Call it Ma Bell's final bequest. In a twist on the telephone industry's historic obligation to provide "universal (telephone) service" to even the most out-of-the-way Americans, the industry is helping to finance an unprecedented multibillion-dollar high-technology makeover of U.S. schools and libraries. Under the resulting "E-Rate" bonanza, administrators are rushing to apply for discounts of 20 percent to 90 percent on the cost of telephone services, wiring, switching and Internet technologies.

"This gives us a tremendous resource," said Joseph R. Salvati, a technology director in the New York City public school system. "Our goal in the first year of E-Rate is to move all our schools into the technology arena. No matter where a child goes to school in New York City, they will see a difference in the technology and resources available."

The E-Rate, or Education Rate, program is a mainstay of the Clinton administration's plan for using technology as an education enabler across the U.S. economic landscape. "The real role of E-Rate is to make sure that no kid in a school or no citizen in a library has to go without technology because their local school or library cannot afford the online cost," said Larry Irving, assistant secretary for communications and information at the U.S. Commerce Department and head of the National Telecommunications and Information Administration. "You don't want to ration education."

Funded in part by telecommunications carriers, E-Rate will provide schools and libraries up to $2.25 billion annually for five years, starting this year. According to the Schools and Libraries Corp. (SLC) , a nonprofit organization set up to administer the program, more than 30,000 applications for the funds were filed a month before this year's April 14 deadline. An estimated 125,000 schools and libraries are eligible to apply.

Not all telecommunications gear is covered; Internet access, network installation and telecommunications services are eligible. But computers, fax machines, modems, software and professional development are not. Even so, savings in one area can help pay for an investment in another. And although the application process can be complicated, help is available.

Experts said the savings are worth the effort. For example, with E-Rate, Boston schools can put T-1 lines in all 125 schools and get an 85 percent discount, paying $150 per line for a monthly service that usually costs $1,000. Not only will they get faster connections to the Internet than with modems, but the more than $1 million saved in a year can buy faster switches, training for teachers or new PCs. New York City, which has 1,200 schools, could save up to $200 million in the first year. But the impact could be just as significant in Davidson County, N.C., where 50 percent discounts on telecommunications charges could make it possible to connect its 26 schools this year.

"We realized that this could leverage the funding we could get to create a much more robust system," said Steven Gag, technology adviser to Boston Mayor Thomas Menino. "Teachers have never had this kind of resource before. It begins to level the playing field. The suburban school has had a T-1 line for three years. Well, now the urban school is going to get it too."

Libraries, too, are finding computers to be indispensable. At San Mateo Public Library in California, a line forms from opening to closing to use the 30 computers available to the public, said Kathleen Ouy, the library director and a member of the SLC board. The E-Rate savings there will be used to buy more computers and business resources.

Equity is what E-Rate is all about. "I think that the greatest impact will be to help the schools with the least capabilities of resources and funding and infrastructure gain the most," said Linda Roberts, director of educational technology for the U.S. Department of Education.

The Playing Field

Although 78 percent of public schools had access to the Internet as of last fall, access was only 63 percent among schools with minority students making up at least half the enrollment or where more than 70 percent of the students were eligible for a free or reduced-price lunch, according to the National Center for Education Statistics. That is not to say there hasn't been progress: Only 35 percent of schools had Internet access in 1994.

But strictly defined, Internet access can mean one computer in the principal's office, experts said. The key is to get computers into the classrooms, and that is where E-Rate will be the most critical. Only a quarter of the nation's classrooms have Internet access, although progress has been made there as well-only 3 percent had Internet access four years ago.

In some schools, the barrier to Internet access can be as simple as electrical wiring. Many classrooms have only one or two outlets. "We don't have the money to spend double and triple the cash on students in rural

areas to have the same resources as city kids," said Jim Soyer, press secretary for technology projects to South Dakota Gov. Bill Janklow. "Through technology they can have the same resources. E-Rate is part of that."

E-Rate is not carte blanche. In South Dakota-where 40 percent of the high schools have fewer than 100 students-it is being used to supplement other cost-saving initiatives. Prisoners are wiring the schools, putting in one electronic hookup for every four students and saving the schools a bundle. In the next year, 690 schools will be totally rewired. E-Rate will help pay to connect all those schools to the Internet, saving districts an average of 60 percent on telecommunications spending.

E-Rate will not address all the challenges of electronic education, such as creating Internet-based curriculums, but the program is forcing schools and libraries to work together to find solutions. "By itself this program cannot change education. It can be a catalyst," said Frank Gumper, vice president of long-range public policy for Bell Atlantic Corp. and a member of the SLC board. "It's not the be-all or end-all. It's up to individual schools and libraries to use these [funds] in the way Congress intended to change education."

Application Anxiety

Seeking E-Rate funding can be a daunting prospect for some schools. Drafting a detailed technology plan, filling out two lengthy forms and filing before the 75-day window shuts can be difficult, especially for administrators who are overwhelmed with other tasks. Form 470 is a request for services that is posted to the SLC's World Wide Web site (www.slcfund.org). Form 471 details the services of signed contracts.

