FCC chairman Ajit Pai continues to make it clear that, as he reads the law, the FCC cannot use E-Rate subsidies for school and library connectivity for home broadband for distance learning.

E-Rate is the Universal Service Fund advanced telecommunications subsidy for high-speed broadband access for schools and libraries. 

Related: FCC Working with DOE to Promote Ed Tech Funding Availability

He spelled out his position in a letter to Sen. Amy Klobuchar (D-Minn.) the FCC has released. 

Pai said he recognizes that schools have had to change the way they teach due to the pandemic and that "it is critical that parents and students stay connected so that they can participate in online learning from home during this crisis."  

But he remains adamant that the language of the statute is clear. 

"[W]e face a major barrier: The Communications Act, which the FCC is duty-bound to administer. He said the Act "expressly limits the FCC's use of E-Rate program funding to broadband and other services delivered to school 'classrooms' and libraries. Connectivity and devices supplied to students at home unfortunately do not qualify for E-Rate support under the law." 

Related: Educators Say Distance Learning Dollars, Equity, Are Keys to Reopening Schools

Sen. Richard Blumenthal (D-Conn.) suggested to Pai during an FCC oversight hearing that his reading was too narrow and Congress was OK with him interpreting classroom to mean the new home classroom necessitated by COVID-19, but Pai didn't budge. But he has told Congress he would be happy to spend the E-Rate money on distance learning if Congress changes the statutory language. 

Related: Senate Dems introduce $4 Billion E-Rate Bill 

Pai pointed out to Klobuchar, as he has to others, that there is $16 billion in CARES Act COVID-19 aid funding that states and localities can tap for home connectivity if they choose. He said there is also $3 billion in emergency grants in the Governor's Emergency Education Relief Funds that could be used for remote learning.

He said the FCC has been working with the Department of Education to educate schools on the availability of that local funding.

FCC chairman Ajit Pai said that while the FCC's hands are tied when it comes to applying E-rate schools and libraries funding to remote learning during the pandemic, there are billions of dollars that could already be applied to that purpose that Congress has already allocated and the FCC is working on getting educators to spend on education tech. 

Related: Pai Tells Hill FCC Will Vote on Broadband Mapping Item in July

Pai explained that funding route on a webcast Thursday (June 25) with Bruce Mehlman, IIA Founding co-chairman and former Assistant Secretary of Commerce for Tech Policy. 

Pai pointed out, as he did in a Senate Commerce Committee FCC oversight hearing June 24, that since the statute specifies that E-rate funding goes to "classroom" connectivity and tech, it can't be spent on home connectivity.  

During the hearing, Sen. Richard Blumenthal (D-Conn.) pressed Pai to find a way to revise classroom to include home, saying he thought the chairman had the power to do so. 

Related: Republicans Unveil Broadband Buildout Bill Blitz

Pai said in the webinar that he understood the frustration, and had asked Congress to clear away that statutory language impediment, in the meantime, and while some people suggest the FCC can just waive statutory language, as a lawyer he knows that is not the case. 

But he also pointed out on the webinar that the CARES Act COVID-19 aid bill allocated $16 billion for schools and that the FCC was working with the Department of Education to let schools know that one of the things that money could be used for is educational tech. 

Pai said that working together, schools and the FCC can provide a holistic approach to distance learning and get students the connectivity they need.  

Senate Democrats plan to double down, literally, on a planned House investment in distance education given what looks like a longer break from physical school during the pandemic. 

Sens. Ed Markey (D-Mass.), Chris Van Hollen (D-Md.), Michael Bennet (D-Colo.), and Maggie Hassan (D-N.H.) plan to introduce a companion bill to the Emergency Educational Connections Act, introduced in the House, but with one change: They are increasing the House's $2 billion appropriation for ensuring K-12 students have access to home internet connectivity and devices during the pandemic to $4 billion. 

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The money would come from the FCC's E-Rate schools and libraries subsidy--under a program that Markey was a driving force behind.  

The senators said that was because the House bill anticipated they need only through the end of this academic year, while in the interim more educators "have come to realize the crisis will last far longer."   

