FCC TAKES STEPS TO IMPROVE E-RATE PROGRAM ADMINISTRATION
The FCC unanimously approved rules Wed. to improve administration of its e-rate program, including allowing $420 million in unused schools and libraries funds to be carried forward for disbursement in 2003. The Commission at its agenda meeting also adopted procedural safeguards, including: (1) Barring the transfer of equipment purchased with universal service discounts to other locations for 3 years after purchase, except in limited cases, such as a school’s closing. (2) Increasing the transparency of updating an annual list of services eligible for support. (3) Supporting internal connections upgrades and replacements no more than twice every 5 years, except for basic maintenance services.
Sign up for a free preview to unlock the rest of this article
If your job depends on informed compliance, you need International Trade Today. Delivered every business day and available any time online, only International Trade Today helps you stay current on the increasingly complex international trade regulatory environment.
The Commission also adopted a further notice to seek comments on changing the discount matrix used to determine the level of discounts for which applicants were eligible, and additional steps to further prevent waste, fraud and abuse. The order follows a proposal this year on several changes in the $2.2 billion program. School administrators and others in the program had told the FCC at a May forum it could reduce misuse significantly by simplifying rules, educating applicants and publicizing wrongdoing.
Comr. Abernathy said the items approved represented a quick response to concerns expressed at that forum and recommendations of the Universal Service Administrative Co. Task Force. “The Commission has appropriately responded -- quite promptly -- by limiting funding for internal connections to twice every 5 years and barring most equipment transfers,” she said. “These new rules will give applicants flexibility to spread expenditures over 2 years but will prevent the same applicants from being funded year after year.” Citing the scarcity of Priority 2 funds in recent years, Abernathy said the changes would “result in extending discounts to schools and libraries in lower discount bands that have yet to receive any funding for internal connections.” The FCC essentially authorized applicants to upgrade internal connections every 3 years, and Abernathy stressed that that was the minimum time that must elapse. “In most circumstances, I would expect applicants to recognize that cables, routers and the like will have significantly longer useful lives,” she said.
In the further notice, the FCC asked whether to: (1) Adopt a ceiling on the total funding an applicant could request annually. (2) Strengthen requirements for technology plans. (3) Impose additional recordkeeping requirements.
Before e-rate, Wireline Bureau attorney Karen Franklin said, only 14% of public school classrooms were Internet connected, and by 2002 that figure had risen to 92%. The measures adopted included a more transparent process for updating the annual list of services eligible for support. Franklin said the program administrator had published an annual list on its Web site of services for which discounts could be received. Under the changes, the FCC will require the administrator to file its service list with the Commission by a specified date each year, and it will seek comment before making it official.
The order also establishes procedures for future unused funds that would be carried forward from a given year, Franklin said. The Commission concluded that $420 million unused 1999-2001 funds would be made available in the first quarter. The further notice seeks comment on whether to amend the discount matrix used to change the level of discounts for which applicants are eligible and on possible revision of the program definition of rural area and Internet access.
The e-rate program has been under fire recently on Capitol Hill. House Commerce Committee Chmn. Tauzin (R-La.) raised concern about fraud in the program, which funds telephony and Internet access in schools and libraries. He asked the General Accounting Office (CD Dec 3 p5) to examine program policies, raising concern about alleged fraud and abuse. That probe comes on top of one by the House Commerce Oversight Subcommittee.
“The rules we adopt today should increase the accuracy and effectiveness of disbursements by, for example, precluding eligible entities from upgrading or replacing internal connections with universal service funds on a yearly basis, clarifying what constitutes permissible maintenance costs and limiting the transfer of equipment purchased with universal service discounts,” FCC Chmn. Powell said.
Copps and Adelstein said they hoped the proceeding could fix a mistake in the eligible services list that had hurt applications from rural schools and libraries in N.D. and elsewhere. Copps said those rural schools and libraries had built networks based on dark fiber. “Now the signals have changed and dark fiber is no longer eligible,” Copps said. “We need to reverse this recent action and get our policy regarding support for dark fiber straight once and for all.” He said nothing in Sec. 254(h) of the Telecom Act mandated the exclusion of dark fiber from e-rate support. Copps also cautioned that changes to weed out waste and fraud shouldn’t unwittingly make the program more complicated.
When private companies make decisions about telecom investments, particularly on equipment, they generally don’t expect to replace that gear year after year, Adelstein said. “Our rules in the Schools and Libraries program have permitted schools and libraries to do just that,” he said: “Today we change that.”