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What Is The E-Rate?
The E-rate is short for the Education Rate established by the Telecommunications Act of 1996. The Education Rate is a discounted rate on telecommunications services, Internet access, and internal connections needed to bring the Internet into the public libraries and all K-12 classrooms in the country. The discounts range from 20 to 90%, depending upon the relative wealth and rurality of a library or school.
Eligible Recipients
All public and private K-12 schools and all public libraries are eligible. More specifically, schools under the statutory definitions of elementary and secondary schools found in the Elementary and Secondary Education Act of 1965, 20 U.S.C. Secs. 8801 (14) and (25), that do not operate as a for-profit business, and do not have endowments exceeding $50 million are eligible. Libraries or library consortia eligible for assistance from a State library administrative agency under the Library Services Technology Act of 1996 that do not operate as for-profit businesses and do not receive funding through an elementary or secondary school, college or university are eligible.
Eligible Services
- Telecommunications services for voice or data, including regular telephone service, pagers for security officials (in other words, wireless services are eligible), high bandwidth telecommunication services, satellite delivery, and coaxial cable.
- Internet access, including e-mail and access to the Web.
- Internal connections, bringing the technology into the learning environment. For example, eligible schools and libraries may select wireline, wireless, or cable technology provided by either a telecommunications carrier or a non- telecommunications carrier. Basic installation and maintenance of a network are eligible, including all technologies necessary for establishing a network such as routers, hubs, communications file servers, wireless LANs and software needed for operation of file servers.
Ineligible Services
- Content, such as a paid subscription service, or a course offered via satellite is not eligible.
- Voice mail is not eligible.
- Computers for teachers and students are not eligible.
- Fax machines, modems, and software other than that necessary to run a network are not eligible.
- Professional development is not eligible.
- Asbestos removal is not eligible.
- Electricity is not eligible.
Planning
Schools and libraries must develop and have approved a technology plan.
Originally, the FCC contemplated that the plan would be approved before applications could be submitted. However, there was a concern that lack of a plan approval process, especially for private schools and libraries, could put some of the most needy schools and libraries at a disadvantage.
In the FAQs submitted by the SLC on November 25, clarification was given of the time by which plan approval must be complete. There will be a third form that schools and libraries will submit to the SLC (Form 486); it will confirm that contracted services have begun and that the technology plan has been approved. (See the ABCs of Application).
This buys time for the plan approval process by pushing the certification that there is an approved plan back as far in the process as possible, yet plan approval is still a component of the application process.
Nine Steps you can Take Now to Prepare for the Schools and Libraries Universal Service Program
E-RATE: Levels of Discounts
| SCHOOLS AND LIBRARIES DISCOUNT MATRIX |
DISCOUNT LEVEL |
| HOW DISADVANTAGED? |
urban
discount
(%) |
rural
discount
(%) |
| % of students eligible for national school lunch program |
(estimated %
of US schools
in category) |
| < 17 |
3 |
20 |
25 |
| 1-19 |
31 |
40 |
50 |
| 20-34 |
19 |
50 |
60 |
| 35-49 |
15 |
60 |
70 |
| 50-74 |
16 |
80 |
80 |
| 75-100 |
16 |
90 |
90 |
There is anywhere from a 20 to 90% discount for both telecommunications and other eligible services based on economic disadvantage and on areas with high prices.
Economic disadvantage is measured by student eligibility for the national school lunch program, which is determined by an actual count or Title I approved alternative mechanisms. Libraries may use the average discount for public schools in their school districts or they may use the discount of the school that is closest to the library. The level of economic disadvantage is determined by using the Department of Education's five poverty categories with an additional category for least economically disadvantaged.
High price areas are based on their categorization as rural or urban under a definition adopted by the office of Rural Health Policy of the Department of Health and Human Services. This is the Office of Management and Budget list of metropolitan counties and additional rural areas with those countries identified by Goldsmith Modification.
It is unclear what will be the method of calculating an average economically disadvantaged population for libraries to use. As districts aggregate their needs for services, the method of calculating averages is still to be determined as well.
E-RATE: The Governance Structure
There are four entities overseeing various aspects of the E-rate.
The National Exchange Carrier Association (NECA) oversees the entire process.
A newly formed company called the Universal Service Administrative Company (USAC), is a 17 member board whose task it is to collect the money from the telecommunications companies and distribute it to those who win contracts with schools. In short, this group interacts with the telecommunications companies and handles the money.
Another board made up of seven members and called the Schools and Libraries Corporation (SLC) has been appointed. Their task is to receive applications from schools and libraries and authorize payments. Following are members of this board:
Ann Bryant, Executive Director, National School Boards Association Henry Marockie, President, council of Chief State School Officers and Superintendent of all schools in West Virginia, Vice Chair Brian Talbott, Executive Director American Association of Education Service Agencies Kathleen Ouye, City Librarian, San Mateo Public Library, Chair Ken Brody, Managing partner, Winslow Partners Frank Gumper, vice president-federal regulatory planning of Bell Atlantic Corp. Ira Fishman has been appointed Chief Executive officer.
