an analysis of e-rate spending

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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%

“

”

��

��

��

��

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


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


$0

$10

$20

$5.72

$17.44WAN

Internet Access

affordability

!

“

”


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


An

nu

al

No

n-D

isc

ou

nte

dE

xp

en

se

Pe

r S

tud

en

t


$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


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


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

!

!

“

”


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


Mo

nth

ly C

os

tp

er

Mb

ps


$0

$3,477 $3,535


Chart 22a: Districts using cable and meeting Current Goals have a median three schools

6


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


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


$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


$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


$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


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


��Data Network:

��Telephony:


��Mobile:

��Other Services:

�� ISP (Internet Service Provider) Only:

��Upstream:

��Upstream & ISP:

��District WAN (Wide Area Network):

��Upstream & WAN:

��Upstream, ISP & WAN:

��

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��Voice:

��Data:

��Voice and Data:

��Web Hosting:

��Email Services:

��Mixed:


Size of Applicant

Location Type

Metropolitan

Suburban Core

Suburban Fringe

Remote


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


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1 Gbps Lit Fiber


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


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

EducationSuperHighway

101 California Street, #4100

San Francisco, CA 94111

(415) 967-7430

[email protected]

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.