The appalling state of EdTech subsidies
By Brent Skorup and Joe Kane
The Washington Post recently highlighted a difficult broadband situation for small school in rural Alabama. Because of natural geography — namely a nearby river — Monroe Intermediate School in Lower Peach Tree is one of the hardest-to-reach small schools in the country. The school has about 60 students. Its antiquated T1 broadband line is frequently useless but it would cost an estimated $1 million for a provider to run a new line to the school. The school’s 29 iPads, purchased with federal funds to add tech to the classrooms, and computers often sit unused.
The story purports to reveal “how the financial decisions of telecom companies have put rural students at a disadvantage.” Yet public data shows that this school district received almost a million dollars in federal grants for technology and connectivity in recent years. Indeed, the government spends substantial sums on nationwide programs specifically for schools, libraries, and healthcare facilities. In truth, this story reveals far more about flawed public policy and government dysfunction.
You can expect to read more stories about schools like Monroe Intermediate in the coming months. Advocates are campaigning to justify recent expansion of E-Rate, an ineffective public subsidy program to schools and libraries that’s funded by regulatory fees tacked onto phone bills. The FCC recently raised the phone fees to $3.9 billion annually.
Rural areas lack the population density to support the retail and services that many suburbanites and city-dwellers take for granted, whether it’s grocery stores, coffee shops, or hospitals. Broadband is no exception and getting wireline broadband into rural areas is often unprofitable. It can take months and cost tens of thousands of dollars to receive City Hall’s permission to dig up streets and wire a single school or home. The small monthly fees plus the churn to competitors — more consumers are turning to wireless broadband only — means risky returns on broadband investment.
States and the federal government realize this and have therefore earmarked billions of dollars to connect rural populations and institutions. There are many overlapping programs at various agencies, but since 1998 the FCC has received, via the E-Rate program, somewhere around $30 billion from consumer phone bills to connect schools and libraries to the Internet. The FCC’s other Universal Service Fund (USF) programs spend billions more in rural areas.
Since broadband is subsidized heavily by the federal government, which shoulders up to 90% of the cost, Monroe Intermediate’s lack of access is not because of miserly telecom companies; it’s dysfunctional government policy that leaves many schools behind. In fact, Monroe Intermediate is in a school district that has received significant federal funds for broadband access. According to data from the Universal Service Administrative Company, which administers the FCC’s USF programs, the district has been reimbursed for nearly $900,000 for various technology and telecom services from 2010–2015.
It’s troubling how little value taxpayers get for their money when it comes to rural broadband. That USF funds haven’t trickled down to Monroe Intermediate illustrates the random distribution of USF programs: some rural schools get no support (sometimes because of local decisions) while in other circumstances 19 subsidized carriers serve the same area.
There are two primary culprits for these policy failures:
- creating complex federal programs that serve as de facto subsidies to telecom companies instead of simple, direct subsidies (like vouchers) to recipients; and
- a bias for “fiber only” broadband when fixed wireless and satellite broadband make sense for many rural areas.
Furthermore, lurking in the background of the discussion of tech in the classroom is that computer and Internet use generally does not appreciably improve educational outcomes. In fact, according to the OECD and others, student performance is often harmed by technology use in the classroom. The “digital divide” appears to be a symptom, not a cause, of the social problems afflicting poor communities.
According to the OECD, student performance is often harmed by technology use in the classroom.
Wasteful federal subsidy system
For rural buildout of telecom services, the government essentially throws billions of taxpayer dollars at infrastructure companies. Despite decades of experience showing that subsidizing carriers encourages unnecessary buildouts and that the agencies are incapable of measuring effectiveness afterwards, this strategy is the dominant one. For instance, the Department of Agriculture spent billions on rural broadband in recent years, yet, as the US Government Accountability Office found, the Department “has not shown how the approximately $3 billion in funds awarded to [rural broadband] projects have affected broadband availability.”
The same can be said for the FCC’s rural broadband programs, E-Rate and the High Cost Fund. Administrators ask firms and schools for time-consuming, granular plans about which services are needed and then agrees to reimburse the meritorious projects. The structure of the programs encourage featherbedding and excessive overhead. Economist Scott Wallsten estimated in 2011 that for every dollar of subsidy to High Cost telecom carriers, nearly 60 cents went to government relations, administrative, and general expenses.
The history of E-Rate features shocking stories of funding redundancies and outright fraud, including warehouses of subsidized computer devices that sat unused for years and school networks where contractors never even broke ground. This wasteful strategy persists because of a political equilibrium. Politicians and administrators point to the huge outlays as evidence that they are “doing something,” infrastructure and tech companies receive steady streams of revenue that are politically untouchable (It’s for kids!), and consumer groups trumpet the lucky consumers and institutions that happen to benefit.
The fiber-only fixation
The second cause of dysfunction in subsidizing rural schools is the fixation on fiber broadband access to the exclusion of other access technologies, especially wireless technology.
There is a popular talking point that fiber access is the best or only option for connecting schools. This is the mantra of advocates like EducationSuperHighway, an education policy policy nonprofit featured prominently in the Washington Post story. “Fiber only” is nonsense, even according to the federal government. As the Department of Education’s Office of Educational Policy says, for many rural schools fixed wireless, mobile broadband, and satellite broadband are reasonable alternatives for Internet access.
