Policy

Why the FCC’s E-rate Makes Funding High-Speed Internet a Slow Crawl

By Stephen Noonoo     Aug 7, 2018

Why the FCC’s E-rate Makes Funding High-Speed Internet a Slow Crawl

It’s one of the cruelest ironies in education: today’s schools must build and maintain robust high-speed, fiber-optic internet connections. But the process involved in finding funds for these upgrades can feel like a laggy dial-up modem, slow to a crawl—when it’s not cutting out completely.

For more than 20 years, the Federal Communications Commission has directed the multi-billion dollar E-rate program, which provides taxpayer-supported construction and service discounts that districts and libraries can use toward internet costs. The program isn't static, and changes big and small continue to shape its direction. In 2014, the FCC modernized the E-rate program, raising the overall funding cap to about $4 billion, making more money available for schools and libraries.

But along with modernization came EPC—pronounced “epic”—an online application portal, which critics say has caused numerous delays and a spate of application rejections around fiber internet construction.

Originally developed to help streamline the process, applicants charge the EPC system with losing completed applications due to glitches, being confusing to navigate and making it tough to input and sort relevant data, according to a recent anonymous survey of applicants conducted by E-rate consulting firm Funds For Learning.

“The implementation of EPC, while a good idea in theory, has contributed significantly to the increase in complexity,” wrote one applicant in the survey’s comments section. “It was not ready when it was introduced; is not operationally intuitive; and requires too much experience to use efficiently and effectively.” Another took a Trumpian tone, describing it as a “Total disaster.”

The silver lining? It’s not quite as bad as it was in previous years. In 2017, the same survey reported 44 percent of respondents found the EPC portal “difficult to use,” compared with 50 percent in 2015 and 2016. A quarter of respondents rated the system neither easy nor difficult in the 2017 survey. (2018 applications are still in process.)

Funds for Learning survey question
Source: Funds for Learning

“Some of the steps they're taking to improve the program seem to be taking hold,” says John Harrington, CEO of Funds for Learning. “It’s not mission accomplished yet, but it’s encouraging.”

Delayed Gratification

System issues such as IT glitches are improving, and after going through the process a few times applicants are starting to adjust. “Anytime you implement a new system you are going to have challenges,” says Radha Sekar, the CEO of the Universal Service Administrative Company, or USAC, which built the EPC portal and administers the E-rate program for the FCC.

Sekar was appointed in January 2018 after her predecessor, Chris Henderson, resigned following a blistering takedown from FCC Chairman Ajit Pai on the EPC system’s shortcomings. “My immediate reaction was, since it’s a new system, there were a lot of growing pains associated with it from all parties,” she says.

Delays still plague the process. Each year the application process opens in January and closes in March. Last year, USAC expected to have all applications processed by September. Today, many remain unprocessed. In fact, some applicants are still waiting on funding they applied for back in 2016. In June, Alabama’s governor Kay Ivey sent a letter to the FCC relating to $32 million in E-rate funds her state was still waiting on. Governors in Texas and Montana have issued similar complaints.

Even more troublesome than the delays are flat-out denials, says Evan Marwell, CEO of EducationSuperHighway, a nonprofit that advocates for improved broadband in schools. As part of the E-rate modernization process, the FCC broadened the kinds of fiber networks eligible for discounts. They now include so-called dark and lit fiber leases, as well as special construction projects to run new fiber lines.

According to EducationSuperHighway, as of last year there were more than 2,000 schools in the U.S. that still lacked fiber connections. And out of the 279 fiber projects submitted through E-rate in 2017, only three had received a decision by the Sept. 1 target date. This year, there were 347 such requests—for about $440 million in new broadband construction—and only a small fraction have received responses so far. (The organization also lists its complaints on a special website, delaysanddenials.org.)

Access Denied

When the replies do come, they’re not always good news. Fiber proposals are often the most difficult to get approved, and they’re denied about 10 times more than normal funding requests, according to a Funds for Learning analysis.

