E-Rate Program Overhaul & Expansion Proposed (@Broadband Limitations)

Fund That Subsidizes Internet for Schools Should Expand, a Senator Says

By EDWARD WYATT

Published: March 12, 2013

WASHINGTON — The $2.3 billion federal E-Rate program, which subsidizes basic Internet connections for schools and libraries, should be overhauled and expanded to provide those community institutions with new, lightning-fast connections to the Web, the chairman of a Senate committee that oversees the F.C.C. said Tuesday.

Senator John D. Rockefeller IV, a West Virginia Democrat who is chairman of the Senate Commerce Committee, said that the fund should be used to create one-gigabit connections to every school in America — a speed that is 60 to 100 times faster than most schools or homes now receive — and wireless connections in every school building.

The initiative is one that Julius Genachowski, the F.C.C. chairman, has already endorsed, but with a less-aggressive goal. In January, Mr. Genachowski called for the nation’s mayors to support bringing one-gigabit Internet access to one community in each state by 2015.

With 92 percent of classrooms now having Internet access, up from 14 percent when the subsidy program started in 1996, “we need to think big about the future of E-Rate,” Mr. Rockefeller said.

“As every educator knows, digital information and technology will continue to play an increasing role in education, so we need to think about how we are going to meet the broadband infrastructure needs of our schools and libraries,” Mr. Rockefeller said.

The F.C.C. may itself restructure the E-Rate program, Congressional officials said. Asked at the hearing by Mr. Rockefeller if they supported the proposal, each of the five commissioners said yes.

Congressional staff members said that Mr. Rockefeller hoped to gradually expand the amount of money devoted to E-Rate, providing for an additional $5 billion to $9 billion in total funds over the rest of the decade.

The two Republican members of the F.C.C. also raised broader issues. Commissioner Robert M. McDowell said that the F.C.C. should first tackle the reform of the fund’s contribution system. A fee is assessed by the F.C.C. on the phone companies, but they almost universally pass the cost on to customers.

The fee, noted on consumers’ bills as the Universal Service contribution, has more than doubled over the last decade, to about 15 percent, up from 7 percent in 2001.

The other Republican commissioner, Ajit Pai, said he favored a much-expanded form of the E-Rate program beyond learning in schools to one that provides, for example, for programs that link rural communities by video to medical centers in larger cities to provide for long-distance medical care.

The $8.5 billion Universal Service Fund comprises four parts. In addition to the E-Rate money, the fund includes the $4.5 billion high-cost fund, which subsidizes the provision of service to high-cost, mostly rural areas, and the $1.75 billion Lifeline fund, which provides telephone service to poor Americans. A small portion, about $100 million, is used for a rural health care project.

In 2011, the F.C.C. voted to convert the Universal Service Fund from one that primarily financed the provision of telephone service to one that provided for high-speed broadband, or Internet, connections in high-cost areas for poor Americans and for schools and libraries. It renamed the Universal Service Fund the Connect America fund.

Some of the changes that the F.C.C. could make in the E-Rate program include updating the types of equipment or services that can be bought with the E-Rate money. Generally, the fund pays for the connection but not the computers or other hardware needed to use the Internet.

The oversight hearing included an exchange over whether the F.C.C. had the power to require that political groups disclose who paid for their advertising on broadcast television and radio. Requiring the disclosure of contributors to those groups would allow the F.C.C. to lift the veil on the anonymous donors who sponsored so much of the advertising during the 2012 presidential campaign, said Senator Bill Nelson, a Florida Democrat. Congress failed to do the same thing when the Senate could not pass the Disclose Act.

Mr. Nelson said that the F.C.C.’s rules allowed it to require the full identification of “the sponsors of all political and commercial advertising.” He then asked each of the commissioners if they supported his view.

Most of the replies were ambiguous. Mr. Genachowski and Commissioner Mignon Clyburn, a Democrat, said that the idea should be considered. The other Democrat on the commission, Jessica Rosenworcel, said she agreed.

The two Republican commissioners said they supported greater transparency, but one, Mr. McDowell, said that he would hesitate at placing the burden of election financing disclosure on broadcasters when it is also overseen by the Federal Election Commission and others.

Senator Ted Cruz, a Texas Republican, had a stronger objection. He warned the commission that it should not try to “end run Congress and adopt a rule that would be perceived as being overtly political,” something, he added, that “could imperil the independence of the commission.”