FCC Expands E-Rate Program to Cover Non-Educational Services

February 18, 2010. The Federal Communications Commission (FCC) adopted, but did not release, an Order and Notice of Proposed Rulemaking that expands the FCC's e-rate tax and subsidy program to cover non-educational uses.

The FCC issued only a short release, and the five Commissioners made brief statements. The release states that the FCC will now allow "members of the general public to use the schools' Internet access during non-operating hours".

The FCC's release states that the order portion of the just adopted item "is effective from adoption of the order through funding year 2010 (which ends June 30, 2011)." (Parentheses in original.) Then, the NPRM portion of this item "seeks comment on revising the Commission's rules to make today's change permanent".

All five Commissioners voted in favor of this item. See also, Genachowski statement, Copps statement, McDowell statement, and Clyburn statement. Baker did not release a written statement, but praised the item at the meeting.

Lack of Statutory Authority. The FCC's release states that its "rules require schools to certify that they will use E-rate funded services solely for ``educational purposes,´´ ..."

There is a reason for this limitation. The underlying statute limits the use of e-rate subsidized services to "educational purposes". See, 47 U.S.C. § 254(h)(1)(B). Thus, the FCC is exceeding its statutory authority in issuing this order. But then, since the inception of the e-rate over a decade ago, the FCC has played fast and loose with this legislative mandate.

The statute provides that e-rate subsidies can only be used for "services to elementary schools, secondary schools, and libraries for educational purposes". The statute adds the the FCC set subsidy must be "necessary to ensure affordable access to and use of such services by such entities".

FCC Makes Stevens Rule Nationwide. There is, however, a precedent for this action. Back in 2001, when Ted Stevens (at right) was a Senator from Alaska, and a senior member of the Senate Commerce Committee (SCC), the FCC adopted an order that permitted schools and libraries in "rural remote communities" in the state of Alaska that receive e-rate subsidies to allow their facilities to be used by the general public to receive telecommunications and internet services.

The Stevens rule was premised on the fact that it would affect only a small number of remote spots in Alaska, and have little impact on e-rate spending.

The FCC's latest action, in effect, applies the Stevens rule nationwide.

The FCC adopted that order [PDF] on November 29, 2001, and released it on December 3, 2001. It is FCC 01-350 in Docket No. 96-45, the FCC's eternal universal service proceeding. See also, notice in the Federal Register, December 28, 2001, Vol. 66, No. 249, at Pages 67112 - 67114.

See also, story titled "FCC Allows E-Rate Funds to Support Non Educational Uses" in TLJ Daily E-Mail Alert No. 336, December 31, 2001.

Also, while the statute, which was enacted in 1996, does not authorize this use, it should be noted that during debate in 1998 over how to implement the statute, the then Chief of Staff of the FCC, John Nakahata, argued that the e-rate should be implemented to allow general public access.

Nakahata argued that schools and libraries should serve as "community access points". See, story titled "FCC and CATO Debate Universal Service to the Internet and the Schools & Libraries Corp.", Tech Law Journal, May 13, 1998. Nakahata is now a partner at the law firm of Wiltshire & Grannis.

2008 NPRM. The just released order follows a NPRM issued by the FCC in 2008.

The just adopted item is FCC 10-33 in CC Docket No. 02-6. The FCC adopted an NPRM in this docket on July 25, 2008, and released the text [26 pages in PDF] on July 31, 2008. That NPRM is FCC 08-173. See also, notice in the Federal Register, August 19, 2008, Vol. 73, No. 161, at Pages 48352-48359.

That NPRM asked for comment on whether the FCC should expand the e-rate program to cover such things as "filtering software, a broader classification of basic telephone service, dark fiber, text messaging, firewall service, anti-virus/anti-spam software, scheduling services, telephone broadcast messaging, and certain wireless Internet access applications".

The FCC did not propose in its 2008 NPRM expanding the e-rate to allow use by the "general public". Perhaps that is a reason why the FCC issued an order that covers only one funding year, and issued a new NPRM. (Alternatively, the interim nature of this order may be due to a recognition of the lack of statutory authority.) The FCC staff who presented this item left the FCC Commission Meeting Room without holding the usual news conference to answer such questions.

