E-Rate News 
 
Making Sense of the E-Rate:
A Guide to the Universal Service Fund for Schools and Libraries
 
On August 14, ASPIN co-sponsored an E-Rate briefing at Arizona State University.  Our goal was to provide K-12 administrators attending the session with a guide to help them position their schools to take advantage of telecomunications discounts available through the Universal Service Fund.  The following information is taken from a handout presented at the briefing. A copy of the handout is downloadable in .pdf format. You will need Adobe Acrobat Reader to view the download.


History: 

The Telecommunications Act of 1996 represents the first major overhaul of telecommunications law since 1934. In addition to placing a new emphasis on competition and deregulation, the act outlines new rules on how schools and libraries would be included as beneficiaries of universal service support. Provisions of the act are designed "to ensure that eligible schools and libraries have affordable access to modern telecommunications and information services that will enable them to provide educational services to all parts of the nation." The act also provides for discounted services for K-12 schools and libraries. Funds allocated for discounts, now commonly referred to as the "e-rate," are available through the Universal Service Fund. 

A Federal-State Joint Board was created to study the Universal Service Fund portion of the act and formulate recommendations for its implementation. On May 7, 1997, The Federal Communications Commission released a Report and Order on Universal Service which adopted the majority of the Joint Board's recommendations for providing discounts to eligible schools and libraries for telecommunications services, Internet access, and internal connections. Discounts were established ranging from 20% to 90% based on a school or library's level of economic disadvantage and its location in an urban or rural area. Monies available in the Universal Service Fund are capped at $2.25 billion per year. 

The FCC's Order and Report mandated that before a state could apply for funding, the state public service commission must set intrastate discounts for its own state. On July 2, 1997, the Arizona Corporation Commission voted to adopt the federal discount matrix for distribution of universal service support funds. 

Funding for the universal service discounts is generated by the telecommunications community. All carriers that provide interstate telecommunication services are required to contribute to the USF. Carriers required to contribute will receive bills from the USF administrator; assessments for the schools and libraries discounts will be based on carrier interstate and intrastate end-user telecommunications revenues. 
 

Eligibility: 

Schools: 
School eligibility for universal service discounts is based on the following criteria: 
 

  • must meet the statutory definition of an elementary or secondary school found in the Elementary and Secondary School Act of 1965 (20 U.S.C. d8801 (14) and 8801 (25) )
  • must not operate as a for-profit business
  • must not have an endowment exceeding $50 million
Public and non-public elementary schools that meet these criteria will be eligible to receive discounts. 
 
    Examples of Eligible SchoolsÝ 
    - Public schools 
    - Private schools 
    - Parochial schools 
    - Vocational technical schools 
    - Charter schools
 
    Examples of Ineligible Schools 
    - Home school programs 
    - Community colleges 
    - Universities
Libraries: 
Library eligibility for universal service discounts is based on the following criteria: 
 
  • must not operate as a for-profit business
  • must be eligible for assistance from a state library administrative agency under the Library Services and Technology Act (LSTA).
 
    Examples of Eligible Libraries 
    - Public libraries 
    - Public elementary or secondary school libraries 
    - Research libraries that: 1) make publicly available library services and material suitable for scholarly research and not otherwise available to the public and 2) are not an integral part of an institution of higher education
    Examples of Ineligible Libraries 
    - Academic libraries (unless their budget is completely separate from any institution of higher education)
Libraries within eligible schools are entitled to receive discounted services as part of their schools. 
 

Consortia: 

School and library consortia are not required by the FCC however, they are strongly encouraged in order to aggregate demand to create sufficient demand to negotiate lower prices. Consortia also consolidate services and share technical expertise, thus achieving improved efficiency. Both eligible and ineligible organizations may be included in a consortium but discounts may only be applied to eligible organizations. Note that ineligible organizations, while not receiving discounts, will still have the advantage of receiving lower pre-discount prices due to aggregation. Eligible organizations may, in turn, benefit not only from the aggregation, but from technical expertise and shared resources contributed by the ineligible partner. Consortia with ineligible members should keep careful records of their expenses to ensure only eligible groups receive discounts. Any organization may apply as both an individual and a member of a consortium but they may not obtain multiple discounts for the same service. 
 

Discounts: 

The USF is capped at $2.25 billion per year with unspent funds carried forward for the next year. Over 1,000 public schools in Arizona will be eligible for the discounts. They are distributed on a first-come-first served basis therefore it is important to be prepared and apply as soon as application forms are available. Applicants must reapply each year for discounts, and the first-come-first-served nature of the program means there are no guarantees a school or library will receive the same level of funding from year to year. 

