Issue:
The Schools and Libraries (E-Rate) program was authorized by the Telecommunications Act of 1996 to provide discounts for connecting schools and libraries to the Internet.

• Discounts for telecommunications services, Internet access, and internal connections
• E-rate (or education rate) is funded via access charges on local and long distance telephone service.
• Sliding scale, largest discounts (90%) going to poorest schools.

Impact:
The FCC, under pressure from Congress, voted to scale back the e-rate program. Debate will continue in Washington over the best mechanism for funding the program.

Position:
Cisco supports the inclusion of internal connections in the schools and libraries program. Without these vital connections, schools and libraries are limited to a single computer Internet connection per school district.

Cisco Involvement:
The FCC asked for comments about the E-rate program. On May 22, 1998, Cisco President and CEO John Chambers submitted a letter to FCC Chairman William E. Kennard and the other FCC Commissioners supporting the inclusion of internal connections in the program.

• Mr. Chambers wrote:  "A system that does not include internal connections will not be, by definition, a network; it will allow one terminal to be connected to the Internet, while other computers within a school building--or within other buildings in a school district--are left without access to the Internet or each other."
  
• In addition, we are working with other networking companies and associations to support the continued inclusion of internal connections in the program.

Status:
In a 3-2 vote on June 12, 1998, the FCC scaled back the e-rate program.

• The FCC froze funding at $325 million for last two quarters of 1998 and first two quarters of 1999.
• Initial 12-month application cycle extended to 18 months (through June 30, 1999).
• Only neediest schools will receive funding for internal connections.
• Introduction of legislation (H.R. 4324 and S. 2348) to fund program through telecom excise tax.
• The first funding under the e-rate program is expected to be released in late November 1998.

The FCC's restructuring of e-rate has, to date, stalled potential Congressional efforts to kill the program. Although some legislators support the goal of wiring schools, they believe that the FCC's method for funding the program establishes an unconstitutional tax; several legislators are advocating alternate funding sources, such as the excise tax. The revised program is likely to remain in tact until a viable alternative is developed. It is likely the issue will be raised in the 107th Congress.

Fast Fact:

• During the first application period, schools and libraries submitted approximately 30,000 completed applications, totaling an estimated $2.02 billion in discounts.

| Back to Education |