SLD: eRate demand drops $1 billion in 2003

Requests for 2003 eRate discounts will total about $1 billion less than last year, the Schools and Libraries Division (SLD) of the Universal Service Administrative Co. announced April 3. The group, which administers the program, attributes this decline to its increased vigilance and warnings concerning waste, fraud, and abuse. “Our enforcement actions are starting to pay off,” SLD spokesman Mel Blackwell said.

Throughout the filing window for 2003, SLD warned applicants to make sure they adhered to the program’s rules, because it had identified a pattern among 2002 applications that violated the eRate’s competitive-bidding requirements. Many of these 2002 applications came from small schools and districts requesting internal connections at the 90-percent discount level.

Perhaps not coincidentally, the largest drop in 2003 applications occurred in requests for internal connections at the 90-percent discount level. Requests for these Priority Two services declined by $500 million (19 percent) compared with last year’s requests. Demand for telecommunications services shrank by $100 million (7 percent). The rest of the decline—about $445 million—occurred in applications requesting internal connections at discount levels of 89 percent or below.

In contrast to the overall trend, demand for internet access increased by $27 million (6 percent).

“Maybe people are looking at what you can apply for and heeding some of our warnings,” Blackwell said.

He added, “This is going into our sixth year, so applicants are getting smarter. They know better what will and won’t get denied.”

In total, applicants requested an estimated $4.718 billion, down 18 percent from the $5.736 billion requested in 2002. This estimate is based on the dollars requested in the 41,146 applications received or postmarked by Feb. 6, 2003, the close of the Form 471 filing window.

Despite the billion-dollar decrease, demand for eRate discounts is still high. For the third year in a row, applicants have requested more than double the $2.25 billion available. “It’s still more than we have [to give],” Blackwell said.

Applicants requested an estimated $1.745 billion for telecommunications services and internet access. Demand for internal connections at the 90-percent level is an estimated $2.116 billion. The SLD expects these figures to decrease slightly once it has weeded out duplicate, incomplete, and ineligible applications.

Although the dollar amount requested for 2003 is less than last year, the SLD received 14 percent more applications. “There were more applications sent in than last year because we asked people to break up their applications,” Blackwell said.

The SLD asked applicants to submit their funding requests for internal connections (Priority Two services) and telecommunications services and internet access (Priority One services) separately. The agency has not yet calculated how many unique entities applied. The number of applicants who filed online rose slightly. For funding year 2003, 92.2 percent of applicants filed online, compared with 85.7 percent in 2002.

Budget deficits, in addition to the SLD’s attempts to “weed out the bad guys,” might have contributed to the decline in 2003 requests, according to Sara Fitzgerald, vice president of communications for the eRate consulting firm Funds for Learning LLC.

“I was not necessarily surprised that [eRate demand] had decreased for 2003,” Fitzgerald said. “To be able to use eRate discounts you have to use some of your own money, and it may reflect that schools’ budgets are pretty tight.”

Also, in working with applicants, Fitzgerald said, she often hears them say they are not poor enough to qualify—so why bother. “It seems people have sort of given up, given the way the program has gone in the last few years, [just assuming] that they won’t be funded,” she said.

But that attitude sometimes can be costly. With its most recent wave of funding commitments for the 2002 program year, issued March 31, the SLD began fulfilling requests for internal connections down to the 81-percent discount level.

“Now that they’ve taken it down to the 81-percent level, so many school [officials] are saying, ‘Oh my God, why didn’t I apply?'” said Gary Rawson, infrastructure planning and eRate coordinator for Mississippi’s Information Technology Services department. Rawson is also chairman of the State eRate Coordinator Group, which is sponsored by the Council of Chief State School Officers.

eRate Task Force

In other eRate news, the SLD announced that it has created an eRate Task Force to identify areas where improvements can be made to combat potential waste, fraud, and abuse by both service providers and applicants.

The task force is a response to renewed criticisms of the eRate in light of recent evidence that some applicants and service providers having been stretching the program’s rules (see “Lawmakers query FCC about ‘troubling’ eRate abuse,”

“The eRate Task Force is one of the highlights going forward,” Blackwell said. “It won’t have an impact on 2003 because we’ll be working through the summer, and then we’ll have to report to the [Federal Communications Commission, which oversees the eRate] before any policies can be made.”

