• by kmeaney@marketresearch.com
  • July 30 2014

FCC E-Rate Modernization Plan Should Benefit Software Industry

From Electronic Education Report, July 18, 2014

The E-rate program over its 18-year life has helped connect almost all U.S. schools and libraries to the Internet. With a new set of rules issued in July, the Federal Communications Commission laid the groundwork to continue to support broadband connectivity to buildings while expanding support for robust Wi-Fi networks within classrooms for digital learning.

The changes made by the FCC are intended to:

•Significantly expand funding for Wi-Fi networks and distribute it fairly;

• Maximize the cost-effectiveness of E-Rate spending through greater pricing transparency, encouraging consortia and bulk purchasing, and better enforcement of existing rules; and

• Simplify the E-Rate application process and overall program administration.

The FCC changes maintain E-Rate’s current budget of $2.4 billion, adjusted by inflation, but make available an additional $2 billion to support Wi-Fi over the next two years by freeing up excess reserves. For the following three years, the program will target $1 billion annually to Wi-Fi by phasing out support for non-broadband services, such as pagers and phones, and through increased efficiencies.

“Based on our analysis, that means every school and library in this country will be able to have a Wi-Fi network that can support 1:1 digital learning,” EducationSuperHighway CEO Evan Marwell told EER. “That’s a huge, huge thing.”

Marwell’s belief that every school and library can be connected adequately is based on the findings of a CoSN and ESH 2014 report that found it would take $3.2 billion to achieve connectivity. The CoSN E-Rate and Broadband Survey 2013 Final Report earlier found that only 43% of U.S. schools currently had wireless networks capable of supporting digital learning.

In addition to the funding, Marwell sees enormous value in the steps the FCC is taking toward simplification and transparency.

“The E-Rate program is very hard for schools to use,” Marwell said. “There are a lot of things this order is doing to make it easier for schools to apply for E-Rate dollars and reduce the administrative cost of the program.”

Under the new rules, schools should better understand what they should be paying for connectivity services and will be encouraged to enter into buying consortia since more volume means better deals.

“Today very few schools have any idea what other schools are paying for their broadband,” Marwell said. “The FCC has a treasure trove of information because every school that uses E-Rate funding has to report what they bought, who they bought it from and how much they paid for it.”

The ESH will tap that data, and information from programs like the pilot it is doing with the state of Virginia on the cost of access, to help inform districts as they plan and implement procurements.

“Schools are lousy buyers of broadband in general; the median school in this country pays $25 per megabit per month for their Internet access,” Marwell said. That would be like paying $500 per month for a cable modem at home, he said, noting that the top quartile of school purchasers pay $4 per megabit per month.

The new E-rate rules will be in place in time to support Wi-Fi upgrades across the country beginning in the 2015-2016 school year. Marwell expects to see a rise in RFPs for broadband and Wi-Fi equipment by December with contracts awarded mid-March and summer installation.

“The first thing every district should be doing is an assessment of their own network,” Marwell said. “Do they have enough Internet access getting to the district office and to each of their school doors and do they have the Wi-Fi networks that are sufficient to support 1:1 learning?”

Software Vendors Expected to Benefit

Clever (San Francisco) CEO Tyler Bosmeny told EER the changes made to E-Rate will give schools a great opportunity to use more software in the classroom.

“The biggest trend we see is that schools are using way more software than ever before, especially schools that have had good Wi-Fi,” Bosmeny said. He added, “Wi-Fi is a great step, but for your product to make a difference it has to be easy for teachers and students to adopt and run with.”

Clever has moved with the trend expanding beyond underlying API technology that allows software applications to plug directly into a school’s existing data infrastructure to offer a digital learning platform that helps teachers and students more easily use software in the classroom. Clever in 2014 has over 150 vendor partners who license its software. Clever is used in 20,000 schools, up from 3,000 schools in 2013.

“We’re moving to an apps world, where instead of schools buying all their software from one or two places, they use Khan Academy for videos, they use DreamBox for adaptive math and Read 180 by Scholastic to help learners catch up to grade level,” Bosmeny said. “It’s all different software programs serving specific needs that schools are using; that’s what’s taking off.”

FCC Plan Generally Praised

The FCC modernization order for E-Rate has won the endorsement of a range of organizations, including the Consortium for School Networking, the National School Boards Association and the Alliance for Excellent Education. However, praise generally comes with the caveat that additional funding will be needed-Marwell estimated in the range of $800 million per year to upgrade the improved networks over time.

The E-rate program has been capped at $2.25 billion, indexed to inflation since 2010. For the 2013 funding year, schools and libraries sought E-rate funding in excess of $4.9 billion, more than twice the 2013 cap of $2.38 billion.

“This is step one of E-Rate modification, it’s not done,” Marwell said.•