E-rate’s looming Fiscal Cliff

The E-Rate Fiscal Cliff

While Congress and the White House debate how to prevent the looming across-the-board budgets cuts known as sequestration, those of us in the E-rate world are worrying about our own “fiscal cliff.” For the past several years E-rate applicants have been biting their nails waiting to see what totals are going to be requested from the capped fund and if there will be enough money to fund their applications. In 2012, we heard a collective gasp when the school and library applications showed that for the first time in the 15 years of the program there was not going to be enough money to cover all the priority one requests, with a shortfall of some $2.8 billion. After shaking out the couch cushions and emptying the penny jars, USAC was able to make up the deficit so that all of these applications could receive funding and the first tier of priority two applications would also receive funding.

So if you’re not up to speed on E-rate lingo this has probably made you scratch your head and your finger is poised to click “next.” E-rate is the special bucket in the universal service fund that provides discounts from 20 percent to 90 percent to eligible schools and libraries for telecommunications services, Internet access, and specific related internal wiring and other costs to ensure that they can provide today’s information services to their students and patrons. In 2012 the total amount in the program after it was adjusted for annual inflation and after USAC identified additional funds was just over $3.82 billion.

Early in the life of the program the Federal Communications Commission (FCC) whose purview E-rate falls under, divided the program into two separate funding “priorities;” priority one (P1) for telecommunications and Internet access and priority two (P2) for internal connections and basic maintenance of those connections. P1 is funded first and with the money left over USAC (the Universal Service Administrative Company that oversees the administration of the universal service programs) funds P2 applications based on a complicated formula that takes into account poverty and urban/rural location of the applicant. (Yes I know, your fingering is hovering again, but read on — E-rate is a critical program for schools and libraries and has enabled libraries to offer video-conferencing services for patrons at the high end and has allowed small rural libraries to be the only free Internet game in town.)

Initiated in 1997 and originally capped at $2.25 billion dollars, libraries receive millions of dollars each year but at the same time there are significant shortfalls in the program. OITP Fellow, Bob Bocher prepared a brief summary (pdf) detailing how we got to where we are and a forecast for the upcoming 2013 funding year which in the E-rate world starts on July1. In the near term, OITP along with the help of our E-rate task force made up of state level E-rate experts will be looking into the issues carefully and will be developing some plausible scenarios to get us out of the difficult spot we’re in anticipating the demand for funds in 2013 and beyond.

Looking ahead, we know we’ll need some strong E-rate champions who understand the critical role E-rate plays in library connectivity but more importantly the impact a library connected to the Internet with high-capacity broadband brings to the people in its community. Senator Jay Rockefeller (D-WV) has stood by the side of libraries since creating the E-rate program with his colleague former Senator Olympia Snowe (R-ME) and he still speaks on our behalf, posting a video in his “Minute with Jay” series reminding all of us that “[P]ublic libraries remain an invaluable resource to our children and our communities.” And, that having libraries and K12 schools connected to the Internet “impacts everything from online learning and job searches to term paper research… For underserved groups especially libraries provide an important lifeline to the Internet and technology.”

If you really want to learn more about E-rate, USAC’s website is the treasure trove of the most authoritative information.  The FCC has an interesting page that covers historical and current decisions, and ALA’s E-rate page links to our official filings on FCC Proceedings and provides other resources.

About Marijke Visser

As associate director and senior policy advocate, Marijke leads and coordinates all of ALA’s work on E-rate. In addition, Marijke supports the Program on Networks focusing on broadband adoption issues for diverse populations. Marijke also serves as Program Director for OITP’s emerging portfolio on children, youth, and technology.


  1. Former senator Olympia Snowe was a Republican. Support of libraries, with their free internet access, should be a bipartisan issue. And accuracy in ALA stories should be a “no-brainer.”

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