Discounts are applied to the rates billed to the schools and libraries by their service provider. The school or library is then responsible for paying only the discounted cost. The provider will apply for reimbursement for the remaining amount through the Universal Service Fund Administrator. 
 

Determining your discount: 

1.) Determine whether your school or library is eligible 
2.) Calculate the percentage of students who are eligible for the national school lunch program 
(Note: the students do not actually have to be enrolled in the program) 
3.) Determine whether your school or library is located in a urban or rural county 
4.) Use the discount matrix (Figure 1) to calculate your discount. 
 

School and Library Discount Matrix
 
Percentage of students eligible for the National School Lunch Program Urban County discount Rural County discount
< 1% 20% 25%
1% - 19% 40% 50%
20% - 34% 50% 60%
35% - 49% 60% 70%
50% - 74% 80% 80%
75% - 100% 90% 90%
Figure 1

Calculating a Percentage of Students Eligible for School Lunch Program: 

Schools: 

Telecommunications discounts are based on the number of students eligible for the national school lunch program. Note: Schools do not have to participate in the lunch program to compute their level of economic disadvantage for the purpose of obtaining discounts. Schools who do not participate or believe their disadvantage is understated may use a federally approved alternative method of computing eligibility. The method (Title I of the Improving America's Schools Act of 1994, 34 C.F.R. § 200.28 (a)(2)(I)(B)) allows schools to: 1) conduct a survey, or 2) use eligibility for a tuition scholarship program to determine the percentage of students eligible for the national school lunch program. 

Libraries: 

Discounts for libraries are determined by the number of students eligible for the national school lunch program in the school district in which the library is located. 
 

Defining Rural and Urban Areas: 

For the purpose of telecommunications discounts, rural areas are defined in accordance with the guidelines adopted by the Department of Health and Human Services' Office of Rural Health Policy (ORHP/HHS). The guidelines classify counties as either urban or rural based on a Metropolitan Statistical Area (MSA) designation adjusted by the "Goldsmith modification" which designates rural areas within large metropolitan counties. 
 
 

What Telecommunications Services are Available? 

The following is a partial list of telecommunications services eligible for discounts. It is by no means comprehensive. If you have a question regarding a particular item or service not listed here, contact the National Exchange Carrier Association (http://www.neca.org/). NECA is serving as the interim fund administrator. 

Eligible Services 

  • Basic phone service
  • Leased data circuits
  • T1, 56kbps, ISDN lines
  • Dial-up Internet access
  • E-mail
  • Wireless connections
Ineligible Services 
  • Content
  • Training
Eligible Internal Connections 
  • Wiring
  • Routers
  • Switches
  • Hubs
  • Network Servers
  • Necessary networking software
  • Wireless LANs
  • Installation and basic maintenance
Ineligible Internal Connections 
  • Personal computers
  • FAX machines
  • Software (except network file server software)
  • Modems
  • Upgrades to the existing electrical system
  • Asbestos removal
  • Cameras (for desktop units)
Who is an Eligible Provider? 

The State utilities commission will determine which providers are eligible to offer services covered by the discounts. 
 

What You Need to Do: 

The following is a preliminary list of steps schools and libraries may be required to take in order to apply for the discounts. Applications have not been released by the FCC and the Department of Education but you can monitor the FCC website for notification of when they will be ready for distribution (http://www.fcc.gov). 

1.) As part of the application process, the school or library must first conduct a technology inventory and assessment that will provide information on the applicant's current capacity and future plans. Since Arizona public school districts must develop and adopt technology plans to comply with the requirements for the Technology Literacy Challenge Fund grants and the Goals 2000 funding, the Arizona Department of Education recommends combining the information required by TLC and the information required by the Act within one technology plan. 

Your technology plan should include the following information: 

  • The availability of computer equipment and modems (existing and/or budgeted);
  • Internal network connections and volunteer efforts -- like NetDay -- to install these connections;
  • The software necessary for computer communications ;
  • The experience level and training programs available for staff that will be making use of the technology, and training programs for which funds are committed for the current and future academic years;
  • Computer maintenance contracts (existing and/or budgeted);
  • The capacity of the school's or library's electrical system for simultaneous operation of computers without creating a fire hazard; and,
  • Specific plans for using the technology and for integrating it into curriculum
2.) School technology plans must be submitted to the Arizona Department of Education for approval. Library plans will be approved by the Arizona Department of Archives, Records and Libraries. 

