FCC's Wheeler proposes increasing E-Rate program cap to $3.9 billion

FCC Chairman Tom Wheeler has put forth a proposal to increase the E-Rate program funding cap to $3.9 billion in order to drive more fiber and Wi-Fi connections, particularly in rural and less affluent areas of the United States.

The proposed plan will go to vote from the entire commission on Dec. 11.

With this increase in spending, consumers would see about a 16 percent increase in the monthly fee on their phone bills. This fee is used to finance the $8.7 billion Universal Service Fund that provides traditional voice and broadband connections for low-income families, rural areas, schools and libraries.

The FCC said that the actual estimated cost to an individual consumer would be about 16 cents a month, which is about "a half a penny per day or about $1.90 a year – less than a medium-sized soda at fast food restaurant or a cup of coffee."

However, the actual amount an individual household pays for this fee varies widely.

"While the impact on consumers will be small, the impact on children, teachers, local communities and American competiveness will be significant," the FCC said in a statement.

The original E-Rate program did not take into account that the program cap of $2.25 billion in 1997 did not include an annual inflation adjustment until 2010.  

"More than 60% of the Chairman's proposed $1.5 billion cap increase represents simply a 'catch up' of the lost inflation adjustment from 1997 to 2010; the rest reflects the significant  growth in the bandwidth needs of schools and libraries since 1997," the FCC said.

Wheeler's proposed e-rate spending increase is the second step he is taking to revamp the E-Rate program that began this July. At that time, the regulator proposed driving $2 billion toward the effort, including funding for Wi-Fi in schools. It also established a budget for rural broadband experiments.

Wheeler said during a conference call with reporters that the reforms are needed to put higher connectivity services into more schools so they can get a more modern education experience.

"While the connected home is commonplace, the connected classroom and library is not," Wheeler said. "Today, 63 percent of American schools do not currently have an Internet connection capable of supporting modern digital learning. Almost two-thirds of America's schools can't appropriately connect their students to the 21st century."

Wheeler added that while E-Rate has helped every school get basic connectivity, it can't keep up with the demands for the emerging digital classroom.  

"In the 18 years since E-Rate was established, technology has evolved, the needs of students and teachers have changed, and basic connectivity is inadequate connectivity," Wheeler said.

One key area of focus is to provide better connectivity into rural and less affluent areas of the country. In particular, rural areas have not been able to get access to affordably priced fiber-based connections. 

"Rural schools have even less access to high-speed fiber than surburban or urban schools," said Wheeler. "Forty-one percent of America's rural schools could not get high speed connectivity if they tried." 

Wheeler added that while "high speed telecommunications infrastructure is both more costly and difficult to amortize in rural areas" is a reality, it's "an unacceptable situation that these realities exist for students." 

Similar to the earlier proposal, this latest plan has drawn criticism from Ajit Pai, one of the FCC's Republican commissioners.

"I strongly oppose this 17.2% tax increase," Pai said in a statement. "Instead of imposing a greater burden on families struggling to make ends meet in this lackluster economy, the Commission should pursue fiscally responsible reforms. These reforms would cut the bureaucratic red tape and focus resources on the children and library patrons of poor and rural America, where the need is greatest."

For more:
- the New York Times has this article

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