The new initiative, called ConnectED, seeks to hook up 99 percent of American students to high-speed broadband and wireless within five years, building on the current E-Rate program and making use of existing funds. Speaking Thursday in North Carolina, Obama unveiled the plan to turn schools and libraries nationwide into high-speed hubs with access to information at gigabit speeds.

“We can’t be stuck in the 19th century when we’re living in a 21st-century economy,” Obama said.

“In a country where we expect free Wi-Fi with our coffee, why shouldn’t we have it in our schools?” he asked.

Senior administration officials said ConnectED would require a one-time infusion of capital that would cost individual Americans little. Administration officials expect to pay for part of the program through savings rung out of the Universal Service Fund.

That most likely isn’t going to be enough to increase capacity for all the schools and educational institutions that may want it, according to Federal Communications Commission sources. Requests from schools already exceed the amount available from the $2.3 billion-dollar E-Rate fund. E-Rate is part of the Universal Service Fund, which is designed to give all Americans access to telecommunications.

Administration officials conceded to reporters on Wednesday that the program could bump up the Universal Service Fund charge on customers’ monthly phone bills by no more than 40 cents.

In his speech Thursday, Obama said the government would “partner with private companies to put people to work laying fiber-optic cables to our schools and setting up wireless connections in our schools at speeds 10 to 100 times faster than what schools have today.”

Education Secretary Arne Duncan described ConnectED as “a huge deal for education” to reporters on Air Force One Thursday, saying countries like South Korea have already taken similar actions, according to a pool report.

As for cost, Duncan said it’s not clear that the telephone charge would have to go up, or by how much, until the FCC looks more closely at existing funding streams and the needs of the initiative.

ConnectED mirrors a proposal that FCC Commissioner Jessica Rosenworcel has been pushing for months, and the Democratic commissioner told POLITICO she’s glad the president is throwing the weight of the White House behind the initiative.

“It works really well with the E-Rate 2.0 program I’ve been advocating for some months now,” Rosenworcel said in an interview. “I think E-Rate is a fantastic program. It’s helped connect schools across the country, but the problem now is not connection, it’s capacity.”

Acting FCC Chairwoman Mignon Clyburn supports the president’s initiative.

“Over the last 15 years, the FCC’s E-Rate program has successfully helped bring Internet access to our nation’s schools and libraries,” Clyburn said in a statement. “But basic Internet access is no longer sufficient, and the FCC has been taking a hard look at ways to further modernize the E-Rate program to bring robust broadband to schools and libraries, especially those in low income and rural communities.”

The ConnectED name is new, but the idea has been a longtime cause for Senate Commerce Committee Chairman Jay Rockefeller (D-W.Va.), who, along with then-Sen. Olympia Snowe (R-Maine), pushed to get E-Rate written into the 1996 Telecommunications Act.

“In its almost two decades, the E-Rate program has fundamentally transformed education in this country — we have connected our most remote schools and libraries to the world,” Rockefeller said in a statement. “But as impressive and important as the E-Rate program has been, basic Internet connectivity is no longer sufficient to meet our 21st-century educational needs. It is time to create E-Rate 2.0.”

Some of the nation’s large telecommunications companies see ConnectED as another shot at modernizing the Universal Service Fund.

“As the president noted, the current e-Rate system, and the Universal Service Fund on which it depends, must be modernized for this plan to work,” AT&T Chairman and CEO Randall Stephenson said in a statement. “In particular, the USF contribution methodology must be updated to encompass more than the legacy services assessed today as we transition to the all-IP communications networks of tomorrow.”