In addition to discounts on the actual telephone services, transmission rates, Internet services, and cellular phone services, this program also helps some schools save money on the networking equipment and internal connections necessary for them to get connected to the Internet. The percentage of discount for which a school is eligible is determined by that school's level of disadvantage. The percentage of students receiving free and reduced lunches is the most common determinant of a school's level of disadvantage. For the E-rate's first term of operation, only the schools with the highest level of disadvantage will receive funding for help with internal connections and wiring. Because of this program's background it has been the center of much controversy in its one-year life.
Libraries qualify if they are public.
In addition, to be eligible schools must meet the definition of elementary or secondary schools established in the Elementary and Secondary Education Act of 1965. Other helpful suggestions made by 3Com include that a school must budget funds to cover their percentage of services. The E-rate program is an extension of the Telecommunications Act of 1996. The FCC created and adopted the Universal Service E-rate program. This program is one way for qualified elementary and secondary schools and public libraries to receive a discount on their telecommunications and Internet needs.