3.) Schools and libraries then submit an application, describing the services they require, to the Universal Service Fund Administrator. The interim fund administrator is the National Exchange Carrier Association. Although applications are not currently available, applicants should plan on providing the following information: 

  • Applicant name
  • Status (individual or consortium)
  • Address
  • County
  • Number of students - also number of students eligible for the national school lunch program
  • Number of buildings
  • Contact person
  • Telephone
  • Fax
  • E-mail address (if available)
  • Description of requested services
Requests must be signed by an authorized official who will certify the following: 
  • The school or library applying is an eligible entity.
  • The services requested will be used solely for educational purposes.
  • The services obtained by the applicant will not be sold, resold or transferred in consideration for money or other things of value.
  • If the services are purchased as part of an aggregated purchase with other entities, the identities of all co-purchasers and the services or portion of services being purchased by each partner.
  • The request is fully budgeted. i.e., applicant must have committed funds available during the current funding year to pay for the discounted services as well as any necessary hardware, software, and training to use and support the services effectively.
  • The applicant has complied and will continue to comply with state and local procurement procedures.
  • The applicant has an approved technology plan.
  • The applicant will maintain suitable records and cooperate with any future compliance audits.
4.) Requests are placed in a queue based on the order they are received by the USF Administrator. The requests are then posted to the Administrator's website in order for the applicant to receive bids for their requested services. 

5.) The applicant is required to wait four weeks after the application has been posted to the website to sign a contract. During this time, providers will submit bids for the requested services. Bids are the lowest price the service provider charges to similarly situated non-residential customers for similar services. This is also referred to as the "base" or "pre-discounted" price. 

6.) After reviewing the bids, the applicant selects a vendor or vendors that will fulfill their needs. The applicant is not required to select the lowest bid. Factors, other than the pre-discounted price, such as quality of service, experience, management capability, and schedule compliance should be considered. 

Once a provider is selected, the applicant submits a second form to the Fund Administrator along with a copy of the contract. This form indicates the funds that will be needed in order to complete the project. The Fund Administrator will commit this amount for future payment. 

Applicants may enter into multi-year contracts with their chosen provider(s) but the Fund Administrator will only commit funds to cover the portion of a long-term contract that is scheduled to be delivered and installed during the funding year. Contracts may be structured so that payment is required on a yearly basis. 

If you are considering a multi-year contract, note that schools and libraries must reapply for their discounts each year. 

If either party feels the bid price is unfair, they may seek recourse from the FCC for interstate services and the State commission for intrastate services. 

Information on purchases will be posted to the Fund Administratorís website. 

7.) Once the applicant receives approval of its purchase order, it may notify the provider to begin service. Service may begin after January 1, 1998. 

8.) Once services are complete, the applicant must notify the Fund Administrator that the services have been provided and the Fund Administrator will pay the service provider. 

9.) The applicant will pay the provider the non-discounted price. Example: A provider offers a service for $1000 and the school or library is eligible for a 90% discount. The Fund Administrator pays the provider $900 and the school or library pays the provider $100. 

10.) New funding requests must be filed each year beginning on July 1 for services to be provided after January 1 of the following year. Discounts are not guaranteed in subsequent years. Multi-year discounts are not allowed. 
 

Important Dates: 

Discount funds will be available January 1, 1998. Keep in mind that requests will be processed on a first-come-first-served basis, so start preparing now. 

The FCC had originally planned on accepting funding requests July 1, 1997. However, the most recent information we have indicates that application forms will not be available until fall. The USF Fund Administrator will begin accepting requests when the forms (currently being developed by the FCC and the Department of Education) are available and the fund administrator's website is fully operational. 

Note: Pending lawsuits could significantly alter the timetable for implementation of the act. 
 
 

For More Information: 

Universal Service Fund 

FCC Resources 
 

 

U.S. Department of Education 
http://www.ed.gov/Technology/implem~l.html 
A summary of key paragraphs of the FCC's order. 
 

American Library Association 
http://www.ala.org/oitp/univserv.html 
Information to help libraries with the implementation of the USF. Keep informed about how the Telecommunications Act affects libraries and schools by visiting the ALA's Washington Office Newsline (ALAWON) Archives. http://ala.org/washoff/alawon/ 
 

Education and Library Networks Coalition 
http://www.itc.org/edlinc/discounts/index.htmlÝ 
Consortium of school and library organizations dedicated to helping schools with technology and telecommunications issues. 
 