"Actually, it kind of scared us," said Sue Whitman, director of management of information systems for Davidson County School District, Lexington, N.C. She believes the schools could qualify for a higher discount, but the district's poor families do not apply for free school lunches, and she did not want to take on the petitioning process. In the end, after meetings and teleconferences, it took only an hour to fill out the E-Rate forms. "It's going to be worth it if we can get that discount rate and get everyone online," she said.

Tell that to New York City's Salvati. "I always laugh when I read at the top of the form that it should take no more than six hours to gather information and complete the application," he said. It has taken weeks to write up technology plans for his district, which serves more than 1 million students. The discounts will be applied to parts of the city's five-year, $2.2 billion technology plan.

The Funding Window

Applications submitted by April 14 will be funded according to need. Discounts are based on the number of low-income children who qualify for the National School Lunch Program. Those with a 90 percent discount will be first in line. Discounts can be applied retroactively to Jan. 1, 1998. If there are 1998 funds left over, which many districts expect, then applications will be funded on a first-come, first-served basis after the deadline.

But administrators also need to look toward July 1, the first day applications will be accepted for 1999 funding. Those applications will be taken on a first-come, first-served basis, so timing is critical. "July 1 is a tight framework. That is the real problematic one," Boston's Gag said. Only 15 of Boston's 125 schools were included in the 1998 E-Rate discount request on construction of local-area networks. As part of its five-year, $50 million technology plan, Boston plans to have one computer for every four students and one for each teacher. The city intends to include 30 or 40 schools in its 1999 E-Rate application and the remaining schools in 2000. Planning has to start now.

Help is available from many sources, including those vendors selling the technology as well as paid technology consultants. The SLC has sent packages of information to prospective applicants and has held more than 100 training sessions throughout the country. Its Web site is loaded with information, and its client services hot line had received 35,000 calls by mid-March. "It's a hand-holding process," said Robert Travis, director of federal systems product marketing and development for Cabletron Systems Inc., a $1.6 billion New Hampshire-based firm that supplies networking technology to the education market.

"The easy part is filling out the forms," said Scott Garren, of Garren Shay Associates, a consulting firm that is working with several school systems. "What is more challenging is figuring out what to do with the savings and figuring out how to expand your services through the E-Rate program. It means doing things faster than anticipated and doing things beyond the scope of what you imagined was possible."

Leveraging the Discounts

Clark County School District in Las Vegas is facing just that question. With explosive growth-10,000 to 12,000 new students a year are added to its enrollment, which is now at 156,000-the district has started a $1 billion building program that calls for adding the latest computer technology. "We are looking to leverage every dime," said Michael Webster, director of technical support. "But the real issue everybody is struggling with is: 'What do you do with the money you save from E-Rate?' The issue is to try to use the savings to do something like build a fiber network or do support training."

With all these schools and libraries out shopping, E-Rate is also an opportunity for vendors. "It means new opportunities for business that maybe we never would have had before," Travis said. "There will be exponential growth from state and local business."

Vendors can bid on any project, as all are posted on the Web. Bell Atlantic, one of the contributors to the Universal Service Fund-to the tune of about $100 million each year-is also one of the vendors that will be seeking business. The telephone company has expanded its billing services department specifically for anticipated E-Rate business. "This is a significant marketing opportunity," Gumper said.

-- Louisa Shepard is a free-lance writer based in Washington, D.C.


Providing Technology Anchors to Forgotten Communities


The E-Rate program is just one of the economic policy programs the Clinton administration is using to eliminate what it calls "the digital divide"-the barrier between Americans in many low-income and isolated communities and access to the high-tech mainstream. In addition to E-Rate, the Telecommunications and Information Infrastructure Assistance Program (TIIAP) and the Technology Literacy Challenge Grant represent millions of dollars more to subsidize equal access for all Americans.

The administration's point man in the attack on high-tech inequality is Larry Irving, head of the National Telecommunications and Information Administration (NTIA) and the U.S. Commerce Department's assistant secretary for communications and information. "This president and this vice president-being from the rural states of Arkansas and Tennessee-are committed to ensuring that the information superhighway doesn't further divide America and that it is used instead to bring all communities into the Information Age," Irving said.

Of course, rural America isn't the only part of the country isolated from high technology. Irving, raised in working-class Queens, N.Y., knows firsthand the power of well-equipped schools and libraries to deliver economic benefits to urban residents.

"Outside of my family, public institutions-schools and libraries-really treated me better than anything else I was exposed to in my life," he said. "But I worry that unless we put technology in the schools, the kid coming up behind me in Queens won't have the same opportunity to go to college or graduate school or do whatever it is he or she wants to do. Whether in Pikesville, Ky., or Barrow, Alaska, or New York City, children should have the ability to go beyond the parameters of their own town."