The task force will consist of 14 members representing schools, libraries, and vendors. Members of the task force will meet to review every aspect of the eRate program where waste, fraud, and abuse can occur—including the application process, application review and funding commitment procedures, and invoicing. They also will review publicly available documents to determine what changes could be made to help prevent waste, fraud, and abuse.

The task force will produce a final report of its recommendations this summer.

“I think it’s a good, positive step,” Fitzgerald said. “Hopefully some good recommendations will come out of it.”

The SLD created a similar task force a few years ago to find ways to streamline the application process.

Besides starting a new task force, the SLD said it would continue educating applicants, issuing warnings, and streamlining the application process. “It’s always a goal that we [make the program] easier,” Blackwell said.


Schools and Libraries Division

Funds for Learning LLC

Council of Chief State School Officers

Federal Communications Commission


Follow up: Novell challenges SCO in Linux fight

Novell Inc. has announced that it—not SCO Group—owns the Unix copyrights and patents that form the basis of SCO’s $1 billion lawsuit against IBM. SCO claims Big Blue unlawfully allowed proprietary Unix computer code to be copied into the open-source operating system Linux. The controversy is important to ed tech because the outcome could affect the future of Linux, which has been growing in popularity for servers in schools, colleges, and government agencies.

The stakes in this increasingly baroque dispute could rise still higher. Linux has traditionally been viewed as an operating system strictly for servers. Now, however, Linux has begun migrating to personal computers as well, a setting where Microsoft long has held sway virtually unchallenged.

When Hewlett-Packard introduced a Linux-powered laptop in Thailand not long ago, for instance, demand was so great, according to the daily newspaper Bangkok Post, that the Thai ministry of technology began talks to bring in other manufacturers if HP failed to keep up with orders. Serious Linux competition for Windows on personal computers could pose a major headache for Microsoft.

Some open-source advocates claim the lawsuit by SCO is intended to slow or stop the momentum of Linux. Others maintain the suit is an effort by SCO to make itself desirable as an acquisition target for IBM, Microsoft, or other giant technology companies. SCO contends it is merely protecting its proprietary rights to Unix computer code and seeking fair compensation from those who use it.

Shortly after filing the IBM suit, SCO sent letters to 1,500 Linux customers claiming that Linux contains “unauthorized derivatives” of Unix and warning that Linux users might be subject to legal liability unless they pay fees to SCO. (See “SCO throws legal scare at Linux users,”

Microsoft quickly agreed to license SCO’s Unix code. Critics claimed the move was designed to provide funding for SCO’s Linux fight and lend credibility to SCO’s infringement claims.

But Microsoft general counsel Brad Smith is quoted by CNet News as saying that acquiring the license from SCO “is representative of Microsoft’s ongoing commitment to respecting intellectual property and the IT community’s healthy exchange of IP through licensing. This helps to ensure IP compliance across Microsoft solutions and supports our efforts around existing products, like services for Unix that further Unix interoperability.”

Unix was initially developed more than 30 years ago by AT&T. Then AT&T sold Unix to Novell. Novell, in turn, sold the operating system to SCO in 1995, but—according to Novell boss Jack L. Messman—never conveyed to SCO ownership of the Unix copyrights.

In a letter to SCO President and CEO Darl McBride, Messman spelled out the Novell position in no uncertain terms: “SCO is not the owner of the Unix copyrights. Not only would a quick check of U.S. Copyright Office records reveal this fact, but a review of the asset transfer agreement between Novell and SCO confirms it. To Novell’s knowledge, the 1995 agreement governing SCO’s purchase of Unix from Novell does not convey to SCO the associated copyrights.”

McBride replied that Novell’s assertion derives from what he called a “contradiction” in the 1995 contract with SCO: One part of the contract “said Novell had some rights to copyrights and patents,” McBride acknowledged. But much more of the contract describes in detail copyrights and patents that were to be transferred to SCO, McBride said.

McBride added that his company has checked with attorneys and top executives who were involved in the 1995 transaction. All agreed that the contract’s intent was to give SCO “the entire rights to the Unix business,” including copyrights and patents, McBride contended.

Messman’s letter to McBride went on to warn that SCO itself could be subject to liability: “SCO’s actions are disrupting business relations that might otherwise form at a critical time among partners around Linux technologies, and are depriving these partners of important economic opportunities.