That announcement came the same day the federal government planned to lift stay-at-home guidelines (April 30) and the governor of California was signaling its schools might reopen in July, with social distancing. 

“The coronavirus pandemic has exacerbated our existing ‘homework gap’ and spurred a growing ‘learning gap’ that will have a lasting impact on America’s children,” the senators said in a joint statement. “Given the magnitude of this pandemic and its effects on teaching, we must increase our investment beyond $2 billion to $4 billion. Our students come first, and we cannot allow any of them to fall behind as a result of this crisis. We are proud to enjoy the support of more than 50 organizations that focus every day on educating and protecting our nation’s youth.”

The FCC has confirmed that schools and libraries can open up their WiFi networks to the public during the coronavirus pandemic without losing e-rate funding. 

In response to queries by schools and libraries, the FCC's Wireline Competition Bureau has confirmed that schools or libraries closed due to the coronavirus can open up those networks and still get access to e-rate funding. 

The e-rate is a government subsidy for broadband service to anchor institutions.

The bureau said it was up to those individual institutions to establish use policies for those WiFi services, including hours of use, but advised them to follow health and safety guidelines on social distancing. 

The bureau also said it hoped the clarification will promote connectivity during the pandemic. 

Some Democratic Senators are calling on the FCC to free up E-rate schools and libraries broadband subsidy money to insure students have internet access at home. 

The E-rate provides schools and libraries "discounts on telecommunications, telecommunications services, and Internet access, as well as internal connections, managed internal broadband services and basic maintenance of internal connections." 

Related: Pai Asks ISPs for Coronavirus Help

Many libraries have also closed due to the coronavirus. 

In a letter to FCC chair Ajit Pai, they asked that the FCC allow the $2 billion as-yet unallocated $4 billion in the E-rate fund to be used for WiFi capability or devices for students who do not have internet access at home.  

Schools have been closed to millions of students and teachers are drawing up new distance learning curricula to keep teaching during the coronavirus-driven closures and quarantines and social distancing. 

They want the FCC to figure out how much can be spent on one-time discounts. The Democrats say the virus is revealing the the extent of the so-called homework gap, a reference to the 70% of teachers who give homework that requires internet access. 

They also want the FCC to "make it clear" to states and localities that undertake similar measures that it will not affect their future eligibility. 

“The E-Rate program is, and has been for over two decades, an essential source of funding to connect the nation’s schools and libraries to the internet,” they wrote. “We believe that the FCC can use its emergency powers to temporarily waive relevant E-rate program rules and allow its beneficiaries to utilize universal service funding to provide home wireless service to existing school devices and hotspots for students who lack internet access at home. This swift, immediate action would help ensure that all students can remotely continue their education during the current public health emergency.” 

Singing on to the letter were Sen. Ed Markey (D-Mass.), a driving force behind creation of the E-rate subsidy, and Sens. Dick Durbin (D-Ill.), Chris Van Hollen (D-Md.), Tammy Baldwin (D-Wis.), Kamala Harris (D-Calif.), Kirsten Gillibrand (D-N.Y.), Jack Reed (D-R.I.), Catherine Cortez Masto (D-Nev.), Patty Murray (D-Wash.), Mazie Hirono (D-Hawaii), Ron Wyden (D-Ore.), Elizabeth Warren (D-Mass.), Angus S. King, Jr. (I-Me.), and Maggie Hassan (D-N.H.). 

Independently, ISPs have already been taking numerous steps to make it easier for kids in families without broadband to bridge that distance learning gap in the age of coronavirus. 

Comcast, for one, is giving any low-income household with school-age children not currently getting Comcast broadband 60 days of free service with no contract, which means they could use the service with no obligation to continue once the virus is contained.

And beginning Monday (March 16) Altice USA is offering homes with students, including college students, free broadband for 60 days. 

AT&T is underwriting the cost of setting up a “one-stop” resource center to support the State Educational Technology Directors Association (SETDA), which is developing tools for parents, teachers and schools. 

In addition, a host of ISPs are opening their WiFi hotspots to nonsubs for free, which was one of the elements of a connectivity pledge FCC chairman Ajit Pai asked, and ISPs agreed, to sign. 

