Possible Threat to the E-Rate Program

FCC explores capping the Universal Service Fund

July 30, 2019

The American Library Association (ALA), along with other organizations, submitted comments July 28 to the Federal Communications Commission (FCC) on its May 31 Notice of Proposed Rulemaking that seeks information about placing an overall funding cap on the Universal Service Fund (USF). USF is the fund that supports E-Rate and other programs (Connect America, Lifeline, and Rural Health Care) that provide affordable internet access to low-income and rural areas.

The E-Rate program is critical to ensure adequate and affordable broadband connectivity and internet access for schools and libraries. In addition, the program supports such network enhancements as Wi-Fi connectivity hotspots.

In its comments to the FCC, ALA made it clear that it opposes placing a funding cap on the USF. Since the E-Rate program’s inception in 1996, it has been chronically underfunded, undermining the ability of schools and libraries to meet the diverse and high-bandwidth needs of learners and students. This was finally addressed with the increased funding provided as part of the 2014 E-Rate Modernization reforms. While the E-Rate program is now adequately funded, ALA is concerned that placing a cap on the USF could result in a future deficiency of funding.

In addition to this core issue, ALA opposes a cap on the USF for the following reasons:

  • The principles of universal service were established by Congress as part of the Telecommunications Act of 1996. These principles include the declaration that all Americans, regardless of where they live, shall have access to advanced telecommunications and information services at just, reasonable, and affordable rates. ALA believes placing a cap on the USF threatens these vital principles.
  • The FCC has already established funding caps on E-Rate and other USF programs. ALA believes funding issues within a particular program should be addressed in the context of that program—as was done in 2014. If an overall funding cap is reached, then all of the USF programs will compete with one another for limited funding. As FCC Commissioner Geoffrey Starks notes in a dissenting opinion, this “would pit deserving beneficiaries—anchor institutions, students, patients, and Americans who lack broadband—against one another in a fight for Universal Service funds.”
  • In its Notice of Proposed Rulemaking, the FCC asks for comments on how it should address the possibility that a funding cap could be reached. One proposal involves prioritizing funding for any specific program based on the cost-effectiveness of each program. ALA resolutely opposes this approach, as this is counter to the Universal Service principles established by Congress.
  • The FCC also suggests combining the E-Rate and the Rural Health Care programs into one fund. Both programs support the affordability of high-quality broadband services but were created as two distinct programs in the statute. ALA believes their funding—like the great majority of their processes and rules—should remain separate. Furthermore, the Association urges the FCC to refrain from any rule changes that jeopardize the E-Rate community’s hard-won battle to adequately fund the program.

The FCC is likely to make a ruling on whether to establish a USF funding cap in the next several months. ALA will follow this issue closely and continue to advocate for predictable and adequate funding for the E-Rate program.


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