In the Telecommunications Act of 1996 ("1996
Act"), Congress directed the Federal Communications Commission ("FCC")
to take the steps necessary to establish a system of support mechanisms
to ensure the delivery of affordable telecommunications service to all
Americans. This system, referred to as "universal service," is codified
in section 254 of the Communications Act of 1934, as amended by the 1996
Act. See 47 U.S.C. § 254. Congress specified several groups
as beneficiaries of the universal service support mechanism, including
consumers in high-cost areas, low-income consumers, schools and libraries,
and rural health care providers. See 47 U.S.C. § 254(h)(1).
The extension of universal service to schools and libraries in section
254(h) is commonly referred to as the Schools and Libraries Program, or
"E-rate" Program.
Under the E-rate Program,
"[a]ll telecommunications carriers serving a geographic area shall, upon
a bona fide request for any of its services that are within the definition
of universal service . . ., provide such services to elementary schools,
secondary schools, and libraries for educational purposes at rates less
than the amounts charged for similar services to other parties."
47 U.S.C. § 254(h)(1)(B). Under FCC regulations, providers of
"interstate telecommunications" (with certain exceptions, see 47 C.F.R.
§ 54.706(d)), must contribute a portion of their revenue for disbursement
among eligible carriers that are providing services to those groups or
areas specified by Congress in section 254. To be eligible for the
discounts, a library must: (1) be eligible for assistance from a State
library administrative agency under the Library Services and Technology
Act, see infra; (2) be funded as an independent entity, completely separate
from any schools; and (3) not be operating as a for-profit business.
See 47 C.F.R. § 54.501(c). Discounts on services for eligible
libraries are set as a percentage of the pre-discount price, and range
from 20% to 90%, depending on a library's level of economic disadvantage
and its location in an urban or rural area. See 47 C.F.R. §
54.505. Currently, a library's level of economic disadvantage is
based on the percentage of students eligible for the national school lunch
program in the school district in which the library is located.
ALA v. United States, CA 01-1303, Sec.
II.A.1 (ED PA May 31, 2002) http://www.paed.uscourts.gov/documents/opinions/02D0415P.HTM