E-Rate Interactive Discussion 
http://www3.pbs.org/cgi-bin/netforum/erate/a/1 
On June 3, PBS hosted a live satellite event addressing universal service. This forum has been established by PBS and the live satellite event producer to provide further information about the e-rate as it becomes available and answer your many questions. 
 

Information Renaissance 
http://info-ren.pitt.edu 
The Information Renaissance seeks to provide networking technology to groups and individuals across the region, in the service of education, medicine, business and government. Sponsors an on-line forum for the Telecommunications Act and E-rate. 
 

National Exchange Carriers Association - NECA 
http://www.neca.org/ 
The website for the temporary fund administrator. 
 
 

Background on the Telecommunications Act: 
 

The Benton Foundation's Universal Service and Universal Access Virtual LibraryÝ 
http://www.benton.org/Policy/Uniserv 
A wealth of information regarding the policy behind universal service and telecommunications deregulation. 
 

The Benton Foundation's Telecommunications Act of 1996 Homepage 
http://www.benton.org/Policy/96act 
Information and background on the Telecommunications Act of 1996. Additional information can be found at: http://www.benton.org/Library/Recommend/recommendations.html 
 
 

Technology Resources: 
 

ASU's Network Information Center 
http://aspin.asu.edu/~NOC/ 
Contains information on connecting your school through Arizona State University 

Arizona NetDay 
http://ade.state.az.us/netday96/index.html 
NetDay is a way for people, schools, and companies to work together, a VOLUNTEER effort to provide network wiring to schools. This site is sponsored by the Arizona Department of Education. It contains information on getting your school connected to the Internet through the NetDay program. Volunteer information is also available. 

Technology Sites 

http://www.cas-psu.edu/docs/pde/tech.html 
A collection of Internet sites pertaining to the use of technology in the classroom. Developed by Pennsylvania State University. Links are provided to sites that contain: 
Planning guides 
   On-line trouble shooting and help desks 
Technical support for networks and video conferencingÝ 
Cabling frequently asked questions 
Introduction to networking 
Design guide for school networks 
Internet starter kit 
Network computing manual 
 

Computer and Communication Standards DocumentationÝ 
http://www.cmpcmm.com/cc/standards.html 
Everything you wanted to know about standards within the telecommunications industry but were afraid to ask. 
 

OneLook Dictionaries 
http://www.onelook.com 
Look up telecommunications terms in one of these on-line dictionaries which allows you to search for multiple definitions of a word. The On-line Dictionary of Computing may also be helpful. http://wagner.Princeton.EDU/foldoc 
 
 


 
 
Glossary of Telecommunications Terms 
 

Analog - In electronics, an analog signal is continuously variable, a flowing line or wave, as opposed to yes/no, left/right digital signals. Analog signals must be translated into digital signals in order for computers to be able to understand them. 

Bandwidth - The capacity of a transmission medium. 

Baud - A unit of speed for data transmission through a cable, now usually given in bits per second. 

Bit - The smallest unit of data retrievable through the yes/no digital signals stored in a computer's memory. 

Bps - Acronym for bits per second.Ý A measure of either (1) cable data capacity, or (2) speed of data transmission through a cable. 

Bridge - A device that connects (in essence bridges) networks of like protocols. 

Broadband - Network technology that allows the transmission of multiple independent channels of data. 
 

Browser - A generic term for a program that can navigate around the world wide web.Ý Browsers read the HTML code on world wide web pages converting them into formatted text and images. 

 
Byte - A unit for measuring computer memory; one byte equals eight bits. 
 
Cellular - A wireless telephone technology that makes use of a range of radio frequencies to transmit calls. Cellular modems have also been invented to allow for computer connections via cellular phones. 

Channel - A path or circuit along which information travels. Most channels are measured in terms of their capacity, or bandwidth. 
 

Compression - The shrinking of digital information to achieve smaller file size. One would compress information to allow for faster upload/download times or to fit on a certain size disk. 
 

Connectivity - Property of a network that allows dissimilar devices to communicate with each other. 
 

Data Communications - The movement of encoded information by means of electrical transmission systems. 
 

Dial-up Access - Connecting to another computer or network using a modem over a regular telephone line. 
 

Digital - In electronics, a signal coded in binary format as opposed to analogís continuously variable flow. All digital information is ultimately stored in yes/no signals that computers can process. 

