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Commissioner O'Rielly’s Blog Introduction and Views on E-Rate Reform

by: Michael O'Rielly, FCC Commissioner

February 12, 2014 - 02:14 PM

As the newest Commissioner on the Federal Communications Commission, it seems only appropriate that I take advantage of all modern communications tools, including the blogosphere.  For my inaugural FCC blog post, I wanted to share my thoughts on the timely and important issue of E-Rate reform.  Before I begin, let me be clear that my postings represent my views and only my views.  I do not speak for the Commission, the Chairman, or my fellow Commissioners.

E-Rate is the federal universal service program that helps schools and libraries obtain discounted access to telecommunications services and the Internet.  I support the program.  It is enshrined in the statute and I appreciate the vast opportunities that connectivity can offer students.  I remember writing book reports in high school based on the World Book encyclopedias my parents bought in 1972.  I also remember our local library and the limitations of the paper Dewey Decimal system files.  The Internet puts all of that to shame. 

There is widespread agreement, however, that the program is due for an overhaul.  I support this effort as well.  The statute calls for periodic review of universal service—an obligation I take seriously.  Indeed, all federal government programs should be reviewed periodically to ensure that they are operating as efficiently as possible and are achieving their goals.  In the case of E-Rate—where there has been well-documented waste, fraud, and abuse as well as insufficient internal controls—time is of the essence. 

I am grateful that the Commission has launched a Notice of Proposed Rulemaking and that the Chairman supports concluding this proceeding soon.  I am especially grateful to my colleagues Commissioners Ajit Pai and Jessica Rosenworcel who have been strong thought leaders in this area and have influenced my thinking.  As the Commission moves forward in the coming months, let me lay out the guideposts that I believe must be reflected in the new rules.  

First, E-Rate must not increase costs on consumers.  Consumers already pay a 16.4% fee on their phone bills to support a universal service program that spends well over $8 billion a year.  During these difficult economic times, families and businesses should not be burdened with any additional assessments.  In other words, any increase in the budget for E-Rate must be offset by reductions elsewhere within the federal universal service fund.

Second, E-Rate must be refocused on broadband access.  By dramatically reducing—if not eliminating—funding for other services, such as paging and long-distance telephone service, we can channel funding toward what students (and library patrons) need most: better access to broadband so they can tap into the greatest collection of information and learning applications the world has ever seen. 

Third, E-Rate matching requirements must be made consistent with other federal programs.  The current local match for E-Rate dollars is as low as 10%.  This percentage is much lower than many other federal programs and it can distort decision making.  Increasing matching requirements would help control costs and stretch available funding so that it covers more applicants.

Fourth, E-Rate funding must leverage the private sector networks and services, not overbuild them.  Many providers are already serving communities, sometimes as a result of universal service support.  Subsiding duplicative networks or overbuilding private investment is an inefficient use of scarce universal service dollars.  At a minimum, schools and libraries should not use E-Rate subsidies to become broadband providers outside of their campuses.   

Fifth, E-Rate funding must not over supply.  We should provide schools with the flexibility to choose the speeds that best meet their needs. 

Finally, E-Rate program administration must be revised.  By streamlining processes, requiring productive oversight, and providing significant outreach, we can make school participation in E-Rate easier, stretch program dollars, and ultimately benefit more students.

In sum, reforming the E-Rate program can have an incredibly positive impact on students across the nation.  I look forward to working with my colleagues in the coming months to make sure we get this done well.         

Updated: February 14, 2014 - 12:14 PM
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