1. E-rate Modernization December 2, 2014 1

2. E-rate Basics Schools and Libraries Universal Service Support Mechanism (E-rate) – Authorized by the 1996 Telecommunications Act – Created by the FCC in 1997; First funding year was 1998 Schools and libraries apply for discounts on: – Priority (now Category) 1: Telecommunications Telecommunications Services Internet Access Services – Priority (now Category) 2: Internal Connections (e.g., Wi-Fi) Basic Maintenance of Internal Connections $2.25 Billion annually (capped in 1997, adjusted annually for inflation starting in 2010); FY 2014 cap is $2.4 Billion 2

3. E-rate Discount Matrix Discounts range from 20%-90% on eligible services, depending on poverty indicator and geographic location 3 Percentage of Students Eligible for Free/Reduced Lunch Discount for Urban Schools and Libraries Discount for Rural Schools and Libraries Less than 1%2025 1% to 19%4050 20% to 34%5060 35% to 49%6070 50% to 74%80 75% to 100%90 3

4. Adopts important program goals and performance measures Significantly expands Wi-Fi funding for all libraries and schools Improves E-rate program cost-effectiveness through pricing transparency, encouraging consortia and bulk purchasing Streamlines and simplifies the E-rate application process and program administration Next step, but not final step, in E-rate modernization process July 2014 E-rate Modernization Order 4

5. Ensuring affordable access to high-speed broadband sufficient to support digital learning in schools and robust connectivity for all libraries – Internet access targets: 100 Mpbs/1,000 students (short term); 1 Gbps/1,000 students (long term) 100 Mbps for libraries serving fewer than 50,000 people; at least 1 Gbps for libraries serving more than 50,000 people – Wide Area Network (WAN) target: Connection scalable to 10 Gbps/1,000 students (long term) Maximizing the cost-effectiveness of spending for E-rate supported purchases Making the E-rate application process and other E-rate processes fast, simple, and efficient Performance Goals and Targets 5

6. Eliminate support for services that do not facilitate high-speed broadband – Phase down support for voice over five years starting in FY 2015 – Eliminates support for other non-broadband services in FY 2015 Equitable funding for broadband within libraries and schools – $1 billion annual target for "Category 2" internal connections – Internal connections 5-year budgets for applicants (FY2015, 2016) $150 (pre-discount) per student for schools $2.30 (pre-discount) per square foot for libraries Pre-discount funding floor of $9,200 for each library/school Support for managed services, caching Affordable Access to High Speed Broadband 6

7. Increasing pricing transparency through the USAC website – USAC website will include information regarding services and equipment purchased by libraries and schools Encouraging consortia and bulk purchasing FCC/GSA MOU for Wi-Fi equipment Maximize Cost-Effectiveness 7

8. Simplifying the E-rate application process – Streamlined application process for multi-year contracts – Exempt certain business-class Internet service from competitive bidding – Encourages applicants to explore direct high-speed broadband connections between schools and libraries Simplifying discount rate calculations Simplifying invoicing and disbursement Tribal Consultation, Training and Outreach Program Additional measures to improve program administration Administrative Efficiency 8

9. Steps Taken Since the July Order USAC implementation Release of Wireline Bureau Staff Paper (8/12) – https://apps.fcc.gov/edocs_public/attachmatch/DA-14-1177A2.pdf https://apps.fcc.gov/edocs_public/attachmatch/DA-14-1177A2.pdf Release of School and Library Fiber Map (8/12) – http://www.fcc.gov/maps/E-rate-fiber-map http://www.fcc.gov/maps/E-rate-fiber-map Release of State Connectivity Profiles (9/19) – http://transition.fcc.gov/Daily_Releases/Daily_Business/2014/db0919/DOC- 329357A1.pdf http://transition.fcc.gov/Daily_Releases/Daily_Business/2014/db0919/DOC- 329357A1.pdf Further Notice of Proposed Rulemaking comments received 9/15; replies due 9/30 Release of Eligible Services List (10/28) Release of E-rate Data Update Staff Paper (11/17) −http://transition.fcc.gov/Daily_Releases/Daily_Business/2014/db1117/D OC-330505A1.pdfhttp://transition.fcc.gov/Daily_Releases/Daily_Business/2014/db1117/D OC-330505A1.pdf 9

10. E-rate not the only proceeding relevant to connectivity for rural, high-cost infrastructure buildout for libraries Also seeking comment in Connect America Fund (CAF) proceeding on obligations of CAF-supported providers to effectively serve community anchor institutions “Connections to Schools, Libraries, and Health Care Providers. In the USF/ICC Transformation Order, the Commission indicated its expectation that ETCs would offer broadband at speeds greater than 4 Mbps/1 Mbps to community anchor institutions in rural and high-cost areas and that they would provide such offerings “at rates that are reasonably comparable to comparable offerings to community anchor institutions in urban areas.” The Commission did not have a record before it at the time to specify what specific speeds are appropriate for anchor institutions. We seek to develop the record more fully, and thus invite comment on how best to ensure that this expectation is fulfilled by ETCs, with specific reference to institutions and the charges, terms, and conditions of service provided to those institutions.” -FCC 14-54, para. 159 (released June 10, 2014) Connect America Fund 10

11. Next Steps Completing the process to ensure that all schools and libraries have the opportunity to meet the E-rate goals – Addressing additional policy steps to maximize schools’ and libraries’ options for purchasing affordable high-speed broadband connectivity – Addressing long-term funding needs of the program Stay tuned… 11 Questions?