In the first major proceeding of Acting Chairwoman Clyburn’s tenure, the FCC is scheduled to open a rulemaking today to consider reforms to the Schools and Libraries program of its Universal Service Fund (better known as the “e-rate” program). The rulemaking follows Commissioner Rosenworcel’s April 2013 proposal to establish “E-rate 2.0” and President Obama’s ConnectEd goal of deploying at least 100 Mbps of broadband to 99% of the schools and libraries within the next five years.

The thrust of the Rosenworcel/Obama reform proposals is to substantially increase the amount of funding provided for schools and libraries and to re-focus that funding on the deployment of broadband, both to the school and to the classroom. This would be good news for broadband service providers and internal networking providers (including in-building wifi providers), as the proposals would increase the addressable market eligible for subsidies.

The battle lines on the proposal are already being drawn. Earlier this week, Commissioner Pai - the lone Republican commissioner at this time -- outlined a “Student-centered” E-rate proposal. This proposal makes no explicit mention of the Rosenworcel/Obama proposals, but is intended as an alternative to those proposals (rather than a supplement to them). Under Commissioner Pai’s proposal, the FCC would simplify the e-rate forms and procedures and re-allocate support using a student enrollment formula. He criticized the current e-rate program as unfocused and ultimately wasteful.

Kelley Drye will be closely following the e-rate reform proceeding and will post a further update after the specific proposals are released. Service providers offering e-rate services and those considering this market should pay careful attention to these changes. This proceeding could have a substantial effect on business plans to serve the education market.

FCC to Initiate Proceeding to Reform the E-rate Program