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Home / Special Report / Telecom discounts available
to schools, libraries

Telecom discounts available
to schools, libraries

Advanced telecommunications services at a cheap price can be coming to a school or library near you. If you are active in a school board, school district, or are just a parent who wants his or her kids to keep up with rapidly changing technology in the classroom, clip this column and send it to your local school district or library head. Ask for action. Don’t wait for September.
A few weeks ago, the Federal Communications Commission adopted a program to establish a new subsidy fund to promote heavy discounting of telecommunications services to schools and libraries. It will apply nationwide. On June 25, Gov. George Pataki announced that the state Public Service Commission had taken action to match the FCC plan, substantially increasing the value of this effort to schools and libraries. The order is available on the PSC’s Web site at http://www.dps.state.ny.us.
This is no petty-cash fund. The basic fund to be established on the federal level will be set at $2.25 billion each year. And it starts this school year. Support will begin to flow to qualified applicants as of Jan. 1, 1998. Thereafter, the program will run on a calendar-year basis. The state portion could offer even more value.
Now that the program is going to be put into place, the pivotal question for Monroe County educators is “how can we gain access to those funds?” After all, this is the first time that federal law has included schools and libraries within the scope of universal service support, and the rules have just been written. (The FCC freely acknowledges that it has no data by which it can accurately estimate the likely demand for funding. Everyone is flying somewhat blind as to the likely interest and cost.)
The money will come from a surcharge on various telephone services. The FCC will collect up to $1 billion alone in the first six months of 1998 (or a lower amount if demand for funds is lower). Then, for each of the first two years, half of any unspent funds will roll over to the next year and remain available. If there is too much demand, spending priorities will kick in if the fund dwindles to $250 million. If the fund is exhausted, the administrator can be expected to seek to have the discounts lowered so the money will reach more applicants. Who is eligible to seek these funds? The law makes the following institutions eligible for discounts: a) elementary and secondary schools, including individual schools, school districts and consortia where all members are eligible for the discounts; and b) libraries that are recognized by a state’s library administrative agency. Academic libraries must be independent, with separate budgets, so that there is no double-dipping with a related school. Schools and libraries that are for-profit are ineligible, as are schools with endowments of $50 million or more. These rules are favorable to most, if not all, Rochester-area schools.
So what can a qualifying school district or library expect to have to do to get some of this support?
First, a school or library has to commit to buy qualifying services. The state has emphasized such things as distance learning and Internet access, but more basic advances are possible. The following services are eligible:
–all basic telecommunications services, including wireless and data services;
–Internet access (the basic conduit, i.e., only the non-content link); and
–internal telecommunications connections within schools and libraries.
Included in the discounting are things like e-mail, gateway access and Internet navigation resources. The FCC has reserved the right to designate additional services that will qualify. Even agreements that are already in place can qualify for funds if they run for a number of years.
But, not everything qualifies. For example, a school or library cannot use these funds to purchase computers, unless they are used exclusively as a telecommunications switch or an Internet server. There also is no advantage here to purchasing “bundles” of services. Funding cannot be obtained for contracts that include eligible and ineligible services under one bundled price. And a school or library cannot resell any service, or make it available to others for value.
Second, the school or library has to be willing to pay for at least some part of the price of those services itself. It has to be willing to assume a share of the cost.
Third, the services must be procured through competitive bidding. There are some quirks to this, including an expectation that the school or library will post the services desired on a Web site to increase the number of potential bidders.
Fourth, the school or library has to formally request the support, and confront the usual level of federal (and other) red tape. And it has to reapply each year. This is the case even for multiyear contracts. If a school or library gets funding in one year, there is no guarantee that discounts will remain in place at the same level from year to year. So there is a risk there.
Applicants for funds will have to meet basic information requirements, including submission of technology assessments and use plans. They will have to show state or other approval of these plans, and show that bids were sought, including the posting of service requirements on the fund Web site. Record keeping and certification also are anticipated.
However, when it qualifies, the school or library will get a generous–indeed hefty–discount from the telecommunications provider for the relevant services. These discounts run from a low of 20 percent to a high of 90 percent! The basic discount objective is specified in the statute: It must be “a discount sufficient to ensure affordable access.” Congress intended that discounts need not be uniform or identical from area to area, as long as they are based on two things: use of the “lowest comparable price” as a base for the services selected, and application of a discount that reflects the “community’s ability to pay.”
The discount itself is based on two factors. One factor is determined according to whether the school or library is in an area that is urban or rural, based on the classifications used by the Federal Office of Rural Health Policy. The other factor is set according to the percentage of children in the relevant public school district that qualify for the federal school lunch program. For example, an urban school with 20 percent of its children eligible for the school lunch program can apply for a discount of 50 percent off of the price of qualifying services. If 75 percent of a school’s children are eligible for the school lunch program, they can apply for the highest discount: 90 percent off the price for qualifying services. A library discount is set according to the district in which the library operates. The rural-urban distinction is eliminated at the highest levels. These discounts should be irresistible.
Schools and libraries can use the local telecommunications utility or elect to use someone else. The provider need not be a traditional telecommunications firm–in fact, the FCC indicated that it need not even be a common carrier! This means that a school can select just about any vendor it finds to be appropriate. This is more likely for internal classroom connections, because wiring has been mostly deregulated for a decade.
New York was willing to match the federal discount levels for state-regulated services, an action that also triggered federal eligibility here. Carriers will be filing their proposed discount plans soon. There was wide support in the state (among all the carriers and special groups like the New York Committee for Schools and Libraries) for a state-level program that would generally mirror the FCC program, to prevent the extra costs of redundant or conflicting administration. Careful implementation can keep costs down.
So why am I, generally a foe of subsidies, supporting schools and libraries and encouraging them to seek money from this program, despite its inefficiencies? Quite simply, a lot of money is going to be there for those who ask for it first. The program is a fact. And the program is set up so that all service providers in this area, like Frontier Telephone of Rochester Inc. or Citizens Communications, are not going to be penalized unless there are some large anomalies that develop.
Most of all, if more of this money can be brought to the Empire State, particularly to this area, the state’s schools, libraries, students, communities and future employers will be better off in the long run. So, go for it. Now!
Martin McCue is corporate vice president of planning and legal services for Frontier Corp.

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