Likely Impact on Demand for E-Rate Subsidies. The FCC's order opens up school systems to a vast number of additional users with potentially huge time and bandwidth demands. Moreover, public schools are ultimately directed by schools boards whose members are elected by this new group of users. Many of these users will expect that school computer systems be modified to satisfy their demands.

The FCC wrote in its release that schools receiving e-rate subsidies will still not be "permitted to request more services than are necessary for ``educational purposes´´".

Commissioner Robert McDowell wrote in his statement that "the change in our rules should not inadvertently put an increased demand on the E-Rate program. It should not provide a backdoor way for schools to request more funds than necessary to support their student populations".

Some school districts in areas where there is no broadband provider may determine to provide broadband wireless access to their systems, and thereby offer an FCC funded form of municipal broadband. The FCC's release says nothing about this. Perhaps it should be recalled that one of the reasons for adopting the Stevens rule in 2001 was to allow residents in rural areas where there was no ISP to avail themselves of e-rate funded satellite connections.

The e-rate program is already plagued with waste, fraud and abuse. Criminal prosecutions have been frequent. The FCC may find it incapable of stopping schools from seeking further or increased subsidies to modify their systems, and increase their bandwidth, to provide service to the general public.

This may result in increased demands for e-rate subsidies. This in turn would increase pressure on the FCC and the Congress to increase the annual subsidy level above the current $2.25 Billion per year. And, if the level is increased, this would lead to higher taxes on communications services.

Internet Porn and the E-Rate. Both the Congress and the federal courts spent a considerable amount of time grappling with issues related to the blocking of access to pornography on the internet on e-rate funded computer systems. That history is long, complex, heated and tempestuous.

The issue was settled by 2003. However, the FCC's latest action could rekindle some of the old flames.

In short, after much debate, the 106th Congress enacted the Children's Internet Protection Act (CIPA), ultimately as Title VI of a large omnibus spending bill, HR 4577. President Clinton signed the bill into law on December 21, 2000. It is now Public Law No. 106-554.

The CIPA requires schools and libraries receiving e-rate subsidies under 47 U.S.C. § 254, and libraries receiving grants under the Library Services and Technology Act (20 U.S.C. § 9101 et seq.), as a condition for receiving subsidies or grants, to use filtering technologies on computers with internet access that are used by children, and to filter images that constitute obscenity or child pornography.

There were immediate legal challenges to the CIPA, as it applied to libraries, but not to schools. Initially, a three judge panel of the U.S. District Court (EDPa) held the statute unconstitutional as a violation of the First Amendment. It held that filtering software is a content based restriction on access to a public forum, and is therefore subject to the strict scrutiny test. That is, it must be necessary to achieve a compelling governmental interest, and be narrowly tailored to further that interest. See, May 31, 2002, opinion in American Library Association v. U.S., 201 F. Supp. 2d 401, and story titled "District Court Holds Part of Children's Internet Protection Act Unconstitutional" in TLJ Daily E-Mail Alert No. 442, June 3, 2002.

Then, the Supreme Court reversed, upholding the Constitutionality of the CIPA, as it applies to libraries. Nevertheless, no single opinion was joined by a majority of the Court. See, June 23, 2003, opinion in U.S. v. American Library Association, 593 U.S. 194, and story titled "Supreme Court Upholds Children's Internet Protection Act" in TLJ Daily E-Mail Alert No. 686, June 24, 2003.

Whatever the FCC includes in it rules, and however schools handle filtering during after school hours, disputes may arise. When the Congress enacted the CIPA, it was understood that schools were only for educational purposes. The FCC is now changing that. School computer systems designed for filtered use by children will now be used by adults demanding unfiltered access. Moreover, the Supreme Court's opinion only addressed libraries. The Constitutionality of the CIPA as it applies to schools would therefore be a question of first impression.

It is possible that adults seeking unfiltered access on computer systems at schools that run porn filtering software will complain, and/or file lawsuits alleging violation of their First Amendment rights. Conversely, parents in school districts that provide unfiltered access may complain about their schools being used for porn access, perhaps in the presence of students doing homework. People also tend to take these sorts of complaints to their Congressional offices.

Perhaps Congressional staffers will give them Julius Genachowski's direct phone number.