The FCC has eliminated the requirement that schools and libraries spread payments for high-speed broadband buildouts over three years. 

That came in an order by the commission released Monday (Jan. 27). 

The FCC in 2000 had required those schools and libraries to amortize any upfront payment of $500,000 or more for broadband buildouts under the FCC's E-rate subsidy program over three years, concerned that large up-front charges for upgrades or builds could drain available funding. 

Concerned the amortization provision could limit broadband buildouts, the FCC suspended it in 2014 through 2018, then in 2018 proposed eliminating it entirely, continuing the suspension until the proceeding had concluded, which now means when this order takes effect in 30 days after it is published in the Federal Register (It removes, rather than adds, paperwork requirements--having to apply for one year now, rather than three times--so does not require vetting under the Paperwork Reduction Act). 

The FCC concluded that concerns about the draining of the fund had not been well founded, and allowing for recovering costs upfront rather than over three years had boosted broadband buildouts. 

Commissioner Jessica Rosenworcel, who has made E-rate a signature issue, praised the move in a statement. 

"Thanks to E-Rate, schools and libraries in communities in every state are connected to the internet," she said. "As a result, this program is an essential part of promoting broadband access and opportunity across the country. Keeping it up to date is important and with this decision we do just that by eliminating an antiquated accounting policy that required the amortization of certain construction costs over several years. This is the right call." 

The FCC agrees with cable broadband providers that cloud-based services should be eligible for broadband subsidies under the Universal Service Fund's E-rate schools and libraries broadband subsidy. 

The commission had sought comment on its 2020 list of eligible services for the fund, and while it chose not to add new services to the list or make some other changes requested by some stakeholders, it did clear up the cloud issue. 

NCTA-The Internet & Television Association had said in its comments that "the Commission should make clear that, so long as the underlying function is eligible for E-rate support, virtualized services that perform the same function as a traditional hardware-based solution are eligible as well." (NCTA was talking particularly about cybersecurity equipment to protect against network attacks).  

Related: Markey Leads Countercharge Against USF Cap

The commission in 2014 found that some hardware and services could be virtualized and said those were eligible. NCTA wanted a clarification that any virtualized services that had been eligible when hardware-based were covered.  

The FCC agreed, but put it in an "only" context.   

In issuing the 2020 eligibility list this week, the FCC's Wireline Competition Bureau (the decision was at the bureau level rather than voted on by commissioners) said: "We address a request for clarification regarding the eligibility of virtualized equivalents of eligible services or equipment. In 2014, the Commission recognized that some category two functionalities can be virtualized in the cloud and perform the same functions as eligible internal connections equipment, and stated that such services are eligible for E-Rate funding. Accordingly, only virtualized solutions that perform the functions of eligible broadband internal connections are eligible for E-Rate funding." 

The head of the Universal Service Administrative Co., which administers broadband subsidies under the Universal Service Fund, said that E-Rate fund recipients can indeed overbuild existing fiber plant if it is the most cost-effective use of the subsidy to get advanced communications so schools and libraries.

That came in a letter to FCC commissioner Michael O'Rielly from USAC CEO Radha Sekar in response to an inquiry from O'Rielly.

O'Rielly last month had written Sekar seeking some answers on whether government broadband subsidies should be used to subsidize wide area networks (WANS) where government subsidies have already been used to lay fiber as well as how many of those were being subsidized. Sekar did not have an answer for the latter, saying USAC did not track whether the money was going to WANS or whether the money for WANS or other special projects was overbuilding.

"USAC does not have sufficient data to determine if approved special construction funding partially or fully overbuilds existing fiber networks," Sekar said.

But as to whether "the E-rate rules permit funding for special construction projects, whether self-provisioned networks or networks owned by a commercial provider, that would duplicate, in whole or in part, fiber networks that have been built using federal funds?" The answer was yes.

"If the cost of applicant ownership over the life of the network is less expensive than the cost of using an existing network, the applicant can be approved for fiber construction funding of their own network," the USAC CEO said.

And if a consortium builds a WAN, O'Rielly asked--there have been 43 consortia seeking funding since 2014, says USAC--can it get money for a WAN even if individual consortium members can get service from an existing provider, Sekar said yes, again so long as the WAN as that is the most cost-effective option.

