FCC Plans to Permanently Increase E-rate Program by $1.5 Billion Annually

FCC Chairman Tom Wheeler is circulating a draft order to permanently increase the size of the E-rate program by an additional $1.5 billion per year, which would raise the annual funding cap from the current $2.4 billion to $3.9 billion.  Word of the draft order was announced on a blog entry posted to the FCC website, and a Staff Report  and Fact Sheet released later in the day, which provide further insight into how Chairman Wheeler plans to achieve the ambitious goals of the White House’s ConnectED initiative.  ConnectED seeks to connect 99 percent of America’s students to high-speed broadband services in the nation’s schools and libraries in less than 4 years from today.  The FCC’s July 2014 E-rate Modernization Order took the first steps to achieving that goal by reforming the program and allocating limited funding for WiFi services.

Among other information, the Staff Report provides details regarding the cost models used by FCC staff to determine the amount of additional funding needed to reach the President’s (and the Commission’s) connectivity goals.  It also provides data estimating potential cost savings to the program through measures adopted or proposed in the E-rate Modernization Order and further rulemaking proceeding, such as the increased use of consortia by schools and libraries to purchase services and equipment, the increased use of dark fiber for WAN services, and an increase in pricing transparency.  The Staff Report also estimates that the $1.5 billion increase in E-rate funding would cost an individual rate payer an additional $1.90 per year per in Universal Service fees, a claim that the FCC’s two Republican Commissioners are likely to question.

It is anticipated that the Commission will vote on whether to adopt the draft order at its December open meeting, which is scheduled for December 11.