Federal Internet and Telecommunications Access Discount for Schools
 
July 31, 2001
 

Introduction

Primary and secondary schools can reduce greatly their cost for the installation and operation of telecommunication and Internet services thanks to a relatively new government program. The program also offers a way for telecommunication and Internet providers to significantly improve their opportunity to provide services to primary and secondary schools. Even though the program distributes over $2 billion per year in discounts, many schools and providers have not taken full advantage of this program. What follows is an introduction into how the program works.

What is the Universal Service Fund?

As part of the 1996 Telecommunications Act, Congress expanded the definition of Universal Service to include the goal of telecommunication and Internet access for all primary and secondary schools as well as independent libraries. This article will focus primarily on the funding for schools.

The Universal Service Fund (USF), also referred to as the E-rate Program, is a way for primary and secondary schools to obtain 20% to 90% discounts on the cost of installing and operating telecommunications services and Internet access. During Year 3 of the E-rate program (covering the period July 1, 2000, to June 30, 2001), the national amount of funds committed totaled well over $2 billion.

USF was established by the Federal Communications Commission (FCC) pursuant to the Telecommunications Act of 1996, and is administered by divisions of the National Exchange Carriers Association. Funding is derived from fees collected from providers of telecommunication services. In turn, many providers have found that servicing schools under the E-rate program can be a profitable enterprise.

How Much Funding Is Available?

The amount of funding that is available to various states is dependent on the schools that apply and the service for which discounts are sought. For example, in Year 3 of the E-rate program, funding varied widely from state to state. Some states and school systems made full use of the program; others did not. Some examples of funding commitments for Year 3 are:

California	$471,272,000
D.C.	$ 9,400,000
Florida	$ 53,436,000
Illinois	$114,261,000
Massachusetts	$ 35,490,000
New York	$267,586,000
Ohio	$ 60,904,000
Rhode Island	$ 4,293,000
Texas	$153,408,000
Washington	$ 17,498,000

What Type of Services Are Covered?

All commercially available telecommunication and Internet services are eligible for support, including but not limited to:

• traditional telephone services

• access services

• high-speed data service

• two-way video, including distance learning and video-conferencing

• wide area nets (WAN)

• paging services

• local area nets (LAN)

• Internet access and other information services, including data transmission, protocol conversion, billing management, introductory information and content, and information navigational systems

• e-mail

• internal connections if there is sufficient funding (Typically only the poorest schools qualify for internal connection discounts which include, but are not limited to: routers, hubs, network file servers, wireless LAN)

• installation and maintenance of internal connections

What Is Not Included?

The following services are explicitly excluded from support:

• voice mail

• personal computers

• software

• modems

• fax machines

• asbestos removal

• electronic publishing

How Does The Discount Work?

The amount of the discount a school can claim will depend on the poverty level of the school and whether the school is located in an urban or rural area. Poverty level is based on the number of students in the school district that are eligible for school lunches. The matrix adopted by the FCC for discounts is:

Schools and Libraries Discount Matrix Discount Level

How Disadvantaged? urban discount level (%) rural discount (%)

% of student eligible for national (estimated % of US

school lunch program schools in category)

<1	3	20 25
1-19	31	40 50
20-34	19	50 60
35-49	15	60 70
50-74	16	80 80
75-100	16	90 90

A school that enters into a qualified contract will be able to have the amount it pays to the provider reduced by the applicable percentage. The difference will be paid to the provider by the USF administrator.

In order to be eligible to receive a discount for supported services the school must seek competitive bids. Service providers submit their bids, and the winning bid will be designated as the "pre-discount price." The pre-discount price is the bid price. This is the price the provider agrees to accept as total payment for its services. The winning bid is then discounted according to the above matrix. The amount of the discount is subtracted from the pre-discount price to determine the amount that the school must pay to the winning bidder. The difference between the pre-discount price and the amount paid by the school will then be reimbursed to the winning bidder through the fund.

Any funds the school receives from other sources will not detract from the amount of the discount. Thus, for example where a project would cost $5 million and $2 million is available from the state and $500,000 is available from a private grant, the amount of the discount would still be on the total $5 million. Therefore, if the school were entitled to a 50% discount, it would not have to pay anything out of its budget because the universal service fund would cover $2.5 million of the cost, and state funding plus the private grant would cover the rest. However, the school must secure all funding prior to submitting its application, so that it is able to provide evidence of its ability to pay the non-discounted portion.