A fourth board is the Rural Health Care Corporation and it deals with the telemedicine portion of the Act.
First Come, First Served
In order to encourage schools and libraries to apply as soon as possible and to reward schools and libraries for advanced preparation, the FCC determined that the discounts would be supported in the order in which the applications are received. The education and library communities became very concerned with this provision and on October 14, the FCC issued their third report and order dealing primarily with first come first served. What it says in short is that the Schools Libraries Corporation SLC should create a window period. This means that all applications received during that window period will be treated as if they were received simultaneously.
The SLC has adopted a window of 75 days. All requests for support filed pursuant to a signed contract and received by the SLC within 75 days of the day the SLC begins to receive requests will be treated as if they were simultaneously received.
This will:
reduce the pressure to submit contracts at the earliest possible moment allowing for negotiation time.
reduce the disparities among applicants with substantial administrative resources and applicants with fewer resources.
promote equity between applicants using existing contracts and applicants going through the competitive bidding process.
Both Forms 470 and 471 must be received during the window time period. This is a one-time window only. After the window closes, subsequent applications will still be accepted. But they will be processed on a first-come, first-served basis.
Existing contracts are subject to the 75-day window, even though they do not have to be posted on the SLC website. They will be treated the same as all other applications received during that time.
Lawsuits
Congress passed the law. The FCC is charged with interpreting the law and passing rules for how the law will be implemented. According to sources from Southwestern Bell, the FCC has misinterpreted the law in a number of ways. As a result, Southwestern Bell has sued to keep the implementation from proceding. The suit has been assigned to the 5th circuit court in New Orleans. Following is how Southwestern Bell thinks the FCC has misinterpreted the law:
some of the services covered in the FCC's interpretation are not under the purview of the FCC. Included here are providing support for inside wire, LANs and Internet access services. In addition, non-telecommunications carriers (such as providers of inside wiring) will receive universal service support. And, they are not required to pay into the universal service fund.
because of deregulation in other areas, this fund, which is drawn only from telecommunications carriers, can favor certain carriers and make the increased competition unfair.
SWB thinks this is a hidden tax which will be passed on to consumers without due notification.
It is not clear what action the FCC may take regarding Southwestern Bell's request, and there is no indication from the 5th Circuit either. Neither is there any established timeline for the resolution of the issue.
Contracts
Any contract entered into prior to November 8, 1996 is an existing contract and any services provided after January 1, 1998 are eligible for USF. Any contract signed between November 8 and the date the website is available for posting for competitive bids as described earlier can be eligible only for one year (1/1/98 - 12/31/98). In order to be eligible for USF, these contracts must expire on or before 12/31/98 and be rebid through the website.
The reason for this limitation is that the FCC was concerned that companies would try to get districts and libraries to enter into long-term contracts without a rigorous bidding procedure. While the limitation of these contracts to one year of support without having to rebid does provide some protection, many libraries, schools, and states have undergone rigorous bidding to secure their long term contracts. They feel they do not need this protection, and going through another bidding process would be time consuming and could cost them money in the long run.
Even though existing contracts do not need to be posted on the SLC
website for 28 days, applications for services covered by existing
contracts are otherwise subject to the 75-day window and will be treated
the same as all other applications which are received during that time.
According to the SLC, the FCC is currently reconsidering its treatment of
those contracts signed after November 8, 1996 and before the opening of
the website. A decision is expected soon as part of a formal
Reconsideration Order. No matter what the decision, discounts still must
be applied for on an annual basis.
We do not know if this ruling will stand. There is considerable pressure from some states, most notably Maine, to allow long term contracts signed after November 8, 1996 to receive benefits of the USF beyond the current one year limitation.
In addition, the FCC has made clear that the state purchasing laws and rules will prevail as far as selecting the winning bidder is concerned. However, the ruling regarding existing contracts having to be rebid runs counter to this sentiment.
Forms
There are three forms which the SLC has created and submitted to the
Office of Management and Budget. These forms must be submitted in
sequential order in order to participate in the program.
The Forms are:
- Form 470 which is the request for services. This describes the
services that an applicant intends to purchase, and it is the form which
is posted to the SLC website for 28 days
- Form 471 which details the services for which a contract has
been signed. This is filed with the SLC any time after the 28 day web
posting period for Form 470 and only after a contract has been signed
- Form 486 which confirms that contracted services have begun and
that the technology plan has been approved
These forms with instructions will be mailed to all schools and libraries
in December. This will be several weeks before the website is open for
business. They will be posted on the SLC website and various other
websites, including this one, as soon as they become
available.
We do not know when the final form will become available, nor do we know what it will look like.
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