone service (known as the contribution factor). A decade ago, in 2011, the contribution factor was 15.5 percent. Today, in 2021, it’s more than double that at 31.8 percent!

Jeopardizing funding for the program further is the fact that landline phone service is fading. The National Center for Health Statistics recently announced that 62.5 percent of U.S. adults now live in wireless-only households. This means that the pool from which universal service funds are drawn is shrinking. The contribution factor percentage, therefore, will continue rising by necessity to support the current size of universal service programs, not to mention their potential expansion in a world ever-more dependent on broadband. This annual increase is unsustainable.

Schools and libraries have long played crucial roles to not only educate America’s children, but support their overall wellbeing. Policymakers can help make it possible for these institutions to continue their positive impacts, even amidst the pandemic, by updating the E-rate program to provide greater flexibility for use of funding. 

The application of technology in schools has evolved over the past 25 years since E-rate began. When the E-rate program was created in 1996, only 14 percent of America’s K-12 classrooms had access to the internet. The FCC should look at the structure of the E-rate program with fresh eyes and reassess whether it fits the reality of our world in 2021. It’s past time for modernization of E-rate, even if the program size—approximately $3 billion for the current school year—is up for debate.

With E-rate’s current reliance on Universal Service funds, long-term expansion of the program would not be feasible. Nor fair. The Government Accountability Office recently issued a report, which explained that a high contribution factor unduly burdens low-income and older Americans, because the USF contribution targets services that these groups disproportionately rely upon and the “tax” consumes a larger share of their income. Given the importance of the E-rate and Lifeline programs, their funding should come from direct appropriations from the annual Congressional budget.

The pandemic has heightened the need for broadband access and technology. For our nation’s children, being on the wrong side of the digital divide is not just a disadvantage; it’s fundamentally detrimental to their future and, by extension, America’s future. Up to 12 million K-12 students were still digitally underserved at the start of 2021, according to Common Sense, Boston Consulting Group (BCG), and the Southern Education Foundation. Due to this state of emergency, E-rate’s benefits are critical in the need to support remote learning. Today, a classroom is created wherever a student engages with an internet-connected device.

Rather than allowing E-rate funds to sit on a lofty but unattainable shelf without fulfilling their promise to our kids, policymakers should empower schools and libraries to continue supporting the growth and development of America’s children, even if from a distance. Education cannot and should not wait for herd immunity.

Kim Keenan is co-chair of the DC-based Internet Innovation Alliance (IIA). The IIA is a broad-based coalition of business and non-profit organizations that aims to ensure every American, regardless of race, income or geography, has access to the critical tool that is broadband Internet. The IIA seeks to promote public policies that support equal opportunity for universal broadband availability and adoption so that everyone, everywhere can seize the benefits of the Internet — from education to health care, employment to community building, civic engagement and beyond.