Will the Cloud Bring an End to E-Rate?

Will the Cloud Bring an End to E-Rate?

In today’s highly connected world you can trace the cloud’s connection to most pieces of technology. Your phone, TV, and computer all work hand in hand with cloud technology, and that raises concerns for some. The areas of concern vary depending on the individual you’re speaking with, but some of the common concerns revolve around security, data storage, and even IT job automation. Despite those substantive concerns, in this article we want to explore how the cloud might negatively impact the education of our children via the dissolution of E-Rate.

For those that are unaware, E-Rate supports public schools and libraries as they secure telecommunications and internet access throughout the country. This is accomplished through the provision of a fund in which schools can request money from in order to help cover the costs associated with these services.

Every phone bill, whether it be for a cell phone or a landline contains a line item titled “Federal Universal Service Fee”. Every penny paid into this fund is then administered by the Universal Service Administrative Company (USAC), which is a division of the FCC. These funds are then provided to one of the four divisions within the USF, which is E-rate, aka the Schools and Libraries Division (SLD).

Adding some additional nuance to E-Rate, it is separated into two different areas of Priority. Priority One is reserved for access to internet and telecommunications services. This means that Priority One helps provide phone service and internet access to schools, with the rule that money spent is for service-based products only and not hardware equipment. Priority Two assists with Internal Connections, as well as the fundamental maintenance that those connections require. This is the point that equipment such as routers, ethernet cables, wireless APs and servers come into play. Schools are only allowed to request infrastructure pieces that are approved by USAC.

All Priority One requests are handled before Priority Two requests are fulfilled. USAC starts at the 90% discount percentage, and funds requests until the allocated $2.25 billion has been spent. The extent of Priority Two allocations does vary a bit year to year, and it all depends on how much is leftover following the fulfillment of all Priority One requests.

This division of funds ultimately leads to a conversation about what is covered under Priority One and Priority Two. Web hosting became a big part of this conversation, as web servers are covered under Priority Two. There were a few hosting services that got their services listed under Priority One, which meant schools no longer had to apply in order to get their web servers installed under Priority Two.

Being that Priority One is always funded before Priority Two, many have been attempting to have their particular services established under Priority One. The two immediate examples are Email hosting and voice over IP (VoIP).

This melee being carried out by ISPs and providers that want all of their offerings listed as Priority One could lead to a troubling scenario down the road. Applications can be outsourced to a data center, while the cloud hosts email, phone systems, and web systems. This leaves very little to be placed on site at the school, and Priority Two funds for infrastructure spending will start becoming less available to schools in need.

You can already see this change occurring, as E-Rate will only fund down to 90% for Priority Two this year. Believe it or not, USAC strongly considered cutting off Priority Two completely this year, meaning no basic maintenance or internal connections. This would leave schools in a situation where they had to fend for themselves and ensure these critical components of technology and learning processes were resolved. With all of these new cloud services in play, Priority One is consuming a bulk of the fund. This negatively impacts the schools that are most in need, leaving them without the infrastructure to actually access the cloud tech that some of the larger school districts are funding with Priority One.

There is still hope, and fixes can be made before the cloud brings an end to E-Rate. This can be achieved when USAC realizes that hosting services should not be considered within Priority One. Alternatively, the E-Rate cap could be raised, as the number of requests is usually more than triple the funding commitment. This raises concerns about tax rates and spending, which isn’t assisted by the fact that the E-Rate program has attracted negative attention recently due to fraud and poor management.

There are no real guaranteed solutions at the moment, but realizing that the issue exists is an important place to start.