WASHINGTON-The Federal Communications Commission may not be the best agency to oversee the E-rate, according to a report released Tuesday by the House Commerce investigations and oversight subcommittee.
The 52-page report said its examination of the E-rate revealed “a well-intentioned program that nonetheless is extremely vulnerable to waste, fraud and abuse is poorly managed by the FCC and completely lacks tangible measures of either effectiveness or impact.”
The E-rate is part of the universal-service fund that Congress codified in the Telecommunications Act of 1996. The E-for educational-rate is administered, along with the rest of the USF, by the Universal Service Administrative Co. USAC is a quasi-governmental organization created by the FCC to administer universal-service subsidies.
As of this month, USAC collected and approved for disbursement roughly $15 billion since the program’s start in 1998. Approximately $10 billion of that amount actually has been disbursed to E-rate program service providers. The amount of funding available annually is capped at $2.5 billion, but money can be rolled over if it is not used. About 40,000 applicants submit requests each year, far exceeding the available funds, so a prioritization scheme has been developed, first paying for telecommunications and Internet access and then for the most-needy applicants’ “internal connections.”
Wireless carriers generally are not recipients of E-rate funds, although in one of the positive notes of the House subcommittee report, it applauded the Philadelphia School District’s use of some of its funds to create a wireless network.
The E-rate concept was developed by Sens. Olympia Snowe (R-Maine) and Jay Rockefeller (D-W.V.) out of concern that their rural students didn’t have access to 21st-century technology. Both Snowe and Rockefeller are members of the Senate Commerce Committee. The Senate overall and its Commerce Committee specifically have been enthusiastic supporters of the E-rate.
The feelings toward the E-rate on the House side, where the report was generated, are not as favorable. Earlier this year, Rep. Joe Barton (R-Texas), a consistent critic, said he wanted to get rid of it.
“I have been in Congress 21 years, and I haven’t seen a more mismanaged program. If I had to vote today, I would vote to abolish it-period. If I can change it, I will. If I have the votes to kill it, I will. If I can’t do either of those things, then I will so underfund it that it ceases to exist,” Barton, chairman of the House Commerce Committee, said earlier this year.
Barton said that the subsidies that many school districts have received to maintain and upgrade existing systems are not the responsibility of the federal government.
The FCC began an examination of the overall universal-service program in June. As part of its examination, the FCC is studying whether the E-rate should be distributed according to a formula rather than by the current grant application process.