“We hope you understand the potential significant legal liability SCO faces for the possible harm it is causing to countless customers, developers, and other Linux community members. SCO’s actions, if carried forward, will lead to the loss of sales and jobs, delayed projects, canceled financing, and a balkanized Linux community.” Novell’s boss also directed key questions to SCO: “What specific code was copied from Unix System V? Where can we find this code in Linux? Who copied this code? Why does this alleged copying infringe SCO’s intellectual property? By failing to address these important questions, SCO has failed to put us on meaningful notice of any allegedly infringing Linux code, and thus has withheld from us the ability—and removed any corresponding obligation—to address your allegation.”

In recent days, SCO has offered to show examples of the allegedly pilfered code, but only if those scheduled to view it consent to signing a non-disclosure agreement. Signing such an agreement would negate the value of seeing the code, Novell and others have responded.

Will all this sound and fury hurt the Linux movement in education and elsewhere? Novell clearly thinks so, but a spokesman for SuSE, one of the firms circulating Linux, said his company hasn’t heard of a single prospective user who has altered course because of the controversy.

Leading market research firms are split on the likely impact of the controversy on Linux. The firms also are divided on what Linux users and prospective users should do now.

In May, analyst firm Gartner Inc. told customers they should minimize their use of Linux on important systems because of SCO Group’s warnings about legal liability.

“Although Gartner has reservations on the merits of [SCO’s claims], don’t take them lightly,” advised Gartner analyst George Weiss. “Minimize Linux in complex, mission-critical systems until the merits of SCO’s claims or any resulting judgments become clear.”

But Forrester Research, another prestigious firm, had this advice for clients: “Enterprises should not stop their Linux rollouts. Why not? Three reasons based on a risk/benefit analysis: (1) The cost-benefit of migrating high-priced Unix on RISC servers to low-cost Linux on Intel servers is highly positive, (2) the risk that tiny SCO can muster the resources to effectively litigate against even one or two of the 1,500 companies it has threatened is low, and (3) IBM will further dilute that risk by intervening to eliminate the threat of legal action.”


Novell on SCO and Linux (with text of letter from Messman to McBride)

SCO Group


This program aims to enhance the school readiness of young children, particularly disadvantaged young children, and to prevent them from encountering difficulties once they enter school. Projects funded under will provide high-quality, sustained, and intensive professional development for these early childhood educators in how to provide developmentally appropriate school-readiness services for preschool-age children that are based on the best available research on early childhood pedagogy and on child development and learning, including the age-appropriate development of oral language, phonological awareness, print awareness, alphabet knowledge, and numeracy skills. Eligible applicants will consist of a partnership between higher education and local or state schools districts, Head Start, or other eligible groups. An estimated $14.9 million is available through this program. Between five and 12 awards will be made, ranging between $1.2 million and $2.8 million.


The purpose of this U.S. Department of Education program is to support academic achievement through awarding competitive grants to local school districts applying on behalf of large public high schools for the planning and implementation or expansion of small, safe, and successful learning environments in large public high schools. There is $135 million available for fiscal year 2003 and awards will range between $25,000 and $250,000 depending on the number of schools involved. Both planning and implementation grants will be awarded under this competition. Applicants are advised that school districts may submit only one implementation grant application and one planning grant application.


This U.S. Department of Education (ED) program supports activities under two categories. The first supports public and private efforts in which funds are matched by private organizations to assist states, school districts, and schools in making informed decisions regarding approving or selecting providers of comprehensive school reform, consistent with the requirements of the Elementary and Secondary Education Act. The second category foster the development of comprehensive school reform models, and provides effective capacity building for comprehensive school reform providers to expand their work in more schools, assure quality, and promote financial stability. Approximately $7 million of fiscal year 2002 funds are available for this grant competition. ED expects to award approximately $2 million for technical assistance in making informed decisions and approximately $5 million to support model development and capacity building. ED anticipates making one to two awards under each category.


Educational Pictures Inc. is awarding $15,000 in classroom scholarship subscriptions to one hundred schools worldwide. The schools will receive access to Educational Pictures’ features a standards aligned image database with a simple interface and image messaging system. To receive a scholarship subscription for one classroom in your school, principals, librarians or teachers can submit a written request to with scholarship in the subject field and a short paragraph about how standards aligned images are good for education. The first one hundred schools to eMail starting March 27, 2003 will be awarded a scholarship and passwords good from September 2003 through June 2004. One scholarship is available per school.