Commissioner Pai Remarks Before The FCBA
REMARKS OF COMMISSIONER AJIT PAI
BEFORE THE FEDERAL COMMUNICATIONS BAR ASSOCIATION
JUNE 18, 2014
I was a little surprised when I received the invitation to address this year’s FCBA Annual
Meeting and Luncheon. Last February, you might recall, I droned on at length to all of you about the
scintillating issue of FCC process reform. To this organization’s credit, many in the audience actually
managed to stay awake during my remarks. Unfortunately, some did not. In fact, I have here in my hand
a list of FCBA members who are known to the FCC to have slept through the speech and who
nevertheless are still appearing before the agency.
Anyway, after my choice of topic, I wasn’t expecting to be asked back. But flash forward sixteen
months, and here I am again. I can only conclude one of two things. Either John Oliver was unavailable,
or you must be gluttons for punishment.
In any event, I’m going to be candid with you. There’s not much to talk about today. It’s been
pretty quiet of late at the Commission. Friends outside of the communications milieu are asking me again
whether I work at the FEC, FTC, or SEC. Sometimes, I wonder if the outside world even knows we exist.
No, as you know, we’ve been at the center of controversy. Protestors have camped outside of our
building. Songs serenading the Commissioners have been uploaded to YouTube! We’ve received some
public comments that are—how should I put it—more colorful than usual. And late-night comedy shows
have taken their swipes, too. It all brings to mind the title of that 1976 hit by the Eagles: “Life in the Fast
And the discord has seeped into the Commission building, too. There have been complaints
about process. There’s been anonymous griping to the press. There have been tense, late-night
negotiations between parties with seemingly intractable differences on the issues, waiting to see who will
blink first. And that’s just among the Democrats!
On a more serious note, the four highest-profile matters we have taken up over the last three
months—the incentive auction, mobile spectrum holdings, media ownership, and “net neutrality”—have
each come down to a straight party-line vote. That’s not the way it should be.
It will never be possible for us to reach consensus on each and every issue. But we should always
be willing to go the extra mile to forge a bipartisan agreement. It not only lends our decisions more
legitimacy and increases public acceptance, it also improves our work product. No one Commissioner
and no one party has a monopoly on wisdom. And our policies are better when they reflect give-and-take
among all the Commissioners.
For example, this past January, the Commission was unanimous in establishing a framework for
IP Transition trials. It wasn’t easy. The negotiations were tough. All of us had to compromise. But in
the end, it was worth it. Each Commissioner made suggestions that improved the final result. And we
produced an order that received widespread public support and allowed the agency to stand unified on a
critically important issue. I’d say the Rolling Stones captured well the lesson to be learned: “You can’t
always get what you want. But if you try sometime, you just might find you get what you need.”
I’m disappointed that this spirit has been absent from many of our recent deliberations. But I’m
hopeful that it will return. We have no shortage of work ahead of us. This gives us the chance to turn the
page and leave any disagreements in the past, where they belong.
In particular, I believe that we have a real opportunity to work together this summer to reform the
E-Rate program on a bipartisan basis. That’s what I’d like to talk about this afternoon.
As you know, the E-Rate program is part of the Universal Service Fund. It provides about two
billion dollars each year for schools and libraries to connect to the Internet. E-Rate has had its share of
successes. But the program is seventeen years old and badly in need of an overhaul. Indeed, there’s a
broad consensus on the need to modernize the program.
I am a part of that consensus. Early last summer, I asked my staff for a top-to-bottom review of
the E-Rate program. What parts of the program needed improvement? And how could we improve it?
After many pages read, many long hours of discussion, and many charts and spreadsheets, I proposed a
comprehensive plan for E-Rate reform. At the time, some people were surprised that I was getting
involved in the issue. Why was a Republican Commissioner taking a leadership role on E-Rate? Well,
my answer to the skeptics is twofold.
