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Universal Access: What Have We Learned from the E-Rate?
Heather E. Hudson, Ph.D., J.D.
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Director, Telecommunications Management and Policy Program
University of San Francisco
Abstract
The Telecommunications Act of 1996 mandated discounts for high speed
connectivity for schools, libraries, and rural health care centers. Innovative although
somewhat complex mechanisms were developed to implement this mandate. Five years
after the E-rate (as the schools and libraries program came to be known ) was
implemented, what have we learned?
This paper reviews some of the innovative features of the E-rate and how they
have been implemented. It also examines possible reasons for disparity in take-up of the
subsidies, even among states with significant disadvantaged and/or rural populations. It
then analyzes lessons learned from E-rate implementation in Alaska, and possible
implications for other countries considering a mechanism to subsidize community or
institutional Internet access.
1. Overview
The Telecommunications Act of 1996 expanded the Universal Service Fund’s
original purpose to extend reasonably priced telephone services to rural and other
underserved areas to include support for the cost telecommunications services for
schools, libraries, and rural health care providers. The E-rate (short for “education rate”)
was created by Section 254 (h) of the Act
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to provide discounts on a wide variety of
telecommunications, Internet access and internal connections products and services. All
public and private nonprofit elementary and secondary schools are eligible (except those
with an endowment of more than $50 million). Libraries are also eligible, subject to
conditions that they meet the definition in the Library Services and Technology Act and
have a budget completely separate from a K-16 school.
The Federal Communications Commission sets the overall policy for the program,
which is administered by a nonprofit entity, the Universal Services Administrative
Company (USAC). (Originally, two separate nonprofits were created to manage
education/libraries and rural health care, but health care was merged into the
education/libraries organization, now called USAC.) The Schools and Libraries program
is part of the FCC’s Federal Universal Service Fund (USF). Funds come from
telecommunications carriers, which are required to contribute a set portion of their
revenues to the Universal Service Fund (USF). Carriers generally pass through these
costs to customers through itemized charges on their telephone bills.
The FCC makes
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Contact information: phone: 1-415-422-6642; fax: 1-415-422-2502; e-mail:
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;
website: www.usfca.edu/fac-staff/hudson.
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