The FCC is overhauling how it subsidizes WiFi for schools and libraries

Regulators have just approved a big package of federal aid for schools and libraries so that they can upgrade their WiFi networks, as part of a larger effort to modernize the way educators connect their charges to the Web.

In a 3-2 vote along party lines Friday, the FCC greenlit a plan to spend $2 billion over the next two years on subsidies for internal networks. The move also begins a process to phase out some subsidies under the federal program, known as E-Rate, for services and equipment that are on the decline, such as pagers and dial-up Internet service.

"No responsible business would stick with an IT plan developed in 1998," said FCC Chairman Tom Wheeler. "We owe the same rigorous self-examination to our schools and libraries."

The original plan called for spending $5 billion on WiFi over five years, in line with a push by the Obama administration to bring next-gen broadband and WiFi to 99 percent of students over the same period. Those funds would have partly come from savings as a result of transitioning away from supporting legacy technologies.

The proposal would also have eliminated an existing requirement that E-Rate funds be spent first on broadband services before being applied to WiFi. In past years, the cost of broadband service meant that money was rarely left over for upgrading WiFi connections.

But the FCC's proposal was ultimately scaled back late Thursday amid Republican objections that the E-Rate program can't afford the changes. The final proposal's two-year, $2 billion commitment accounts for the money the FCC has already set aside for WiFi upgrades, but it does not commit the FCC to funding WiFi upgrades at that same rate for the following three years.

Earlier this week, talks broke down between the commission's Democrats, some of whom want the program dramatically expanded, and its Republicans, who've warned that the $5 billion-over-five-years plan would eat into funding for broadband subsidies.

"The numbers for the WiFi plan just didn't add up and would've blown a $2.7 billion hole in E-Rate's budget, slashing funds for Internet connectivity," said Commissioner Ajit Pai. Pai criticized the finalized order as a half-measure, saying it does little to simplify the drawn-out E-Rate application process that's been the source of some delays.

The commission's other Republican, Michael O'Rielly, has called for matching any increases in E-Rate spending with reductions elsewhere. On Friday, O'Rielly warned that the FCC's plan could lead to "a funding cliff for schools and libraries, or higher phone rates" for taxpayers, who pay into the E-Rate program through a line item on their phone bills.

Democrats such as Commissioner Jessica Rosenworcel not only want to see more money allocated to WiFi within E-Rate, but also for E-Rate to receive greater annual funding overall. The program is currently capped at roughly $2.4 billion a year — which is little changed from when the E-Rate program was created in the mid-1990s — but according to the FCC, demand for E-Rate funds is about double that figure.

"We can’t expect to compete if we educate the next generation with a support system frozen in the age of dial-up," said Rosenworcel.

Wheeler vowed to consider lifting the cap on E-Rate's budget, but said that changes to the program's structure would have to come first.

"Let me be clear: It would be a mistake to simply add money to a program that was set in the 20th century," Wheeler said.

Brian Fung covers technology for The Washington Post.
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Brian Fung | July 11