First, parents across this country understand that we can’t prepare children for the world of
tomorrow in a classroom of yesterday. All of us want our children to be able to take advantage of the
most promising innovations in digital learning. Otherwise, we run a real risk of denying educational
opportunity to rural Americans, to poor Americans, and to others yet to partake of the bounty of
broadband. If universal service means anything, it means not leaving these Americans behind simply
because of who they are and where they live.
Second, improving educational opportunities for our nation’s kids shouldn’t be a partisan or
ideological issue. The program was created on a bipartisan basis by Senators Rockefeller and Snowe.
The FCC’s original E-Rate rules were passed in 1997 by a unanimous, bipartisan vote. At the time, my
friend, Republican Commissioner Rachelle Chong, called it a “splendid new program” that would “help
catapult our society further into the Information Age.” All of this means something beyond the dry pages
of the Code of Federal Regulations. And so, with the moment at hand to modernize the program, with a
unique chance to meet the challenges of the 21st century, we should move forward again on a bipartisan
Feel-good platitudes won’t get the job done. That’s why I’ve taken the time to put pen to paper.
That’s why I have been upfront from day one about what my plan is and why I believe in it. You can find
a detailed summary of my vision for schools on the FCC’s website, and I’m releasing today a detailed
summary of my vision for libraries too.
My guiding principle is simple. We need a student-centered E-Rate program. A program mired
in bureaucracy must become one focused on kids and digital learning.
My proposal has five main elements. First, we should streamline the program. Second, we
should target next-generation technologies. Third, we should allocate E-Rate funds more fairly and
predictably. Fourth, we should increase transparency and accountability. And fifth, we should be fiscally
responsible. Let me take a few minutes to explore each plank of my plan.
First, simplicity. The current rules for E-Rate are so complex that many schools and libraries
don’t even bother applying. I’ve found that few things are more likely to generate an eyeroll than merely
mentioning the application process to school or library officials. Those who do apply are often forced to
divert money away from classrooms and reading rooms in order to hire E-Rate consultants to navigate the
Complexity also means delay. If all goes relatively well, it can still take years for applicants to
receive funding. And if a school or library makes an inadvertent mistake, it may have to file an appeal,
which can take even longer to resolve. Some appeals are still pending from 2003—when the biggest
news in tech was Apple introducing the iTunes Store. None of this serves our nation’s children well.
My plan would dramatically simplify E-Rate. The initial application form would be just a single
page. No more need to hire outside consultants. No more long waits for E-Rate funds. And many fewer
errors filling out complex paperwork would mean many fewer appeals.
Second, we must refocus the program on delivering next-generation technologies. Today, the E-
Rate program prioritizes things like telephone service over connecting classrooms to the Internet, whether
by wires or Wi-Fi. We spend about $600 million dollars a year (over one quarter of the annual E-Rate
budget) on voice telephony services.
Meanwhile, the vast majority of schools and libraries can’t get any money for connections.
Indeed, during the most recent application cycle, not one funding request for connecting classrooms—not
one—has been approved. In 2014, when voice is quickly becoming just another application riding over a
broadband network, this makes no sense.
My plan would redirect funding from stand-alone telephone service to broadband. It would also
end the distinction between so-called priority one and priority two services and let local communities
decide how funds could best be used to help local kids. Putting students first also means directing money
only to instructional facilities. No more E-Rate funds for bus garages or football fields.
Third, we must allocate E-Rate money more fairly and more predictably. Right now, funds are
distributed in a way that this audience might call arbitrary and capricious. Urban states can receive more
money per student than rural states. States with a high poverty rate can receive less money per student
than wealthier states. The E-Rate application process doesn’t coincide with schools’ normal budgeting
cycle, which makes short-term planning difficult, if not impossible. And a school’s funding can vary
widely from one year to the next, which makes long-term planning difficult, if not impossible.
My plan would provide more equitable and stable funding. Schools would receive money
annually on a per-student basis; libraries on a similarly objective basis. Schools in rural and low-income
areas would get a bump, as would smaller schools. The funding stream would be steady. And each
school would be given an E-Rate budget so school boards and parents would know how much funding is
available at the beginning of the school year.
