Under language enacted in the Telecommunications Act of 1996, a discount on telecommunications services is being implemented for schools and libraries as part of universal service. In general, universal service seeks to ensure the availability of telecommunications services for all consumers, including low-income consumers as well as those in rural and high cost areas. The universal service discount for schools and libraries, known as the E-rate, is now in its third award cycle. The E-rate has an annual limit of $2.25 billion in discounts. The Federal Communications Commission (FCC) committed a total of $2.25 billion for the second year; it has also set the third year funding level at $2.25 billion. Applicants for the third year have requested discounts of $4.72 billion. Given concerns about various aspects of the program by some Members of Congress, telecommunications companies, and others, the future of the program remains in flux. This report provides background information on the E-rate, focusing specifically on schools and educational issues involving the E-rate. It will be revised to reflect any substantive changes in the program. For legislative activity on the E-rate, see CRS Issue Brief IB98040, Telecommunications Discounts for Schools and Libraries: The “E-Rateâ€ŗ Program and Controversies. For background on technology in precollege education, see CRS Report 96-178, Information Technology and Elementary and Secondary Education: Current Status and Federal Support.

Passage of the Telecommunications Act of 1996 (P.L. 104-104) codified the long standing policy commitment to ensure universal service in the provision of telecommunications services. The 1996 Act also expanded the concept to include, among other principles, that elementary schools and classrooms, and libraries should have access to telecommunications services for educational purposes at discounted rates. The Federal Communications Commission (FCC) was tasked with implementing the universal provisions of the Act and on May 7, 1997, adopted its order detailing its guidelines.

The FCC¿s Schools and Libraries Universal Service Support Mechanism -- also known as the E-rate program -- is a significant source of fed. funding for info. tech. for schools and libraries, providing $2 billion a year. This report assessed issues related to the E-rate program's long-term goals, including: (1) key trends in the demand for and use of E-rate funding and the implications of these trends; (2) the rate of program participation, participants' views on requirements, and FCC's actions to facilitate participation; and (3) FCC's performance goals and measures for the program and how they compare to key characteristics of successful goals and measures. To perform this work, the auditor surveyed a sample of participating schools and libraries. Illus.