The responsibility for providing access, Irving said, lies with government. NTIA has become a leader among federal efforts with TIIAP, a $21 million program to fund civic networking projects. But while the federal government is extending dollars-$2.25 billion in 1998 in the E-Rate program alone-and sponsoring technology workshops to promote awareness of such programs, it is incumbent upon local governments to step forward for that help, Irving insisted.

"The community that doesn't take advantage of technology is just going to slip further and further behind," Irving said. "There are communities out there that missed getting a stop on the interstate highway system and small towns in the 1800s that did not have the railroad go through it. The landscape of the [Midwestern] plains is littered with towns which missed the stagecoach line or the telegraph line, and the income of those towns dried up. I don't think a community now can afford not to have access to technology and use it."

"We want to take a look at which communities are underserved and find replicable models that people there can use," Irving said. "There aren't enough federal dollars there, but as towns and counties prepare to make funding decisions, let's give them some ideas about how technology is being used in some places to improve quality of life, to improve education, to improve health care, to improve social services programs."


FCC's Telehealth Program Extends Universal Service to Health Care

The Universal Services Telehealth Program, passed as a companion measure to E-Rate, offers up to $400 million annually in telecommunications discounts to public health agencies and nonprofit health care providers serving remote and rural areas.

"E-Rate was passed as an effort to connect more public schools and libraries, but a second area included in the universal services programs is for health care," said Elliot Maxwell, deputy chief of policy and plans for the Federal Communications Commission. "The program is based on the fact that there is less access to health care in rural areas and that telecommunications would be helpful in remedying that."

Although the programs are similar in intent, they differ in format. "The two programs were set up differently," Maxwell said. "The rural health program is directed toward the charges people pay for being at a distance from telecommunications carriers. Rather than saying there will be a discount on a particular telecommunications service, the program looks at the services and makes up some of the difference in cost between what urban and rural facilities are expected to pay."

Specifically, the telehealth program allows a rural health care facility to obtain telecom services up to a T-1 line at the same price an urban center would pay. In addition, public health facilities that could only obtain Internet access through a long-distance call could participate in a "toll-access" program, which would pay about 30 hours per month-about $180-in toll charges.

"The FCC...saw the Internet as important for access to health care services in places where there is no dial-up access available," said Maxwell, who noted the program is geared toward fostering telemedicine applications. "If someone wanted to connect a rural facility to an urban facility in order to do remote consultation or to provide medical evaluation, under the program they would pay essentially what others would pay in an urban area."

- Jennifer Jones


Irate at E-Rate

The E-Rate program is not without its critics, particularly among those who are building state telecommunications networks (STNs) for the education community and for other customers. That's because STNs are excluded from receiving some of the discounts-directly or passed-along-available to schools and libraries under the E-Rate program.

Consequently, the school and library community, in some instances, may find it less expensive to contract directly for services covered by E-Rate and thereby avoid using state-sponsored backbone networks. Of course, this makes the state government information technology community-and telecommunications directors in particular-understandably incensed. After all, schools and libraries represent some of their biggest customers.

Washington state officials, for example, are concerned that schools and libraries attracted by E-Rate discounts will be lured away from the state's $54.5 million educational network, called the K-20 Educational Telecommunications Network. "Under the [rule], only common carriers can be paid out of the Universal Service Fund," said Steve Kolodney, director of Washington's Department of Information Services. "But some states are putting together networks and aggregating buying power. Some of the costs associated with that would be reimbursable if those states were private carriers, but [the cost] will not be reimbursed for public carriers."

Washington state lawmakers last month sent a formal message to President Clinton, Congress and the Federal Communications Commission decrying the potential-although "unintentional"-damage to state interests caused by E-Rate. The nation's highest officials should "review and amend the [FCC] ruling barring direct reimbursement to state agencies that provide telecommunications services," notes the legislature's memorandum.

The National Association of State Telecommunications Directors and now the National Association for State Information Resources Executives also have joined the chorus, lobbying the FCC and the Schools and Libraries Corp. to make E-Rate discounts available to STNs just as if they were commercial carriers.

The FCC late last year addressed some of the issues, clarifying that STNs would be eligible to receive discounts from two funding "buckets" reserved for internal connections and Internet access services. STNs "may either secure discounts on such telecommunications on behalf of schools and libraries, or receive direct reimbursement," the FCC said.

But the FCC said STNs were still shut out of a "telecommunications services bucket" from which schools and libraries would receive funds for basic phone service. "That bucket is the area where the FCC appears to hold onto the concept that there will be an end-user relationship between schools and libraries and the carrier. But STNs are often in the middle, and that is creating some challenges," said one state telecommunications official.

- Jennifer Jones


An E-Rate Directory

Schools and Libraries Corp.

Web site: www.slcfund.org

Hot line: (888) 203-8100

E-mail: [email protected]

U.S. Education Department

Web site: www.ed.gov/Technology

Hot line: (800) USA-LEARN

E-Rate Hotline




Edtech Alert


National Exchange Carrier

Association's Frequently Asked Questions on Implementation of the Universal Service Program for Schools and Libraries



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