This early look at the E-Rate is part of a new initiative, funded by the Department of Education, and is based on an analysis of E-Rate administrative records covering the first two years of program operation, that were linked to detailed national data on all public and private schools and libraries in the U.S. Key findings indicate that public schools have taken the most advantage of the E-Rate program. In the first two years, the E-Rate has distributed nearly $4 billion, with 84% going to the nation's public schools. In part, this is due to differences in the program's penetration--more than three-fourths of all public districts and schools applied for E-Rate funds, compared to about half of public libraries and 15% of private schools. Thus, there were about 13,000 public school districts, 70,000 public schools, 5,000 private schools, and 4,500 library systems participating in the second year of the E-Rate program. The E-Rate has targeted poor communities, encouraging higher rates of application and getting funds to the places with the greatest need. Application rates of the most impoverished public school districts were lower than those of most other school districts in the first year of the program, which may be a consequence of lower capacity in these communities. However, application rates rose for all types of entities in the second year of the program, and by even more for high-poverty districts than for other types of districts. Larger districts, schools, and libraries are more likely to apply for E-Rate discounts, and when approved receive the largest total amount of E-Rate funds and higher average funding per student (or person). This pattern also holds for application rates even after controlling for poverty or urban location, suggesting that larger organizations may have more of the human, technical, and fiscal capacity needed to apply for, and make effective use of, the E-Rate program. Detailed tables are appended. (AEF)