E-rate Basics

What is E-rate?

  • The E-rate program, officially known as Universal Service Schools and Libraries Discount Mechanism, was created as a part of the Telecommunications Act of 1996. In the act, a Universal Service Fund program was established to help schools and libraries connect to the Internet.


How and who does it help?

  • The program provides discounts to assist schools and libraries in the United States to obtain affordable telecommunications, Internet access, and electronic equipment to support a robust Wi-Fi infrastructure within each campus.


How does it work?

  • Discounts for support depend on the level of poverty and the urban/rural status of the population served and range from 20% to 90% of the costs of eligible services.
  • Eligible schools, school districts and libraries may apply annually, either individually or as part of a consortium. There is a window of time in which they can apply. All that apply by the deadline are eligible for discounts for that funding year.
  • There are two types of discounts provided:
    • Category 1 – Broadband (telecommunication services)
      • Receive funding every year at school discount level
    • Category 2 – internal connections that support Wi-Fi (cabling, access points, switches, etc.)
      • Receive funding every 5 years (enrollment x $150 x Discount level)
  • The E-rate program is funded with $3.9 billion dollars annually from the Universal Service Fund.


What agencies administer the E-rate program?

  • Federal Communications Commission (FCC):
    • The FCC administrates the Universal Service Fund (a set of telecommunication subsidies and fees used to promote universal service in the U.S.). The FCC writes the rules and standards for programs utilizing the USF.
  • Universal Service Administrative Company (USAC):
    • An independent, nonprofit corporation designated by the FCC to protect the integrity of the USF. USAC runs the E-rate program, including organizing and approving applications, conducting audits, and providing technical support to state and district E-rate coordinators.


What are the goals of the program?

  • FCC connectivity targets:
    • Internet access to the district:
      • 100 Mbps Internet access per 1,000 users (staff and users) in the short term
      • 1 Gbps per 1,000 users in the long term
    • Internet access within the district, all the way to the student’s device
      • WAN connectivity: 1 Gbps per 1,000 years in the short term
      • WAN connectivity: 10 Gbps per 1,000 users in the long term

How the E-rate Program has Affected Texas:

  • Since the inception of the E-rate program (1998), Texas schools and libraries have received $4.5 Billion from the E-rate program.
  • Over the life of the program, Texas has received 10.6% of the total disbursements.
  • The annual average Texas schools and libraries has received is $239,371,073

In 2014 the FCC approved two sets of rules that serve to transition the program to focus on broadband and can help close the fiber-gap in underserved areas of Texas:

  • The FCC raised the funding cap to $3.9 Billion a year and indexes it to inflation.
  • The new rules allow school districts to lease dark fiber and receive discounts on both the fiber as well as the electronics to light the dark fiber.
  • In some situations, districts will be allowed to self-provision (own) the fiber if it is the most cost effective solution.
  • Up until now, the E-rate program would only provide discounts on construction projects that costs $500,000 or less. For four years, they are suspending that cap. This is an opportunity to utilize E-rate funds for those districts whose construction costs for fiber installation are over that threshold.
  • E-rate provides up to an extra 10% discount on special construction costs if a state agrees to match the additional percentage offered by the FCC.
    • The 85th Texas Legislature appropriated $25 million for the state match which is only available for the 18-19 biennium. 101 applicants filed for special construction and requested state match in E-rate Funding Years 2017 and 2018. These applicants included 8 ESC consortiums that were able to aggregate purchasing across multiple member districts for cost-efficiency, which is of particular benefit to smaller and rural districts. Factoring in the districts represented by the consortium applications, a total of 338 districts will benefit from state match (if approved).
  • The FCC is now requiring that carriers receiving subsidies through the High Cost program to also offer high-speed broadband to schools and libraries.

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