an analysis of e-rate spending
TRANSCRIPT
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Chart 1: SchoolSpeedTest results show that 63% of U.S. schools are not meeting the Current Goals
Not Meeting Current Goals
Pe
rce
nt
of
Sc
ho
ols
Not Meeting Five Year Goals
0%
50%
100%
63%
99%
“
”
��
��
��
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Chart 2: At the current rate of upgrades, it would take until 2021 for all schools to meet Current Goals
2012-2013
Pe
rce
nt
of
Sc
ho
ols
M
ee
tin
g C
urr
en
t G
oa
ls
0%
50%
100%
28%
2013-2014
37%
2014-2015
46%
2015-2016
55%
2016-2017
School Year
64%
2017-2018
73%
2018-2019
82%
2019-2020
91%
2020-2021
100%Actual SchoolSpeedTest Data
Projected
Appendix A: Data Collection and Sampling
EducationSuperHighwayNational K-12 E-rate Spending Report
Chart 6: Approximately half of E-rate mobile spending goes toward data services for mobile devices (including tablets), wireless cards, and Wi-Fi hot spots
$20
$40
$60
$80
$100
$120
$140
Voice & Data
An
nu
al
E-r
ate
Sp
en
din
g (
$M
)
$0
$121
Data
$80
Voice
$77
Unknown
$13
Mixed/Other
$3
Chart 7: Approximately $124M of annual E-rate spending is on web hosting and email
$20
$40
$60
$80
$100
$120
Web Hosting
An
nu
al
E-r
ate
Sp
en
din
g (
$M
)
$0
$100
Email Services
$23
Other
$7
Unknown
$0.4
EducationSuperHighwayNational K-12 E-rate Spending Report
Chart 8: Significantly higher speeds are available over fiber connections compared to other service types
200
400
600
800
1000
1200
T1/DSL
Co
mm
on
Co
mm
erc
iall
yA
va
ila
ble
Ma
xim
um
Sp
ee
d (
Mb
ps
)
$01.5
T3/D53
45
DSL
50
Cable
100
Fixed Wireless
1,000
Fiber
10,000
“
”
“
”
Chart 9: Fiber is more cost-effective than most service types and more scalable than cable
$100
$200
$300
$400
Cable(n=187)
Mo
nth
ly C
os
t P
er
Mb
ps
$0
$7
Lit Fiber(n=470)
$9
DSL(n=77)
$18
Fixed Wireless(n=20)
$73
T3/D53(n=14)
$88
T1/DSL(n=67)
$324
No Fiber Fiber
Av
era
ge
Mb
ps
0
200
400
600
800
1000
3790
344
787
No Fiber
Av
era
ge
Mb
ps
$0
$10
$20
$30
$40
$50$41
Fiber
$11
Chart 10a: Fiber connections result in bandwidth that is on average 9 times higher than other service types
Chart 10b: Cost of connectivity using fiber is approximately 75% lower than other service types
WAN
Internet Access
Not MeetingGoals
% o
f S
ch
oo
ls w
ith
Fib
er
0%
20%
40%
60%
80%
100%83%
MeetingCurrent Goals
kbps Per Student Gbps Per Circuit
17%
Meeting FiveYear Goals
1%
Not MeetingGoals
% o
f S
ch
oo
ls w
ith
Fib
er
0%
20%
40%
60%
80%
61%
Meeting Current/Five Year Goals
39%
Chart 11a: 83% of schools with Internet access over fiber still are not meeting Current Goals
Chart 11b: 61% of schools with fiber WAN connections are not meeting Current Goals
Chart 12: Districts not meeting Current Goals face a price for connectivity that is too high to buy sufficient bandwidth
Meeting Current Goals
Mo
nth
ly C
os
tp
er
Mb
ps
Not Meeting Current Goals
$0
$10
$20
$5.72
$17.44WAN
Internet Access
affordability
!
“
”
EducationSuperHighwayNational K-12 E-rate Spending Report
Chart 13: Districts that are meeting the Current Goals pay approximately 4.5 times more from their budgets for Internet access
$2
$4
$6
$8
Meeting Current Goals
An
nu
al
No
n-D
isc
ou
nte
dE
xp
en
se
Pe
r S
tud
en
t
Not Meeting Current Goals
$0
$7.16
$1.59
Chart 14: Wealthier schools are more likely to be meeting the Current Goals than poorer schools
10%
20%
30%
50%
40%
Affluent (<1% )
Pe
rce
nt
of
sc
ho
ols
m
ee
tin
g C
urr
en
t G
oa
ls
0%
39%
Moderate (1-74% )
Percent of Free and Reduced Lunch Students Per District
20%
Low-income (75-100% )
14%
!