USAC could not tell O'Rielly how much money had been given out for WANS--since USAC does not track that--but it did have a figure for special projects, of which WANS are a subset*: $202,399,488.79.

“USAC’s purported inability to identify and prevent the overbuilding problem previously described exposes the inadequacy of the Commission’s current E-Rate rules, as well as the dire need for better coordination among the USF programs," said a spokesperson for O'Rielly. "Given the low threshold for satisfying the so-called “cost-effectiveness” standard, it’s unsurprising that certain special construction applicants were able to game the rules and configure their applications to achieve a specific outcome. This is unacceptable and needs to change: funding overbuilding in areas served by an existing fiber-based provider—when millions of Americans don’t have any broadband service at all—is a waste of ratepayer money and the epitome of bad government.”

In a speech this week to NTCA – The Rural Broadband Association’s legislative and policy conference in D.C. O'Rielly said he would continue to fight the use of government broadband subsidy money to overbuild existing broadband service deployed with private capital, including from high-profile funds with laudable goals, like E-Rate.

He suggested that some were trying to hijack the E-rate and Rural Health Care Universal Service Fund (USF) programs to "cannibalize your service areas, steal the biggest and most lucrative clients around, and jeopardize your ability to serve remaining consumers." O'Rielly favors capping the USF fund. 

*The balance of "special projects" are last-mile buildouts from existing providers' networks.  

WASHINGTON — Federal Communications Commission member Michael O'Rielly told rural broadband providers Monday that he would continue to fight the use of government broadband subsidy money to overbuild existing broadband service deployed with private capital, including from high-profile funds with laudable goals.

That has been one of his signature issues, a signature he was glad to write large in a speech to NTCA – The Rural Broadband Association’s legislative and policy conference in D.C.

O'Rielly has both sides of the conference covered, having dealt with legislation, including the 1996 Telecom Act, as a hill staffer, and with policy implementation at the FCC.

O'Rielly has long been working to expose efforts by the FCC and other agencies to use federal funds to overbuild their networks.

RELATED:O'Rielly Grills USAC on E-Rate Overbuilding

He suggested that some were trying to hijack the E-rate and Rural Health Care Universal Service Fund (USF) programs to "cannibalize your service areas, steal the biggest and most lucrative clients around, and jeopardize your ability to serve remaining consumers." O'Rielly favors capping the USF fund.

Last month, O'Rielly asked the USF administrator whether E-rate subsidies should be used to fund wide area networks (WANs) where government subsidies have already been used to lay fiber. 

The Republican commissioner told NTCA that the result is that scarce funds are diverted from unserved areas that most need them.

O'Rielly focused on specialized networks for E-rate and healthcare that have been funded "notwithstanding the fact that existing local providers could and would be willing to carry any necessary traffic and offer the requisite services."

He suggested those funds were being manipulated by "certain applicants," that "can only be met by a select, hand-chosen provider, sometimes the applicant itself under a self- provisioning scheme."

He says those networks were being allowed to "steal" customers from rural broadband providers, customers that could be critical to their viability.

He also warned about billions in Farm Bill broadband subsidies being used to overbuild.

"Thankfully, there is general agreement that the USDA must coordinate with the FCC to keep this from happening," he said. "However, coordination doesn’t mean a ban on overbuilding; it can mean as little as having a conversation between government agencies."

He told them to be on the lookout for "new pots of funding — such as potential federal infrastructure funding — that could create similar mischief."

O'Rielly said few were willing to tackle such overbuilding issues because "just talking about restricting E-Rate, Rural Health Care, or USDA funding provokes outrage by particular interest groups … Many of these entities don’t want any restrictions imposed on their ability to get federal funds, no matter the purposes."

But he suggested it was a tough job he felt it was his duty to tackle as a government official charged with making sure that all Americans have access to broadband. "Every dollar wasted to overbuild existing provider networks comes at the expense of those Americans without broadband service."

ISPs, including rural providers, have joined O'Rielly in arguing that money should be targeted to unserved areas, rather than underserved.