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FCC UPGRADES RULES FOR E-RATE PROGRAM

The FCC adopted several additions to its e-rate rules Wed. to guard against improper use of funds as well as to clarify eligibility and simplify the application and billing process. The changes came as criticism of the e-rate program had increased because of charges of wasteful practices at the local level. However, the FCC emphasized that the new rule changes were first contemplated more than a year ago and weren’t directly attributable to recent problems. The e-rate program offers schools and libraries discounts on the cost of connecting their classrooms to the Internet.

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Among the changes: (1) Persons convicted of crimes or held civilly liable for misconduct arising from participation in the e-rate program will be debarred from participation for 3 years and in some cases longer. (2) Requests for duplicative services, defined in the FCC’s news release as those that “deliver the same functionality to the same people during the same period of time” won’t be funded.

Questionable practices among e-rate contractors have surfaced in N.Y. and Tenn., although FCC officials said most of the concerns involved waste rather than outright fraud. For example, FCC Wireline Bureau Chief William Maher said, duplicative services occur not because of “any clever scheme” but because forms are filled out wrong. He said that in general the e-rate program had been highly beneficial, increasing to more than 87% the number of public school classrooms connected to the Internet, compared with 14% when the e-rate law was passed as part of the Telecom Act.

The new rules also: (1) Add voice mail as a service eligible for support, which the FCC said would eliminate an administrative burden for schools and libraries that in the past had to strip voice mail out from the bundled price of discounted telecom services. (2) Make wireless services eligible for support in the same manner as wireline services, which the FCC said would make the application process more predictable. (3) Authorize the Universal Service Administrative Co., the e-rate administrator, to develop a pilot program to create an online list of eligible equipment to wire schools, which the Commission said was aimed at easing the processing of funding requests.

The FCC asked for additional comments on several new ways to improve the program, including: (1) Whether to expand the circumstances under which persons could be debarred from involvement in the e-rate program, including for willful or repeated violations of FCC rules. (2) How to implement the FCC’s decision to carry forward unused funds from the program in subsequent funding years.

FCC Comr. Abernathy said some of the rule changes were obvious fine-tuning adjustments now that the program had been under way for several years. She said it was obvious that those convicted of malfeasance should be barred from participation, but that action simply wasn’t included in the earlier rules. Comr. Copps said: “Great programs like the e-rate don’t survive without regular review and care.” He said even more work was needed to make sure schools received aid in a more timely fashion. Chmn. Powell said a tough stance on abuse was needed because those cheating on the program were stealing “from our children.”

Comr. Adelstein said he would like to see even stronger measures to protect the program: (1) Debarment for those found guilty of civil and criminal violations “beyond those associated with the… program.” (2) Actions to make sure “users, in addition to the service providers, are not violating our rules.” Adelstein said he would “support a process that would address any abuses that are committed by the schools and libraries that are meant to benefit from this program.” (3) Different debarment treatment for different violations. (4) Changing the discount levels. Adelstein said “many have suggested that the 90% discount level is too high because it does not require enough of an investment by the school or library.” The flip side of that is that some schools and libraries might not be able to afford a higher payment, he said. (5) Further strengthening rules against schools’ and libraries’ gaining funding for duplicative equipment or networking, perhaps assigning a “service life” to equipment.

The FCC’s E-rate reforms were welcomed on Capitol Hill, but they won’t deter a House investigation into allegations of fraud in the program. House Commerce Committee Chmn. Tauzin (R-La.) said last month he was widening a House probe of potential fraud in the program, which he said had been occurring since E-rate was started 5 years ago (CD March 14 p6). Committee spokesman Ken Johnson said the FCC’s action was a “good first step,” but didn’t convince the committee that the reforms would end the “rampant fraud and abuse that we've seen.” “We intend to move full speed ahead with our own investigation,” Johnson said: “Frankly, we may need some criminal remedies a lot more than we need administrative remedies.” In a March letter to the FCC and USAC, Tauzin said there were 30 separate federal and state investigations into E-rate fraud that could total as much $200 million.

The FCC should take even tougher action, the International Society for Technology in Education and the Consortium for School Networking said. The 2 groups urged the FCC “to adopt strong additional steps to uphold the e- rate’s integrity, including empowering itself to sanction entities that consistently, knowingly and willfully violate significant program rules.”