“
”
Chart 15: Internet access costs decrease significantly as more bandwidth is purchased
$50
$100
$150
10Mbps
Mo
nth
ly C
os
t p
er
Mb
ps
$0
$114
20Mbps
$74
50Mbps
$36
100Mbps
$27
200Mbps
$22
500Mbps
$15
1Gbps
$7
10Gbps
$2
EducationSuperHighwayNational K-12 E-rate Spending Report
Chart 16: District WAN capacity can be significantly increased with moderate increases in cost
$500
$1,000
$1,500
$2,500
$2,000
10 Mbps
Mo
nth
ly C
os
t P
er
Co
nn
ec
tio
n (
Lit
Fib
er)
$0
$775
100 Mbps
$899
1 Gbps
$1,242
10 Gbps
$2,173
EducationSuperHighwayNational K-12 E-rate Spending Report
Chart 17: District WAN cost per connection decreases with a higher number of connections purchased
$500
$1,000
$1,500
$2,000
<20 (n=155)
Mo
nth
ly C
os
t p
er
Co
nn
ec
tio
n(1
Gb
ps
lit
fib
er)
0%
$1,665
20 - 99 (n=23)
$1,280
100+ (n=2)
$445
Chart 18: District WAN economies of scale can be achieved in all types of locales
$500
$1,000
$1,500
$2,000
Metropolitan
Mo
nth
ly C
os
t p
er
Co
nn
ec
tio
n
(1 G
bp
s l
it f
ibe
r)
0%
$1,221
Suburban Core
$923
Suburban Fringe
$1,538
Remote Area
$1,412
!
!
“
”
EducationSuperHighwayNational K-12 E-rate Spending Report
Before After
Total Monthly Cost Stayed Roughly the Same
Monthly Cost Per Mbps Decreased Significantly
Bandwidth Increased Fivefold
$0
$20,000
$40,000
$20$30,100 $31,000
$2
Before After
0
2,000
4,000
Before After
$0
$10.00
$20.00
$30.00
Figure 2: Indian Prairie School District dramatically increased bandwidth without increasing costs
District WAN
Internet Access
Chart 19: The quartile of districts with the lowest per-Mbps rates pay 1/6th the median cost
$20
$40
$60
$80
$100
$120
$140
1st Quartile
Mo
nth
ly C
os
t p
er
Mb
ps
$0
$4
WAN
Internet Access
2nd Quartile
$17
Median
$25
3rd Quartile
$38
4th Quartile
$134
1stQuartile
2ndQuartile
Median
100 Mbps, Internet Access
3rdQuartile
4thQuartile
Mo
nth
ly C
os
t p
er
Mb
ps
$0
$5
$10
$15
$20
$25
$30
$35
$40
$12
$20 $21
$26
$34
1stQuartile
2ndQuartile
Median
1 Gbps, District WAN
3rdQuartile
4thQuartile
Mo
nth
ly C
os
t p
er
Mb
ps
$0
$.5
$1.0
$1.5
$2.0
$2.5
$0.58
$0.98
$1.28
$1.54
$2.15
Chart 20a and 20b: Wide cost variations for Internet access and district WAN exist even within metropolitan areas
Chart 21: District contributions to WAN costs are roughly equal regardless of whether districts are meeting Current Goals
$2,000
$4,000
Meeting Current Goals
Mo
nth
ly C
os
tp
er
Mb
ps
Not Meeting Current Goals
$0
$3,477 $3,535
EducationSuperHighwayNational K-12 E-rate Spending Report
Chart 22a: Districts using cable and meeting Current Goals have a median three schools
6
Meeting Current Goals
Nu
mb
er
of
Sc
ho
ols
Not MeetingCurrent Goals
0
2
4 3
5
Chart 22b: Districts using cable and meeting Current Goals have approximately 500 students
Meeting Current Goals
Nu
mb
er
of
Stu
de
nts
Not MeetingCurrent Goals
0
500
1,000
1,500
2,000
2,500
523
1,969
Figure 1
Chart 23a: Fixed wireless Internet access is over two times more expensive than lit fiber
Lit Fiber
Mo
nth
ly C
os
tp
er
Mb
ps
(10
-20
0M
bp
s)
Fixed Wireless
$0
$50
$100
$29
$73
Chart 23b: Fixed wireless WAN connections are over two times more expensive than lit fiber
Lit Fiber
Mo
nth
ly C
os
tp
er
cir
uit
(5-1
00
0M
bp
s)
Fixed Wireless
$0
$1,000
$2,000
$3,000
$1,099
$2,283
Chart 24a: It would cost E-rate $16B per year to support all students on mobile LTE
Current E-rate Program Cap
An
nu
al
co
st
to E
-ra
te($
B)
Cost to Serve all Students on LTE
$0
$10
$5
$16
$20
$2.38
$16B
Chart 24b: At the current cap, E-rate could support only 7 million students on mobile LTE