Ethernet - A commonly used system for connecting computers in a local area network. 

FCC - Federal Communications Commission. 
 

Fiber Optic - A cable technology in which light is used for telecommunication and computer networks with very high capacity, allowing high-speed transmission (266 Mbps) of data and services such as video. 

Full-Motion Video - A standard video signal for 30 frames per second and 525 horizontal lines per frame. 

Gateway - Connects networks of dissimilar and incompatible protocols together allowing for the exchange of information. 

HUB - A device used to concentrate incoming data from multiple nodes onto a common network medium.Ý Also commonly referred to as a concentrator or repeater. 

Internet Service Provider - An organization or company that provides Internet access to individuals or organizations. 

Interoperability - The ability to operate and exchange information in a heterogeneous network. For example, one large network made up of several different local area networks. 

ISDN (Integrated Services Digital Networks) - A technology that allows large quantities of data to be transmitted over ordinary telephone lines. Basic Rate Interface (BRI) provides two digital communications paths, each capable of carrying up to 64 kbps for audio or data. 

Kbps - Acronym for kilobits per second, i.e., thousands of bits per second, used to describe the speed of a network connection. Today's fastest modem operates at 56 kbps over an analog telephone line. 

LAN (Local Area Network) - A network that connects computers in one area, such as a school or office building. 

Megabit - One million bits. 

Megabyte - One million bytes, or 1,000 kilobytes. 

Microwave - A wireless technology that uses the high frequency band of the radio spectrum to transmit analog and digital information. Microwave systems can have bandwidths up to 300 times greater than broadcast TV networks and several times greater than cable TV networks. 
 

Modem - MOdulator/DEModulator. The equipment used to link computers over a telephone line. 
 

Mbps - Acronym for megabits per second, i.e., millions of bits per second, used to describe the speed of a network connection. Many LANs operate at speeds of 10 mbps or more; a T-1 line WAN connection operates at 1.544 mbps. 
 

NECA - (National Exchange Carrier Association) The current Universal Service Fund Administrator and the temporary school and library fund administrator. 

Network - A connection of computers and computer-related equipment such as terminals, printers, modems, etc. Networks can also consist of other technologies such as a phone system or video conferencing technologies. 
 

Online service - An organization or a company that provides special proprietary services in addition to basic Internet access. Examples include America Online, Prodigy, and CompuServe. 
 

Open Systems - An approach to building information processing systems using hardware, software and networking components that comply with industry-accepted standards. This approach allows for flexibility in choosing hardware, software and networking components. 
 

POTS - Plain old telephone service, ordinary telephone lines. 
 

Protocol - An accepted set of rules, procedures, or conventions that two data devices just accept and use to be able to understand each other. 
 

Router - A protocol-dependent device that connects smaller networks together. 
 

Satellite- A wireless communication device that orbits Earth and relays video, voice, paging, data, or fax messages from originating ground stations to other ground stations, which then forward the messages to recipients. Certain technologies, such as DirecPC use satellites to deliver high speed connections to the Internet. 
 

Satellite dish - A receptor capable of receiving transmissions from satellites directly, without the mediation of a ground-station. 
 

Server - Computer hardware that allows a host computer to share data with networked computers. 
 

SONET (Synchronous Optical Network) - Standards for digital transmission at rates ranging from 51.84 Mpbs to 2.4 Gbps. 
 

TCP/IP - Transmission Control Protocol/Internet Protocol.Ý A set of protocols developed by the Department of Defense to link dissimilar computers across networks. TCP/IP is the standard protocol upon which computers communicate on the Internet. 
 

T-1 - A high-speed, telecommunication circuit used for voice and data transmission (high-capacity network link) which operates at 1.5 Mbps. These circuits can be divided into 24 separate 64kb channels. 
 

T-3 - A high-speed, digital communications circuit (high-capacity network link) that operates at 45 Mbps. 
 

Video conferencing - The real-time, two-way transmission of digitized video images and audio between two or more locations. Typically uses a special monitor, video cameras, microphones, and software. 
 

WAN (Wide Area Network) - A data network extending a LAN (Local Area Network) outside the building, over telecommunication lines to link to other LANs over great distances. 
 

Wireless - The transmission of data by noncable technologies such as microwave, satellite, and cellular. 
 

Wireless LAN - A local area network connected by wireless technology such as radio waves or infrared. 
 

Wireless Transmission - The transmission of data without cables, using microwave, satellite, and cellular technologies.