E-Rate is a Federal Communications Commission (FCC) program aimed at the telecommunications and technology industry. It is actually administered by the Schools and Libraries Division of the Universal Service Administration (www.sl.universalservice.org). The program has a reported annual value of $2.25 billion, not a bad chunk of change for the communication industry. It was initially outlined within the context of the Telecommunications Act of 1996.
According to EdLiNC (Education and Library Networks Coalition, www.edlinc.org), the program has provided Internet access at a discounted rate to 87 percent of private schools and 95 percent of public schools since its inception.
Sounds complex, and, like most government programs, it can be. But don’t let that scare you off.
The program provides schools (public and private) and libraries with what the program refers to as “discounts” on various telecommunications, Internet and connection products and services. Many discount programs don’t provide any significant savings, but in the case of E-Rate, the discounts range anywhere from 20 to 90 percent of the total cost. Not a bad deal, especially for non-profits. Budgets rule most companies, but this particular market is even more burdened by such restraints so any savings that can be realized are appreciated, regardless of the rules surrounding them.
Many have wondered about the discount range, especially since it is broad. The discount is based on the National Free Lunch Program. For students to qualify for the lunch program, their families must fall into a certain income category. Reasoning behind the correlation to communications is that if a certain school district has more students on the lunch program, they most likely have less available funds for such “luxuries” as Internet connections and videoconferencing. Therefore, the more students that are enrolled in the lunch program, the higher the E-Rate discount.
In fact, many people are aware of the funding side of the program and they don’t even know it. On everyone’s monthly phone bill there appears the Universal Service Fund (USF) charge. This is a line item charge on both residential and commercial phone accounts; all those fees go into one big pot from which E-Rate is funded.
Getting on board
An important first step as far as service providers go is to acquire a SPIN. The Service Provider Identification Number is necessary since it shows potential customers (schools, etc.) that you, as a company, have taken the time to learn at least a little about the program. This is a key element, since there is a dual role for providers in this program.
Not only do service providers need to work in a traditional capacity (design, installation, etc.), but they also need to do a little legwork on the back end as well. Mainly, they will have forms and paperwork to complete so the facility can receive its appropriate discount.
Schools and libraries solicit providers to supply quotes. After that, things run the same as with any other bid environment project, until the end when the paperwork needs to be filled out and submitted for the discount. Once that is done, the rebate check is sent to either the school or provider. Some providers find that if the check is sent to them, it requires some additional paperwork—either signing over the rebate or issuing a check for the rebate amount.
Many have balked at this notion, since providers need to do extra work, essentially for nothing. Or so they think. Understanding both the program and process can yield a marketing advantage. Promoting your company as one that participates in E-Rate can have positive effects on your bottom line.
Keep in mind that this program has come under fire in the past and is likely to continue to have its detractors in the future. Many have made claims that service providers raise their rates, provide inadequate service and such. For this reason, Congress has been debating the validity and necessity of E-Rate, with a fraud hotline established to help protect the program. E-Rate now utilizes a debarment and suspension list not unlike many federal and state vendor programs. The move may seem a bit much, but it has helped to calm down the fuss.
In the long run, who is to say whether E-Rate has staying power or not? The jury may not have come to a decision yet, but for now, E-Rate is something that helps make communications technology more affordable for schools and libraries. EC