Served by LTE at Current E-rate Program Cap
Nu
mb
er
of
Stu
de
nts
Students CurrentlyServed by E-rate
0
20
10
30
40
50
60
7
48
Chart 25: Schools receive an average of $11,000 per year for non-broadband services
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
Telephony Mobile Email ServicesWeb Hosting OtherAv
era
ge
An
nu
al
E-r
ate
Fu
nd
ing
$0 0%
20%
40%
60%
80%
100%$6,485
$3,719
$1,850$1,213
$838
96%
78%
53%
19%8%
Percent of Schools Receiving Funding
Annual E-Rate Funding Per School
Chart 26: Transitioning $1.1B of E-rate funding to broadband services significantly advances Current Goals but leaves a large gap against Five Year Goals
20%
40%
60%
80%
100%
Current Goals
Pe
rce
nt
of
Sc
ho
ols
Five Year Goals
0%
76%
4%
20%11%9%
80%
Upgraded with Transition of $1.1 B
Ready Today
Insufficient Funds to Upgrade
��Purchasing at scale
�� Increasing price transparency
�� Increasing competition
Chart 27: It would cost E-rate $11B per year to meet the Five Year Goals, assuming status quo pricing
$5,000
$10,000
$15,000
Current Cost
An
nu
al
Co
st
to E
-ra
te($
M)
$0
$1,285
Meet Current Goals atStatus Quo Pricing
$2,393
Meet Five Year Goals atStatus Quo Pricing
$11,057Internet Access
District WAN
Chart 28: Leveraging economies of scale in purchasing could save up to 79% over the status quo
$1,000
$2,000
$3,000
$500
$1,500
$2,500
An
nu
al
Co
st
to E
-ra
te($
M)
$0
Current Cost
$1,285
Meet Current Goals atStatus Quo Pricing
$2,393
Meet Current Goals with Economies
of Scale
$1,562
Meet Five Year Goalswith Economies
of Scale
$2,376Internet Access
WAN
Internet access and WAN only. Does not include LAN / Wi-Fi costs to meet ConnectED Goals
Chart 29: More efficient procurement can increase the impact of economies of scale
$1,000
$2,000
$3,000
$500
$1,500
$2,500
An
nu
al
Co
st
to E
-ra
te($
M)
$0
Current Cost
$1,285
Meet Current Goals atStatus Quo Pricing
$2,393
Meet Current Goals at Top 50% Pricing
$747
Meet Five Year Goalsat Top 50% Pricing
$1,799
Internet Access
District WAN
Internet access and WAN only. Does not include LAN / Wi-Fi costs to meet ConnectED Goals
Chart 30: Market competition results in significant cost reductions for district WAN
1 Gbps Lit Fiber
Mo
nth
ly C
os
t P
er
Cir
cu
it
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$1,566$822
10 Gbps Lit Fiber
$4,485
$1,474
Other Providers
Incumbent Providers
Chart 31: Dark fiber WANs offer significant cost advantages over lit fiber
100 Mbps Connection(n=94, 31)
Mo
nth
ly C
os
t P
er
Cir
cu
it
$0
$500
$1,000
$1,500
$2,000
$2,500
$899$1,242
$2,173
$522
$187
$522
$187
$522
$187
10 Gbps Connection(n=22, 31)
1 Gbps Connection(n=144, 31)
Leased Dark Fiber
Self-provisioned Fiber
Lit Fiber
Chart 32: Widespread deployment of dark fiber would save E-rate 70 - 90% annually for district WAN
$500
$1,000
$1,500
Status Quo Pricing
An
nu
al
Co
st
to E
-ra
te($
M)
$0
$1,218
Leased Dark Fiber
$376
Self-provisioned Fiber
$135
Does not include LAN / Wi-Fi costs to meet ConnectED Goals
Chart 33: While effective for district WAN, market competition is not a reliable way to reduce costs for Internet access
100 Mbps Connection
Mo
nth
ly C
os
t P
er
Mb
ps
(In
tern
et
Ac
ce
ss
Ove
r F
ibe
r)
$0
$40
$30
$20
$10
$18
$30
1 Gbps Connection
$9 $7
Other Providers
Incumbent Providers
Chart 34: Investing in transport to state R&E networks for Internet access allows E-rate to meet Five Year Goals at an annual cost of $1.2B
$4,000
$8,000
$12,000
$2,000
$6,000
$10,000
An
nu
al
