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End E-Rate Now

A wireless industry pioneer says that the E-Rate should be seen as a system fraught with fraud and a secret subsidy for phone companies. The FCC should be investigating the E-Rate, not trying to cover up its flaws.

by Dave Hughes [July 23, 2004]

On the ISP-Wireless list this week, Dave Hughes posted the following message:

I posted the following to FCC Chairman Powell's Blog [Tuesday], after I read the following press release on the Benton maillist.

FCC SEEKS TO DOCUMENT ERATE BEST PRACTICES

The FCC is planning an October 6 symposium to highlight success stories from school and library E-Rate recipients nationwide including examples of how schools and libraries are using a variety of broadband technologies to enhance teaching and learning as a result of their E-Rate discounts. The FCC is looking for school or library officials who would like to tell their story at the symposium. Best practices of particular interest to the agency would include ways that states have leveraged E-Rate discounts to take advantage of other funding sources and how broadband infrastructure, paid for with E-Rate discounts, has spurred regional broadband deployment.

Anyone interested in presenting at the symposium can e-mail Sarah Whitesell, the FCC's associate chief of strategic planning and policy analysis, at edsymposium@fcc.gov

To the Blog
Chairman Powell here is a new subject that has stuck in my—and every other unlicensed Wireless-Education advocate's craw—since the FCC Commission under Reed Hunt made a very bad rule implementing the E-Rate way back in 1996. He didn't get it, and neither did his successor William Kennard. With your advocacy of Wireless, and especially unlicensed wireless, revisit and change that bad FCC rule and you will do more to spur 'broadband' deployment to every last K-12 school in the nation, and start moving students into their wireless future, with E-Rate funds, urban and rural than any other one thing you could do.

Sarah Whitesell, your FCC associate chief of "strategic planning and policy analysis" has announced an October 6th "symposium" to highlight E-Rate "success stories" and "best practices."' Now, I am not sure what is behind this program-congratulatory effort to publicize activities under the recurring scandal-plagued (huge wastes or misuses of E-Rate funds in numerous places), but I will tell you, and her one thing (your Policy chief, Robert Pepper has heard this from me for 8 years) the E-Rate rule that prohibited schools from buying and owning with E-Rate funds wireless broadband devices (either unlicensed or licensed—as in microwave links) was, and still is, a huge mistake.

For that rule prevented 16,000 School Districts from buying, learning how, and deploying (either themselves as every homeowner today can or by an installation contract) unlicensed broadband radios at the very least to link their 84,000 scattered school buildings with 55 million students and 3 million teachers in them daily, at ridiculous low and non-recurring communications costs.

No, that rule forced the schools the last 8 years to purchase only broadband telecommunications services, not devices, which has meant, practically, that the same Telephone companies who collect $2.25 billion in 'Universal Service Funds' for E-Rate from every hapless rate payer, every year, turned around to bid to schools their broadband recurring-cost broadband services, which costs thousands a month, and which the schools have to go back and request the same amount of E-Rate funds every single year to the end of time.

The E-Rate has become a perpetual cash-cow for local telephone companies. They love it—while school districts are still unable to buy, except with their own separate-from-E-Rate funds, unlicensed broadband radios by which they could be connecting up their buildings, modular classrooms, and even teachers and students across the district from homes! That would be the face of future education!

It doesn't take an MBA to figure out that if a school district is forced, every year, to pay Telcos for 24/7—including all nights, weekends, vacations, including three summer months—broadband T-1 or more per-month rates for connections between all buildings as opposed to buying sets of backbone radios one time and making the same—or even higher (than T-1) bandwidth connections, the overall E-Rate funds could go much further. (last time I checked, there were pending requests from schools and libraries for $5 billion a year, while Congress fixed the maximum at $2.25 billion.)

In one case I studied for the NSF years ago, a Telco bid $1.5 million up front to connect 25 school buildings with T-1, wired 'service' and then wanted to charge $12,000 a month until the end of time—or $2.9 million over the first 10 years, while a one-man wireless company bid a one-time purchase and installation cost of $600,000 and that's all it took for the same 10 year projection. Today that same school district could be connected up at 10 Mbps to 45 Mbps—DS3 speed—for under $150,000, one time. Or do it themselves buying off the shelf radios for under $50,000! But not with that stupid rule!

Now some FCC lawyers have tried to say the restriction was 'statutory' but they never were able to document for me the legal rationale. If it is statutory, then ask Congress to change it for gawds sake. Why would it object?

Of course if there is a WISP close to every one of the 16,000 school districts in the US, theoretically they can bid for their wireless 'service' under the E-Rate rules. But of course if there is no local WISP (a hell of a lot of small towns which have no WISP have, however, schools) the school geeks would have to put up their network themselves, or contract with a WISP to sell and install a wireless network of their own.

Dave Hughes

—End