Iowa City, IA (May 2, 2019) – The Schools and Libraries Program of the federal Universal Service Fund, also known as the “E-rate Program,” provides billions of dollars each year to support educational connectivity in schools and libraries across the country.
Within the E-rate Program, “Category 1” subsidies are provided in the form of “discounts” off of broadband services based on two factors: financial need (as determined by a school district’s participation in the National School Lunch Program) and location (whether or not the district is located in a rural area). Discounts can range anywhere between 40% and 90% depending on these factors.
Unfortunately, despite the significant amount of money allocated to the program, many school districts still lack adequate connectivity—either because they lack physical access to fiber broadband infrastructure or because competition is so limited that even the discounted prices available to districts are more than they can afford. This means they are scraping by on slower connections.
The problem is often exacerbated by the fact that many rural districts fend for themselves—bidding for services on a metaphorical island rather than collaborating on a regional or statewide basis to maximize their buying power.
As Connected Nation has recently proven in Iowa, districts that organize and collaborate across district boundaries can maximize the return from E-rate by incentivizing regional competition—including bringing new broadband entrants into the market—in a way that ultimately lowers costs, improves network performance, and prepares districts to scale in the future to meet future needs.
In late 2018, school districts in eastern Iowa learned that the state’s first Internet Exchange Point would be established near Iowa City and the University of Iowa as a result of an investment made by New York-based Allied Colo. This facility—which will be operational this summer as a carrier-neutral colocation, interconnection, and peering facility—is being built near existing commercial long-haul, commercial metro, municipal, school district, and university fiber.
With its prime location, the facility is well-positioned to serve as a neutral marketplace for broadband carrier competition and interconnection. This makes it an ideal venue for commodity internet aggregation and access to Layer 2/WAN services across multiple carriers.
How School Districts Benefitted
Working with the Grant Wood Area Education Agency, the districts formed a consortium and sought proposals from providers on shared commodity internet, as well as Layer 2/WAN circuits to their individual districts and schools. After soliciting bids via RFP from service providers, the consortium received pricing that, overall, was significantly lower than their current connectivity costs—a direct result from creating a neutral marketplace for interconnection.
One district lowered its internet access costs from $3.83 per megabit to 35 cents per megabit—a more than tenfold reduction in pricing that will allow the district to significantly increase bandwidth and still save money. The Internet Exchange Point will also allow for direct peering with content delivery networks locally—giving the districts direct access to cloud services and content without tying up their commodity internet connection.
With the right mix of E-rate leadership, strategy, and planning—as well a willingness to explore regional district collaboration—it is possible to replicate the Iowa success story in other markets around the country—helping scale bandwidth to meet needs at lower prices and freeing up resources to invest in digital teaching and learning tools, staff, and other assets to prepare students for the future.
About the Author: Lindsay Conrad is the Director of Public Policy for Connected Nation. Lindsay monitors all current and forecasted federal and state broadband public policy legislation and initiatives.
In this role, she develops recommendations on the strategic direction and development of Connected Nation policy studies and messaging to stakeholders while supporting and guiding Connected Nation’s broadband planning, research, and policy agendas. Contact Lindsay at email@example.com.
Click here to go to Connected Nation’s policy and research page.
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