Co
st
to E
-ra
te($
M)
$0
Meet Current Goals atStatus Quo Pricing
$1,175
Meet Five Year Goalsat Status Quo Pricing
$10,076
Meet Current Goals Leveraging R&E
Networks
$569
Meet Five Year GoalsLeveraging R&E
Networks
$1,247
Does not include LAN / Wi-Fi costs to meet ConnectED Goals
EducationSuperHighwayNational K-12 E-rate Spending Report
Chart 35: Doubling the E-rate funding cap addresses Current Goals but leaves a large gap against Five Year Goals
50%
100%
Current Goals
Pe
rce
nt
of
Sc
ho
ols
Five Year Goals
0%
80%
20%26%
9%
65%
Upgraded with Funding
Ready Today
Insufficient Funds to Upgrade
EducationSuperHighwayNational K-12 E-rate Spending Report
��Data Network:
��Telephony:
EducationSuperHighwayNational K-12 E-rate Spending Report
��Mobile:
��Other Services:
�� ISP (Internet Service Provider) Only:
��Upstream:
��Upstream & ISP:
��District WAN (Wide Area Network):
��Upstream & WAN:
��Upstream, ISP & WAN:
��
��
��
��
��
��
��Voice:
��Data:
��Voice and Data:
��Web Hosting:
��Email Services:
��Mixed:
EducationSuperHighwayNational K-12 E-rate Spending Report
Size of Applicant
Location Type
Metropolitan
Suburban Core
Suburban Fringe
Remote
EducationSuperHighwayNational K-12 E-rate Spending Report
Size of Applicant
Location Type
Metropolitan
Suburban Core
Suburban Fringe
Remote
Size of Applicant
Location Type
Metropolitan
Suburban Core
Suburban Fringe
Remote
Unidentified
Size of Applicant
Location Type
Metropolitan
Suburban Core
Suburban Fringe
Remote
EducationSuperHighwayNational K-12 E-rate Spending Report
EducationSuperHighwayNational K-12 E-rate Spending Report
EducationSuperHighwayNational K-12 E-rate Spending Report
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EducationSuperHighwayNational K-12 E-rate Spending Report
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EducationSuperHighwayNational K-12 E-rate Spending Report
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EducationSuperHighwayNational K-12 E-rate Spending Report
1 Gbps Lit Fiber
EducationSuperHighwayNational K-12 E-rate Spending Report
District Locale
Metropolitan
and Suburban Core
Suburban Fringe
and Remote
20 Mbps
50 Mbps
100 Mbps
500 Mbps
1,000 Mbps
10,000 Mbps
1 Gbps
Metropolitan
Suburban Core
Suburban Fringe
Remote Area
EducationSuperHighwayNational K-12 E-rate Spending Report
District Locale
Metropolitan
and Suburban Core
Suburban Fringe
and Remote
20 Mbps
50 Mbps
100 Mbps
500 Mbps
1,000 Mbps
10,000 Mbps
1 Gbps
Metropolitan
Suburban Core
Suburban Fringe
Remote Area
59
EducationSuperHighwayNational K-12 E-rate Spending Report
EducationSuperHighway
101 California Street, #4100
San Francisco, CA 94111
(415) 967-7430
About Educat ion SuperH ighw ayEducationSuperHighway is the leading non-profit focused on upgrading
the Internet infrastructure in America’s K-12 public schools. We believe
that digital learning represents an unprecedented opportunity to
provide every student with equal access to educational opportunity
and that every school requires high-speed broadband to make that
opportunity a reality.
EducationSuperHighway’s data-driven programs help accelerate
upgrades in America’s schools. We work to raise awareness of the
school connectivity gap, provide technical and procurement expertise
to states and districts, and advocate on behalf of students to influence
policy decisions. Our work has helped shape President Obama’s
ConnectED initiative and served as a catalyst for modernization of the
Federal Communications Commission’s E-rate program.