Many rural schools may have no idea that fixed wireless or satellite broadband may be a good option for them because education activists and (some) telecoms breathlessly describe fiber as the only option. Wireless options, whether on an interim or permanent basis, are often much cheaper and can be deployed much faster. Advocates often “prove” fiber is the most cost-effective option only by highlighting specious measurements like cost per Mbps and completely disregarding the costs of a new fiber build.
The fiber-only mantra may delay better Internet access to schools like Monroe Intermediate. For such schools in remote rural locations, satellite and fixed wireless broadband is cheaper and faster than their current options. The government subsidizes satellite service for many critical services and institutions. The Department of Agriculture devoted about $100 million for satellite broadband for rural libraries and the FCC has disbursed millions more for rural healthcare and rural schools. In fact, in Alaska, about a quarter of schools get Internet service via satellite. Satellite Internet has its limitations, such as high latency, but a reliable 15 Mbps satellite connection is an improvement over Monroe Intermediate’s erratic connection, which often struggles to reach 1 Mbps.
Illusory educational benefits of tech in classrooms
This top-down planning is not only ineffective, it distorts education priorities. There is growing evidence that technology does not lead to measurable improvements in education, and may actually depress student achievement. Federal policy perversely mandates dubious edtech spending while schools languish. Monroe Intermediate is a revealing example: a failing school, according to the Alabama Department of Education, where the most obvious signs of federal help are the gleaming iPads gathering dust on bookshelves.
The diversion of billions of dollars of public funds to technology and broadband in schools via opaque and distorted subsidy programs persist because improving student performance is so difficult. Monroe Intermediate was listed in the bottom 6% of public schools in performance by the Alabama Department of Education this year. Is spending $1 million on a new broadband line really what that school needs? Is spending tens of thousands of dollars rewiring the school for ubiquitous WiFi the best use of public funds? Or might it be better to hire and retain high-quality math (or music or English or PE) teachers? “In a nutshell: schools are spending billions on technology, even as they cut budgets and lay off teachers, with little proof that this approach is improving basic learning,” the New York Times reported a few years ago.
These are not mere anecdotes. The OECD recently looked at dozens of countries, international test scores, and technology use. Using that data, the organization released a 2015 report that was even harsher about the effect of technology in schools, concluding:
[S]tudents who use computers very frequently at school do a lot worse in most learning outcomes, even after accounting for social background and student demographics. The results also show no appreciable improvements in student achievement in reading, mathematics or science in the countries that had invested heavily in ICT for education. And perhaps the most disappointing finding of the report is that technology is of little help in bridging the skills divide between advantaged and disadvantaged students. Put simply, ensuring that every child attains a baseline level of proficiency in reading and mathematics seems to do more to create equal opportunities in a digital world than can be achieved by expanding or subsidising access to high-tech devices and services.
In fact, the report says, after making the necessary adjustments, PISA data show that countries that have invested less in introducing computers in school improved faster, on average, than countries that invested more.
Current US edtech policy is wasteful and regressive. For two decades Congress and the FCC have required massive financial transfers from every telephone user, many of them poor, to telecom carriers and tech companies via circuitous subsidies. Whatever meager residual effects accrue to schools typically have negligible or negative educational impact.
A hint of good news
Fortunately, there are small signs that Congress has gotten the message to devolve decisions about edtech purchases to states and schools.
The Every Student Succeeds Act, passed in December 2015 to replace the No Child Left Behind Act, avoids the mistake Congress and the FCC made with the E-Rate program — namely, subsidizing carriers to provide Internet access. Section IV of the Act authorizes about $1.6 billion annually in block grants to the states for education initiatives. Funding technology is emphasized in the Section but schools are relatively free to optimize according to their technology needs, whether it’s devices, teacher training, or Internet access.
The problem is that the lion’s share of public funds for technology are still tied up in the FCC’s dysfunctional E-Rate program. If Congress eliminated the fees on telephone service, ended wasteful USF programs, and increased funding for the flexible state block grants, that would be a huge policy improvement. Taxpayers would be more protected from featherbedding and fraud, and schools would have more flexibility to fund their actual educational needs, rather than purchase services a far-off communications regulator determined they should want.
Monroe Intermediate deserves better
No doubt, Monroe Intermediate is in a difficult situation. It is a rural, underperforming school trying to improve the skills of its deprived students. However, its lack of reliable broadband cannot be pinned on corporate neglect. There are adequate funds and technologies available. The problem is that subsidy distribution is uneven and often wasted.
Further, school administrators need to ignore the fiber-only crowd and consider cost-effective wireless systems.
Finally, even with adequate Internet access, school administrators should be realistic about the effects of technology in the classroom. The FCC and advocates certainly won’t trumpet it as the agency disburses billions more, but technology often has negligible or negative effects on student performance.
Rural schools falling through the cracks is not the morality tale of corporate greed advocates would prefer. Rather, the schools are victims of a massive, dysfunctional subsidy system and serve as pawns to defend and expand the underlying programs.
