School House Shock
Wednesday, October 6, 2004; 9:48 AM
The New York Times reported on the halt to funding on Monday, noting that schools and libraries nationwide "have suddenly stopped receiving any new grants from a federal program that is wrestling with new rules on how it spends $2.25 billion each year to provide high-speed Internet and telephone service. The moratorium at what is known as the E-Rate program began two months ago, with no notice, and may last for months, causing significant hardships at schools and libraries, say state officials and executives at the company that runs the program."
More from the article: "The suspension came after the Federal Communications Commission, in consultation with the White House, imposed tighter spending rules that commission officials say will make it easier to detect fraud and waste in the program. As much as $1 billion in grants the states say they expected to receive by the end of the year may be affected, one official estimate says. That has led state administrators to either take money from other educational programs or postpone paying their phone and Internet companies." Interestingly, the Web site of the Universal Service Administrative Co., the nonprofit organization which handles the program, does not have a notice about the stoppage of the program, nor does the FCC site.
The New York Times: Internet Grants to Schools Halted as FCC Tightens the Rules (Registration required)
Tuesday's hearing "had originally been called to examine waste at the so-called E-Rate program, which administers telephone and Internet services for schools and libraries. But three of the four senators present focused instead on the FCC's decision to impose tighter spending restrictions. The fourth senator, John McCain of Arizona, the Republican chairman of the committee, pressed the witnesses about what steps were being undertaken to monitor the program in light of a series of fraud cases involving telephone companies and equipment makers over the last few years. He expressed irritation that Congress had not been notified about the suspension of the program. Frank Gumper, the chairman of [USAC] told lawmakers that the FCC's decision last week to order a quick sale of more than $3 billion of the program's investments had resulted in a loss of almost $5 million." The FCC did not send a representative to testify at the hearing, the New York Times reported, and despite the agency's offer to work with Congress on the issue, lawmakers told the paper there is not enough time in the session to resolve it.
The New York Times: Internet Grants Cut and FCC Scolded (Registration required)
Reuters explained that E-Rate "is funded by companies that offer long-distance telephone service, like AT&T Corp. and Verizon Communications. They typically pass on those charges to customers. Congress has also been probing waste, fraud and abuse in the $2.25 billion annual E-Rate fund that goes to help wire schools for the Internet. The [FCC] said it was working with prosecutors, including supporting 22 investigations and monitoring 15 others."
Reuters via washingtonpost.com: E-Rate Encounters Flak in Senate (Registration required)
Education Week: Cash Freeze for E-Rate Hits Schools
Government Technology gave details on how the program has made a difference for recipients. "Todd Russ, director of technology for the Public Schools of Robeson County (PSRC), N.C., said when E-Rate began, his district still used dial-up access. 'Now we have a 90 meg connection to our school district. It's made a world of difference in our abilities to connect to the Internet and do different types of Web page access, as well as subscribing to different programs that have video streaming and things like that,' he said. 'There's no way we could have put in that kind of technology without E-Rate funding.'"
Government Technology: E-Rate Inspection
Expect more to come from the FCC's decision to suspend the program. But also expect critics of the program to become more vocal as well. The Atlanta Journal-Constitution in September reported a series of articles on some cases of alleged fraud tied to E-Rate. Today in an opinion piece, the paper is critical of the program for being improperly managed (and gives itself a pat on the back for enterprising reportage):