School districts purchase a huge amount of Internet services—to the tune of $1.85 billion a year—but most districts are not getting the best deal on connectivity for their students. This isn’t surprising, since district leaders and staff are in the business of educating, and are rarely experts in the often-convoluted process of purchasing complex network equipment and large-scale connectivity. From our work with districts, we have found that when school district customers are armed with transparent information and comparative pricing on network costs, everyone can become an expert in getting a better deal.
Many people are more familiar with this phenomenon in the healthcare industry where the customers – in this case, patients – are also not experts in buying what they need. Recently, Medicare and Medicaid Services (CMS) took steps to illuminate and make available specific costs in healthcare system. As The Learning Accelerator’s Daniel Owens shared in a recent post, Pricing Transparency in Education: What We Can Learn from Health Care, “by providing [cost] information in an easily consumable format, third parties such as research groups, think tanks, universities, media, and most importantly the public, have been able to analyze it and discover all sorts of purchasing anomalies.”
Analysis of the healthcare data revealed a high variance in procedure cost both regionally and from hospital to hospital within the same geographic region. But once this information is made public, customers can make informed decisions. As Owens writes, “open-cost data allows for increased accountability and better conversations with a well-informed public about how this nation chooses to spend its healthcare dollars.”
Just like in healthcare, we have seen incredibly high variance in the prices school districts in different areas of the country—and even within the same state—are paying for Internet connectivity. In the past year, EducationSuperHighway has collected data nationwide and conducted extensive data analysis projects in Arkansas, Nevada, Virginia, and Wisconsin. Using this data, not only have we identified connectivity pricing variation, transparency has also allowed us to draw high-level insights about factors that bring costs down:
- Economies of scale: cost per Mbps is lower when districts buy more bandwidth
- Group purchasing: aggregating demand can lower costs
- Fiber is the future: fiber connections are the most cost-effective for most areas
As in the healthcare industry, shared information and pricing transparency provide an ideal starting point from which to understand true connectivity costs and how school districts can get the best deal possible. EducationSuperHighway is continuing to pursue projects that contribute to increased price transparency, including collecting E-rate spending data (all of which will become publicly available in 2015), documenting costs and making comparative pricing tools available.
In addition to our work on data transparency, EducationSuperHighway has developed a step-by-step guide called, Network Essentials for Superintendents, to help district leaders navigate network and Internet service options. This free downloadable guide provides useful tips and information that district leaders need in order to bring high-speed broadband Internet access to their students. Download a copy Network Essentials for Superintendents.