Fourth, we must increase transparency and accountability. Right now, if you want to find out
how your local school or library is using its E-Rate funds, I wish you the best of luck. But under my plan,
a central website would enable anyone—parents, journalists, FCBA members—to find out exactly how
any school or library in the United States is spending its E-Rate money. By bringing this information into
the sunlight, we will promote effective oversight and the wise expenditure of funds.
And fifth, we must be fiscally responsible. The E-Rate program currently encourages wasteful
spending. There is no limit to what any single school or library can receive. And the more money it
spends, the more money it gets from the program. Some schools receive nine dollars from the program
for every dollar they spend. Examples of excess are legion.
My plan would end these skewed incentives. It would require schools and libraries to have more
skin in the game. Schools and libraries would have to contribute at least one dollar for every three they
get from E-Rate, just as a unanimous FCC required Rural Health Care Program participants to do in 2012.
And, as explained earlier, each school and library would be given a fixed budget so the sky would no
longer be the limit for funding requests.
Over the past year, I’ve seen firsthand the problems with today’s E-Rate program. I visited
Siouxland Libraries in Sioux Falls, South Dakota. Siouxland doesn’t bother applying to participate in E-
Rate. Why? The library’s director, Mary Johns, told me that the program was just too complicated.
They sure could’ve used the help, both at the main branch and at several remote locations that they can
only afford to staff a few hours each week. My reforms would give Siouxland Libraries the help they
I’ve also seen firsthand the benefits that a student-centered E-Rate program like mine could bring.
I spent an afternoon at a Los Angeles school where I learned what could be accomplished by connecting
more classrooms. In Javier Peña’s 7th grade class at the San Fernando Institute for Applied Media, each
student has an iPad and is connected to the Internet through Wi-Fi. The day I visited, Mr. Peña was
teaching his students about tessellation, which is a shape repeated over and over again to cover a plane
without any gaps or overlaps.
Back when I was a student, a teacher probably would have lectured about such a topic while the
kids took notes with No. 2 pencils. But in Mr. Peña’s class, the experience was far more interactive, and
the children were much more engaged. They were using their iPads to find examples of tessellation and
learn about its use in Islamic art and architecture.
Later in the day, I had the opportunity to speak with Ms. Robledo, the school’s principal, as well
as the school’s teachers and several parents. They told me about how the school’s embrace of technology
was having a very positive impact on the students. By allowing children to become active participants in
their own education instead of passive recipients of information, students were retaining more knowledge
and becoming intellectually curious.
These conversations and others like them have only strengthened my belief in the need to move
forward with a student-centered E-Rate program. And if press reports are to be believed, E-Rate soon
will be on the Commission’s agenda.
Now look, I’m realistic. I don’t expect the Commission to adopt my plan lock, stock, and barrel.
(Of course, if my colleagues are so inclined, I won’t stand in their way.)
I do believe, however, that there is broad, bipartisan agreement on many of the principles that are
critical to a student-centered E-Rate program, and that we have a real chance to make substantial progress
towards achieving that goal.
When it comes to simplifying the program, Commissioner Rosenworcel has stated that we must
“reduce the bureaucracy associated with E-Rate” because that bureaucracy “has become too much for too
many of our schools to bear.”
When it comes to focusing funds on next-generation technologies for kids, Commissioner
Clyburn has said that we must “phase out funding for unnecessary services.”
When it comes to distributing money more fairly, Chairman Wheeler has observed that it “is far
from equitable” when “urban school districts receive over 80 percent of the funding for Wi-Fi.”
When it comes to enhancing transparency, the Commission’s unanimous Notice of Proposed
Rulemaking endorsed “increas[ing] the transparency of E-Rate spending.”
When it comes to promoting fiscal responsibility, Commissioner O’Rielly has stated that
“[i]ncreasing matching requirements would help control costs.”
