Hughes and Grunwald
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Looking at E-Rate

Community technology activists are caught in the position of both defending the e-rate program and being among its major critics. We share a commitment to its defense—witness Tony Wilhelm's "E-Rate: Don't Let the Flame Expire," in Digital Voices, 24 May 1999  (; we need to grasp its restrictions and limitations. The following exchange reflects an important critique of those limitations.

On March 21, 1999, David Hughes posted to the discussion a copy of his response editorial that ran in the morning in the conservative Colorado Springs Gazette Telegraph newspaper. The CT Review editors asked Terry Grunwald to respond.

Dave Hughes is Principal Investigator for the NSF Wireless Field Tests for Education Project. Terry Grunwald is a nonprofit strategic computing consultant, and founding project director, NCeXchange, Raleigh, NC.

The Continued Wireless Hypocrisy

David Hughes

The Colorado Springs Gazette Telegraph newspaper ran a story on March 17th, "School Internet Aid at Risk" in which Congressman Tom Tancredo (R - Littleton) has introduced legislation to kill the $2.25 Billion Universal Service Fund 'e-rate' subsidy for schools and libraries connectivity to the Internet. School District 11 got $1.8 million this year. Tancredo said it is an example of 'rash Federal spending.'

Well, I agree with him -- but for entirely different reasons.

First off that fund was originally designed to subsidize rural, 'high cost' and poorest school districts and libraries, such as those in the San Luis Valley of Colorado, where a T-1 Internet line between Alamosa, the closest Internet connection, and the tiny town of San Luis costs over $1,700 a month, while the same capability -- because of shorter distances -- costs as little as $200 a month in Colorado Springs. So the first question is -- do the big urban Denver and Colorado Springs school districts need such a subsidy, while can the 14 tiny districts in the poorest counties of Colorado remain connected at such high costs without the subsidy? There are places that e-rate is needed.

But the second point even more questions the Congressional oversight, and FCC administration of the program and funds. Tancredo could fix those problems, without throwing out the baby schools with the e-rate bath.

There is list of eligible costs that e-rate funds can pay for. A new list was issued yesterday. The telephone companies made sure, by lobbying, it could only be used to pay for commercial 'services' outside the schools. i.e. the money flows back to the telephone company. NOT eligible, is the right of the schools to purchase and install, on a one-time basis, either microwave systems or digital radio systems which will do the same thing US West lines will do to connect schools and libraries, but cost nothing each month, for service, thereafter.

This is not idle talk. I spent the last three years demonstrating, as an Investigator for the National Science Foundation how schools and libraries could use off the shelf advanced communications technologies, rural and urban, at the lowest long term cost to taxpayers or rate payers. In fact I connected up two large District 11 schools, Coronado and Mitchell, and one branch library of the Pikes Peak Library District to test the radios and prove their worth. The $1.8 million received by District 11 would have bought an even newer $3,500 radio, installed, for every one of its 55 schools, which would link them 7 times faster than US West's T-1 lines could do it. At Ethernet speeds. And just, or even more, reliably than telephone lines. With no monthly costs, e-rate or no e-rate.

Its only going to get better, and cheaper. To the point all students and teachers from home could be connected to their school's resources, at no monthly cost.

One large local district -- District 20 -- 3 years before e-rate came along, connected up its 25 separate schools this way, including Microwave, out of their own budget. And are saving over $2.3 million ($12,000 a month) over a US West bid solution over the first 10 years.

But when the FCC made the stupid rules under pressure from the phone companies, and Congress did not override them, no local schools or the library district with its 10 branches could apply for the e-rate to make such one time expenditures, and get Internet connected between schools, and to the nearst Internet service, forever, high speed and free.

So they went for the Washington 'free lunch' instead. And they must ask for an e-rate grant every year for the connection between their schools and the Internet until the end of time.

So where does that Universal Service Fund money, collected on your phone bill every month go? Why right back into US West's pockets. Where else did you think it went? That's what's really 'rash' about the e-rate. And neither Congress, nor Representative Tancredo have done anything to correct such a rash set of rules by the FCC, which only benefits US West's stockholders by selling schools a service they don't need from telephone companies, when they should be able to buy radios from any of 70 American companies which are being used daily by corporations, government, and the US military.

E-Rate -- A Rejoinder

Terry Grunwald

There are many flaws to the e-rate. Dave Hughes has focused in on the way one particular ox (wireless) has been gored. So, this piece makes sense as a critique of the regs and as an exposť of the hypocrisy of the telecos (some say that they turned against the e-rate when they discovered that a large percentage of funds was going to wiring schools and not back into the telcos' pockets as service fees). It's a strong argument because it shows how the program has been skewed by the self-interest of the telcos.

More globally, the e-rate has diverted attention from the principle of universal service by zeroing in on one aspect of the digital divide—mainly K-12 schools and pretending that addressing that need is *the* answer to the universal service challenge in the information age. It's an effort to convince us that we can shine up a muddy car by adding new windshield wiper fluid. We need the whole car wash.

In doing this, the worst thing about the e-rate is that it divides the natural universal service constituencies into "haves" (schools with high % of children eligible for school lunch program, libraries, & rural health centers) and "have-nots" (every other public interest group from nonprofits to community colleges to CTCs and even to health centers in rural areas that don't meet the eligibility requirements). It pits these groups against each other, undermines the possibility for community-wide collaborations, and makes the e-rate itself with all its flaws (not universal service) the issue.

One concern about focusing on wireless is the danger of falling into the "divide and conquer" trap in another way. The issue is not solely one for rural, high-cost areas but Universal Service as a principle. The e-rate IS needed in underfunded inner city schools and the issue shouldn't get framed as a rural vs. urban one — although the disadvantages of rural areas are real and should receive special attention.

Finally, the e-rate also doesn't address the fact that the Internet is fundamentally different from utilities covered by the old universal service model. With the steep learning curve for technology, there are now significant "barriers to use" as well as "barriers to access." The studies now coming out about the need for teacher training underscore this issue.

Universal service needs to be broadly defined.