“In many cases we found those denials were unfair and made for spurious reasons,” Marwell claims. Many rejections come down to technicalities and minor discrepancies found in a battery of complicated paperwork, according to the same analysis. Others were denied due to arcane regulations, which rarely match applicants’ actual experience getting bids and planning construction.

For example, Marwell says, until recently USAC regulations prohibited schools from including slack—or a few extra feet of line—in proposals, citing it as an unnecessary cost. Yet if the lines break, slack can help pull two severed lines together, saving money in the long run. Schools are also penalized if their proposed construction does not follow the shortest possible path—even if that route intersects with rivers or railroad tracks—both of which can hike overall prices.

Those rules are all thanks to an unpublished theoretical cost model built by academics that is based on geography and cost-per-foot financial assumptions, Marwell says. “You look at the way they’re reviewing things and it makes no sense,” he adds. “It’s a lack of understanding of broadband systems that’s creating these problems.”

Speeding Up the Process

Part of the problem may lie in who is actually reviewing the applications. For E-rate, the FCC sets the agenda and makes top-level decisions, and USAC sets the guidelines for reviewing applications—work they pass along to Solix, the third-party vendor that has processed and reviewed these forms for years.

“Our sense from our interactions is that the folks at Solix don’t understand broadband networks,” says Marwell, adding that they’re mostly concerned with rigidly following regulations, even when they don’t make sense for a given situation. “We have given feedback to USAC and the FCC that Solix needs more broadband expertise. We’ve even offered to go in and train them.”

Solix declined to comment, referring all questions back to USAC. Sekar’s view on Solix was relatively non-committal, although she did say that it came as a surprise when she first realized that Solix did much of the review process around applications. She has made it a focus of her administration to train USAC staff to be able to conduct application reviews themselves.

As to Solix’s overall performance? “They have been here 20 years, I have been here seven months. It will take me a little longer to judge how they are performing,” she says. “Are they meeting the requirements of our statement of work? I would say yes.”

Sekar’s directive to USAC to be more proactive in reviewing applications is part of a larger strategy designed to look for ways to streamline approvals in response to criticism. She pulled out half of the 35-member E-rate team to work on a long-term project to identify areas where they can improve the process. She calls them the “believers,” in that they were the ones most gung-ho about change.

The believer team is looking at user frustrations and challenges, as well as how to make the EPC system more user-friendly and to develop a quality-control system with Solix to help them make more accurate decisions while applications are still in review.

“If you take a big approach to modernizing the E-rate program, you will never be successful,” Sekar says. “So we are taking one chunk at a time and fixing it.”

Any improvements to the system won’t be immediately apparent though; major changes can’t be implemented until 2019. Yet within that limiting framework, Marwell says there are fixes USAC could make if so inclined. Many have to do with the way reviewers interpret rules.

One example: the cardinal change rule, which requires applicants to notify all the telecom companies it has requested bids from if they make a significant change to their application or its terms. Yet “what constitutes a significant change is highly interpretive and subjective,” Marwell says. He also cites districts who have been denied after the theoretical cost model deemed the telecom bids in the application too expensive—even if they received only a single bid. “The applicants have no idea why it costs so much and yet that’s the only bid in the marketplace.”

Still, the Funds for Learning survey indicates that the post-modernization application process is getting somewhat easier to navigate each year. Many, like Harrington and even Marwell, see Sekar’s leadership as cause for cautious optimism. In short, things are getting better, but the layers of red tape and delays only hurt students in under-connected areas who may not have the same perspective on time as USAC and the FCC.

“For you and me, if a connection is wonky in Starbucks, we finish our latte and leave. The kids don't have that option,” Harrington says. “I used to say we live in a connected world. That's a misnomer—we live in a need-to-be-connected world and we're not all connected. The E-rate program isn't going to solve all that but it can play a huge role.”