Who Is Eligible To Purchase Supported Services?

All schools (both public and private) that do not operate as a for-profit business, or do not have an endowment of greater than $50,000,000, are eligible for the E-rate program. The term "school" includes individual schools, school districts, and consortia of schools and/or school districts.

What Are the Requirements Imposed on Schools?

A school receiving discounted services under the universal service support mechanism:

• must meet the statutory definition of an elementary or secondary school

• may not sell, resell or otherwise transfer discounted services

• must make a bona fide request

• must use the service for educational purposes, and

• must certify that it complies with the Children's Internet Protection Act (CIPA), if it receives discounts for Internet access or internal connections

How Does A School Satisfy the CIPA Certification Requirements?

Under new FCC rules adopted in April 2001, all schools receiving discounts for Internet access or internal connections under the E-rate program must certify, each funding year, that they comply with CIPA.

Schools will be required to make the certification on FCC Form 486, which is currently submitted by schools after they are certain of receiving funding under the E-rate program. The form requires the school to certify that an Internet safety policy is being enforced.

A Compliant Internet Safety Policy Must Include

• filtering device that protects against Internet access by both adults and minors to visual depictions that are obscene, child pornography, or, with respect to use of the computers by minors, harmful to minors

• monitoring of online activities by minors

In addition, the Internet safety policy must address:

• access by minors to inappropriate matter on the Internet

• the safety and security of minors when using e-mail, instant messaging and chat rooms

• unauthorized access, including "hacking," and other unlawful activities by minors online

• unauthorized disclosure, use and dissemination of personal information regarding minors

• measures designed to restrict minors' access to materials harmful to minors

FCC Form 486 will be due on October 28, 2001, and will cover Funding Year 4 of the E-rate program. Starting in Funding Year 5, applicants will need to make the certification as part of the application process for that funding year.

If the school is part of a consortium, the consortium will be required to certify on behalf of its schools. To do so, the consortium will complete a new form, FCC Form 479 (Certification to Consortium Leader of Compliance with the Children's Internet Protection Act), which will contain similar certifications as Form 486. When this article went to press, new Form 479 was not yet available.

The FCC has adopted rules to ensure that all members of a consortium are not penalized if one member school is not in compliance with CIPA. If a member school is not in compliance, it must reimburse its proportional share of the universal service discounts it has received for the period during which it is not in compliance.

Do All Schools Have to Make the CIPA Certification?

No. Only schools receiving discounts for Internet access or internal connections need to make the certification. Thus, for example, if a school receives discounts on telephone service, it does not need to make the CIPA certification, even if the school has Internet access but does not receive a discount for that Internet access.

How Does the Competitive Bid Process Work?

Eligible entities must submit requests for proposals to the USF fund administrator.

The request for services and facilities must be signed by the person authorized to order telecommunications and other supported services for the school and must contain a certification under oath that certain requirements have been met.

The USF administrator then posts the request on the USF Web site. See www.sl.universalservice.org.

After the description of services is placed on the Web site, the USF administrator sends confirmation of the posting to the entity requesting services.

The requesting entity must wait at least 28 days from the date its service request is posted on the Web site before making any commitments to the selected providers.

What Constitutes a Bona Fide Request for Services?

A bona fide request for services must, at a minimum include:

• the computer equipment currently available or budgeted for purchase for the current, next, or other academic years as well as whether the computers have modems and, if so, what speed modems

• the internal connections, if any, that the school has in place or has budgeted to install or any specific plans for an organized voluntary effort to connect the classrooms

• the computer software necessary to communicate with other computers over an internal network currently available or budgeted

• the experience of, and training received by, the relevant staff in the use of the equipment to be connected to the telecommunications network and training programs for which funds are committed

• existing or budgeted maintenance contracts to maintain computers

• the capacity of the school's electrical system in terms of how many computers can be operated simultaneously without creating a fire hazard

The request must be signed by the person authorized to order telecommunications equipment and other supported services and include a certification that:

• the school is eligible

• the services requested will be used solely for educational purposes

• the services will not be sold, resold or transferred

• all co-purchasers and the services or portions of the services being purchased must be identified

• all of the necessary funding in the current funding year has been budgeted and approved to (1) pay for the "non-discounted" portion of the requested connections and services as well as any necessary hardware and (2) to undertake the necessary staff training required to use the services effectively

• the school or consortium including those entities has a technology plan that has been certified by the applicable state agency or an independent entity approved by the FCC.