Our record, too, reflects a sweeping consensus that the E-Rate program needs real reform. More
of the same just won’t work. Indeed, a bipartisan group of 46 Members of Congress recently sent a letter
to the FCC endorsing many of these principles. Among other things, they asked the FCC to focus E-Rate
on broadband, increase transparency and accountability, simplify the application process, and ensure
stable funding for schools and libraries.
A bipartisan agreement on E-Rate reform is achievable, but it won’t be easy. The road ahead has
some pitfalls. Here are two of them.
First, we can’t tinker around the edges and declare victory. We can’t squander this chance to
embrace fundamental change. For instance, we have to radically simplify the program. Cutting a page or
two from a seven-step process with six different application forms isn’t real reform. If some school
administrators and librarians still have to hire consultants to navigate the E-Rate labyrinth after we adopt
new rules, and if others still don’t bother applying at all, then our efforts will have failed.
The second pitfall involves the E-Rate program’s budget. Some have rejected creative reforms
and essentially demanded that the Commission increase the budget. But these inside-the-Beltway
advocates always think that “education reform” just means more money from Washington, DC. I’ll
concede: That solution would be quick. It would be easy. But when it comes to E-Rate—to borrow from
Yoda in The Empire Strikes Back—if you choose the quick and easy path, you will become an agent of
the status quo.
So let me make my position as clear as possible. In the months ahead, I will not support any
reform plan that boosts E-Rate’s budget. Since the beginning of 2009, the universal service contribution
factor has increased from 9.5% to 16.6%—that’s over an 80 percent increase. I will not ask Americans to
pay even more in their monthly phone bills, especially when so many are struggling to find work and
make ends meet.
Instead of throwing more money at the program, we need actual reform that will get us the most
bang for our bucks. Along those lines, here’s a convenient truth: We can free up billions of additional
dollars for next-generation technologies without collecting an extra dime from the American people.
A student-centered approach would produce big results. For instance, ending subsidies for voice
telephony and other legacy services would free up an extra $600 million a year for broadband.
And simplifying the program would end what I’ve called the “red-tape funding gap” and produce
another $400 million a year. You see, on average, we’ve been collecting about $400 million more for the
E-Rate program each year than actually goes out the door. Why? Applicants make bureaucratic missteps
or miss deadlines so disbursements are blocked. As a result, billions of dollars have accumulated in the
E-Rate account. That’s money from American consumers’ pockets that is just sitting on the table. By
simplifying the program, in part through a per-student model with its single-page application, we can
close the red-tape funding gap and push hundreds of millions of additional dollars to schools and libraries
With steps like these, my plan would increase funding for next-generation technologies for
students and patrons by more than $1 billion dollars in its first year.
And I’m not the only one who argues we can substantially increase funding for broadband
without taking more money from the American people. Chairman Wheeler put it well earlier this year
when he said that “the FCC has a fiduciary responsibility to both rate-payers who contribute to the
program and to students who rely on it to first assure that every E-Rate dollar is finding its highest and
best use. So here we must deal with a key reality. Simply sending more money to the E-Rate program to
keep doing business as it has been for the last 18 years is not a sustainable strategy.”
I agree. So let’s work together across party lines. Let’s modernize the E-Rate program so that
each dollar finds it highest and best use. Let’s simplify the program. Let’s focus funding on broadband.
Let’s distribute money more fairly and predictably. Let’s be more transparent so the American people
can easily see whether we are meeting these goals and can hold us accountable if we are not.
end the incentives for wasteful spending.
You never know if and when we’ll have another window of opportunity for reform. After all, E-
Rate hasn’t been substantially revised for almost two decades. So we should treat this as the FCC’s
chance to get this right. And by “we,” I don’t just mean the Beltway-bound. From Principal Robledo in
Los Angeles to Library Director Johns in Sioux Falls, so many across the nation are counting on us to
think and do big things.
I look forward to working with my colleagues in the weeks ahead and to meeting Americans’
expectations by creating a student-centered E-Rate program.
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