Why the FCC’s E-rate Makes Funding High-Speed Internet a Slow Crawl

Policy

Why the FCC’s E-rate Makes Funding High-Speed Internet a Slow Crawl

By Stephen Noonoo     Aug 7, 2018

Why the FCC’s E-rate Makes Funding High-Speed Internet a Slow Crawl

It’s one of the cruelest ironies in education: today’s schools must build and maintain robust high-speed, fiber-optic internet connections. But the process involved in finding funds for these upgrades can feel like a laggy dial-up modem, slow to a crawl—when it’s not cutting out completely.

For more than 20 years, the Federal Communications Commission has directed the multi-billion dollar E-rate program, which provides taxpayer-supported construction and service discounts that districts and libraries can use toward internet costs. The program isn't static, and changes big and small continue to shape its direction. In 2014, the FCC modernized the E-rate program, raising the overall funding cap to about $4 billion, making more money available for schools and libraries.

But along with modernization came EPC—pronounced “epic”—an online application portal, which critics say has caused numerous delays and a spate of application rejections around fiber internet construction.

Originally developed to help streamline the process, applicants charge the EPC system with losing completed applications due to glitches, being confusing to navigate and making it tough to input and sort relevant data, according to a recent anonymous survey of applicants conducted by E-rate consulting firm Funds For Learning.

“The implementation of EPC, while a good idea in theory, has contributed significantly to the increase in complexity,” wrote one applicant in the survey’s comments section. “It was not ready when it was introduced; is not operationally intuitive; and requires too much experience to use efficiently and effectively.” Another took a Trumpian tone, describing it as a “Total disaster.”

The silver lining? It’s not quite as bad as it was in previous years. In 2017, the same survey reported 44 percent of respondents found the EPC portal “difficult to use,” compared with 50 percent in 2015 and 2016. A quarter of respondents rated the system neither easy nor difficult in the 2017 survey. (2018 applications are still in process.)

Funds for Learning survey question
Source: Funds for Learning

“Some of the steps they're taking to improve the program seem to be taking hold,” says John Harrington, CEO of Funds for Learning. “It’s not mission accomplished yet, but it’s encouraging.”

Delayed Gratification

System issues such as IT glitches are improving, and after going through the process a few times applicants are starting to adjust. “Anytime you implement a new system you are going to have challenges,” says Radha Sekar, the CEO of the Universal Service Administrative Company, or USAC, which built the EPC portal and administers the E-rate program for the FCC.

Sekar was appointed in January 2018 after her predecessor, Chris Henderson, resigned following a blistering takedown from FCC Chairman Ajit Pai on the EPC system’s shortcomings. “My immediate reaction was, since it’s a new system, there were a lot of growing pains associated with it from all parties,” she says.

Delays still plague the process. Each year the application process opens in January and closes in March. Last year, USAC expected to have all applications processed by September. Today, many remain unprocessed. In fact, some applicants are still waiting on funding they applied for back in 2016. In June, Alabama’s governor Kay Ivey sent a letter to the FCC relating to $32 million in E-rate funds her state was still waiting on. Governors in Texas and Montana have issued similar complaints.

Even more troublesome than the delays are flat-out denials, says Evan Marwell, CEO of EducationSuperHighway, a nonprofit that advocates for improved broadband in schools. As part of the E-rate modernization process, the FCC broadened the kinds of fiber networks eligible for discounts. They now include so-called dark and lit fiber leases, as well as special construction projects to run new fiber lines.

According to EducationSuperHighway, as of last year there were more than 2,000 schools in the U.S. that still lacked fiber connections. And out of the 279 fiber projects submitted through E-rate in 2017, only three had received a decision by the Sept. 1 target date. This year, there were 347 such requests—for about $440 million in new broadband construction—and only a small fraction have received responses so far. (The organization also lists its complaints on a special website, delaysanddenials.org.)

Access Denied

When the replies do come, they’re not always good news. Fiber proposals are often the most difficult to get approved, and they’re denied about 10 times more than normal funding requests, according to a Funds for Learning analysis.

