July 11 (Bloomberg) -- The Federal Communications Commission approved a plan to spend $2 billion to boost wireless Internet connectivity in U.S. schools and libraries during the next two years.
“We’re at a watershed moment,” FCC Chairman Tom Wheeler said during a hearing in Washington today in which the panel voted 3-2 to approve the plan he proposed in April. “Because of what we do today 10 million kids will be connected next year who otherwise wouldn’t. That’s a good days work.”
The move will phase out funding under a program known as E-rate for old technologies like pagers and dial-up phone service in order to subsidize broadband and wireless Internet connections in classrooms and libraries.
It doesn’t seek to increase rates paid by customers of telecommunications services or the program’s $2.4 billion annual budget cap, even though at least one Republican commissioner fears that’s what will eventually happen.
The proposal seeks to modernize the E-rate program in order to make good on President Barack Obama’s directive last year to expand broadband access to 99 percent of U.S. students. Facebook Inc., Netflix Inc. and Bloomberg LP, the owner of Bloomberg News, sent FCC commissioners a letter July 7 supporting Wheeler’s proposal because “the plan will make dramatic progress in bringing high-speed connectivity to our classrooms.”
The commission will pay for expanded Wi-Fi financing by redirecting $2 billion in existing funds from reserve accounts. The E-rate program is paid for by fees that telecommunications providers are required to charge customers in their monthly bills.
Companies benefit from subsidized payments to schools and libraries under the program, including AT&T Inc. Verizon Communications Inc., CenturyLink Inc. and Comcast Corp., according to the Universal Service Administrative Company, a Washington-based nonprofit that administers the funds.
Wheeler’s proposal is flawed because it promises $5 billion for Wi-Fi without identifying a source for the money, Ajit Pai, one of two commission Republicans, said in a July 8 statement.
“The FCC has forfeited this opportunity for real, bipartisan reform of the E-rate program,” Pai said at the meeting today. “In five months, maybe six, we’ll be back at this table to talk about how much to raise” U.S. consumer phone bills.
An increase of “probably on the order of $5 or less a year on cellphone owners, on an individual cellphone owner” may be needed to meet Obama’s goal, White House spokesman Josh Earnest said in an August press briefing.
Ninety-seven percent of U.S. classrooms are connected to the Internet, up from 14 percent when the E-rate program was created in 1997. School administrators say just connecting isn’t enough -- they need speed and service in more classrooms and that costs more.
Three out of five U.S. schools lack sufficient wireless capability and E-rate has only been able to support Wi-Fi in 5 percent of schools and 1 percent of libraries, Wheeler wrote in a June 20 blog post.
“The new plan will make E-rate dollars go farther by creating processes to drive down prices and increase transparency on how program dollars are spent,” Wheeler said. “And it will simplify the application process for schools and libraries, making the program more efficient while reducing the potential for fraud and abuse.”
The plan seeks to increase the program’s efficiency by making the application process easier and adding protections against fraud and abuse, Wheeler said.
Poor and rural schools could see less funding for Internet connectivity under the plan, Democratic Senators Jay Rockefeller of West Virginia, chairman of the Senate Commerce Committee, and Edward Markey of Massachusetts wrote in a July 8 letter to Wheeler.
“Efforts to make Wi-Fi technology ubiquitous in our schools and libraries cannot come at the expense of the already limited funding that keeps these institutions connected,” they wrote. “It would be ill-advised to guarantee a permanent set-aside for Wi-Fi, if that set-aside could end up cannibalizing funding for basic Internet connectivity.”
The senators said they oppose a new formula to base E-rate funding on the number of students enrolled at an applying school and the square footage of a library requesting aid. They asked Wheeler to test the allocation formula for two years.
They also asked Wheeler to consider raising the permanent funding cap for the program in order to put it “on a solid financial foundation” for the future.
“Our worries are shared by schools and libraries, both urban and rural, and the educators and librarians who work at these institutions,” they wrote. “They are on the front lines of this program in classrooms and libraries across the country.”
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