Killing E-Rate Would Cost US Economy $4.2B a Year

Scrapping the E-Rate program would shave $4.2 billion off US GDP every year, according to a Brattle Group study filed with the FCC last week. The analysis, commissioned by the Schools, Health & Libraries Broadband (SHLB) Coalition, lands in the middle of a proceeding that could dismantle a subsidy schools and libraries say they can't run without.

The arithmetic is straightforward. E-Rate handed out roughly $2.6 billion in subsidies in 2025. Brattle finds each dollar of that support is "associated with approximately $1.60 in GDP." Multiply it out and, as the study puts it, "eliminating approximately $2.6 billion in annual E-Rate support would reduce real GDP by approximately $4.2 billion annually, real wages by $2.8 billion, and tax revenues by approximately $1.5 billion."

The FCC opened its notice of proposed rulemaking (NPRM) in August, proposing changes to the program and asking pointed questions about its future — including whether it should exist at all. Schools and library systems across the country have flooded the docket with pleas to keep it. Superintendents argue that without E-Rate dollars, they'd have to shift budget onto telecom bills and cut staff to compensate.

Why the losses ripple beyond the classroom?

Brattle's model tracks what happens when schools and libraries "devote more of their own budgets to connectivity, leaving less available to support the overall level of education and library services." Because school spending generates more follow-on economic activity than broadband spending, institutions buy fewer other goods and services and use less labor. Those reductions, the study says, "propagate through household income, spending, and tax revenues."

The NPRM floats a narrower option too: killing only E-Rate's "Category 2" support, which funds internal network infrastructure — the wiring and Wi-Fi inside buildings — at roughly $1.2 billion a year. Brattle ran that scenario and found it wouldn't be cheap either.

"Removing Category 2 support alone produces an estimated $2.5 billion annual GDP loss, $1.6 billion reduction in real wages, and $0.9 billion reduction in tax revenues," the study states. "These losses are substantial relative to the roughly $1.2 billion of Category 2 support removed."

The study adds a blunt point about what a connection without an internal network is worth: "Connectivity to a building has limited value if the institution lacks the internal network necessary to deliver that connectivity where students, teachers, staff, patrons and the buildings' countless systems actually use it."

Is the FCC even allowed to end E-Rate?

SHLB's filing spends a section arguing it isn't. Congress created the program through section 254 of the Telecommunications Act of 1996, and SHLB contends the statute gives the Commission no power to switch it off.

"The plain text of the statute shows that connecting schools and then sunsetting the program was clearly not Congress's objective," the group argues. "There is nothing in the text of the statute empowering the Commission to terminate the program, including (as the NPRM asks) after a certain period of time or after certain benchmarks are met."

The filing even offers a comparison: "Treating E-Rate as a finished project is like deciding to stop maintaining a highway because it has already been built." Roads, famously, don't maintain themselves.

The NPRM also asks about limiting E-Rate to certain geographic regions, tying it to educational outcomes, or capping screen time. SHLB dismisses each as beyond the Commission's authority. On screen time specifically, the group writes that "there is no rational reading of section 254 that would allow the Commission to impose screen time limitations on student and library patrons."

The legal argument matters beyond rhetoric. It signals SHLB may be laying groundwork for a court fight if the FCC moves to sunset the program.

The clock is short. Reply comments in the FCC's E-Rate proceeding close on November 12, after which the Commission must decide whether a $2.6 billion program survives — and whether it wants to test $4.2 billion in annual GDP losses against a statute it may not be able to rewrite.

By Amara Osei