“In many cases we found those denials were unfair and made for spurious reasons,” Marwell claims. Many rejections come down to technicalities and minor discrepancies found in a battery of complicated paperwork, according to the same analysis. Others were denied due to arcane regulations, which rarely match applicants’ actual experience getting bids and planning construction.

For example, Marwell says, until recently USAC regulations prohibited schools from including slack—or a few extra feet of line—in proposals, citing it as an unnecessary cost. Yet if the lines break, slack can help pull two severed lines together, saving money in the long run. Schools are also penalized if their proposed construction does not follow the shortest possible path—even if that route intersects with rivers or railroad tracks—both of which can hike overall prices.

Those rules are all thanks to an unpublished theoretical cost model built by academics that is based on geography and cost-per-foot financial assumptions, Marwell says. “You look at the way they’re reviewing things and it makes no sense,” he adds. “It’s a lack of understanding of broadband systems that’s creating these problems.”

Speeding Up the Process

Part of the problem may lie in who is actually reviewing the applications. For E-rate, the FCC sets the agenda and makes top-level decisions, and USAC sets the guidelines for reviewing applications—work they pass along to Solix, the third-party vendor that has processed and reviewed these forms for years.

“Our sense from our interactions is that the folks at Solix don’t understand broadband networks,” says Marwell, adding that they’re mostly concerned with rigidly following regulations, even when they don’t make sense for a given situation. “We have given feedback to USAC and the FCC that Solix needs more broadband expertise. We’ve even offered to go in and train them.”

Solix declined to comment, referring all questions back to USAC. Sekar’s view on Solix was relatively non-committal, although she did say that it came as a surprise when she first realized that Solix did much of the review process around applications. She has made it a focus of her administration to train USAC staff to be able to conduct application reviews themselves.

As to Solix’s overall performance? “They have been here 20 years, I have been here seven months. It will take me a little longer to judge how they are performing,” she says. “Are they meeting the requirements of our statement of work? I would say yes.”

Sekar’s directive to USAC to be more proactive in reviewing applications is part of a larger strategy designed to look for ways to streamline approvals in response to criticism. She pulled out half of the 35-member E-rate team to work on a long-term project to identify areas where they can improve the process. She calls them the “believers,” in that they were the ones most gung-ho about change.

The believer team is looking at user frustrations and challenges, as well as how to make the EPC system more user-friendly and to develop a quality-control system with Solix to help them make more accurate decisions while applications are still in review.

“If you take a big approach to modernizing the E-rate program, you will never be successful,” Sekar says. “So we are taking one chunk at a time and fixing it.”

Any improvements to the system won’t be immediately apparent though; major changes can’t be implemented until 2019. Yet within that limiting framework, Marwell says there are fixes USAC could make if so inclined. Many have to do with the way reviewers interpret rules.

One example: the cardinal change rule, which requires applicants to notify all the telecom companies it has requested bids from if they make a significant change to their application or its terms. Yet “what constitutes a significant change is highly interpretive and subjective,” Marwell says. He also cites districts who have been denied after the theoretical cost model deemed the telecom bids in the application too expensive—even if they received only a single bid. “The applicants have no idea why it costs so much and yet that’s the only bid in the marketplace.”

Still, the Funds for Learning survey indicates that the post-modernization application process is getting somewhat easier to navigate each year. Many, like Harrington and even Marwell, see Sekar’s leadership as cause for cautious optimism. In short, things are getting better, but the layers of red tape and delays only hurt students in under-connected areas who may not have the same perspective on time as USAC and the FCC.

“For you and me, if a connection is wonky in Starbucks, we finish our latte and leave. The kids don't have that option,” Harrington says. “I used to say we live in a connected world. That's a misnomer—we live in a need-to-be-connected world and we're not all connected. The E-rate program isn't going to solve all that but it can play a huge role.”

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