FCC moves to ban eRate ‘bad actors,’ approves wireless

Any applicant or service provider who is convicted of criminal violations of eRate policies or held civilly liable for eRate misconduct will be banned from participating in the program for three or more years, the Federal Communications Commission (FCC) ruled April 23 at an open meeting in Washington, D.C.

The commission also ruled that wireless connectivity is eligible for eRate funding.

The agency’s decision regarding so-called “bad actors” comes as allegations of waste, fraud, and abuse threaten to derail the $2.25 billion-a-year program, which provides telecommunications discounts to schools and libraries.

“Debarring those who have shown themselves as ‘bad actors’ is an important step in protecting the integrity of the program and deterring others with bad intent,” said Romanda Williams, staff attorney for the FCC’s Wireline Competition Bureau, who presented the new rules.

Said FCC Chairman Michael Powell: “It’s very important that we have taken a much tougher and increasingly stronger stand against those who would abuse, waste, create fraud, and really are stealing the fruits of this program away from our children. I think it’s a heinous misuse of the public trust.”

The FCC commissioners expressed unanimous support for the eRate program and its success, but they agreed more work still needs to be done to make the program more efficient and effective.

“When this program was started, we didn’t appreciate all the ways one might manipulate our rules, and that’s what we’re learning here. We’re learning ways to make them better,” said Commissioner Kathleen Q. Abernathy.

The agency’s ruling takes a step toward preventing waste, fraud, and abuse, but it marks only the first in a series of comprehensive reforms the FCC will undertake.

“Great programs like the eRate do not thrive without regular care and review. The gains we have made can vanish without continued attention and, indeed, without ongoing vigilance, and that’s why our actions today are so important,” Commissioner Michael Copps said.

For example, a bill introduced into the House of Representatives in March, called the eRate Termination Act, would kill the eRate. Sponsored by Colorado Republican Tom Tancredo, the measure would end the eRate immediately and remove all mention of it from the Telecommunications Act of 1996, the law that authorizes the program.

Tancredo’s bill is the most extreme in a series of actions in the House following recent reports of widespread eRate abuse from the FCC’s Office of Inspector General and the Center for Public Integrity. The report was not the sole motivation for Tancredo, however, because he introduced a nearly identical bill several years ago.

Two other House Republicans, on the other hand, come more recently to the cause. House Energy and Commerce Committee Chairman Billy Tauzin, R-La., and Rep. James Greenwood, R-Pa., who heads that committee’s oversight and investigations subcommittee, have launched an investigation into the alleged abuses (see “Lawmakers query FCC about ‘troubling’ eRate abuse,” http://www.eschoolnews.com/news/showStory.cfm?ArticleID=4304).

Other eRate changes

The FCC’s April 23 actions reflect only a fraction of the items from a Notice of Proposed Rulemaking released in January 2002. FCC Commissioner Abernathy has organized a public forum scheduled for May 8 to explore eRate issues further with stakeholders.

Here are other rules adopted April 23:

  • Requests for duplicative services—where a school or library receives the same functionality from multiple services at the same time—will not be funded.

  • Voice mail is now eligible for support and will not have to be excluded from the price of telecommunication services.

  • Wireless services are eligible for support to the same extent as wired services.

  • To expedite the approval process, the Universal Service Administrative Co., the agency that administers the eRate, will pilot an online list of eligible equipment to wire schools.

  • Applicants who have received funding-decision letters may elect to pay their service providers only the full discounted cost of services received, instead of being forced to pay the undiscounted cost and waiting for reimbursement.

Besides these newly adopted rules, the FCC also issued a Further Notice of Proposed Rulemaking to seek additional comments from the public about creating an online checklist of eligible services, rolling over any unused funds to future program years, and expanding the circumstances under which participants will be debarred from the eRate.

At the meeting, the commissioners also brought up issues they would like to have addressed in the future.

“We need to work harder to ensure that deserving school districts and libraries around the country receive support in a timely fashion,” Copps said, referring to the fact that funding commitments for the 2002 program year—which began last July and ends this June 30—are still being issued.

The FCC also needs to clarify the program’s competitive-bidding rules so applicants are assured of getting services at the lowest price, Copps added. Although the FCC needs to get serious about rooting out abuses, these programmatic challenges are an equally pressing priority, he said.

“I’m interested in [whether] we should adjust” how discount levels are determined, Commissioner Jonathan Adelstein said.

Because only applicants that qualify for the highest discount levels have received funding for internal connections in recent years, Adelstein wants to explore whether the FCC should set a minimum level of connectivity—based on the speed of connections or the number of computers on site per student—and target funds to the schools and libraries that fall below the baseline.

Also, Adelstein said, “We need to look at whether the request for the same service for the same school is sustainable, or whether we should establish a useful life for equipment.”

eRate experts who spoke with eSchool News said the FCC’s April 23 actions were a positive start. But more needs to be done and defined, they agreed.

“We are encouraged that the commissioners are now moving forward to address the issues that were raised more than a year ago,” said Sara Fitzgerald, vice president of communications for the eRate consulting firm Funds for Learning LLC.

“As far as I know, there have not yet been any criminal convictions or civil cases that have been resolved through the program, but there may be in the future. Again, this is a good first step, but additional sanctions may be necessary to address some of the issues that have been raised about instances of fraud,” she added.

“We also would have liked the FCC to decide it could simply go ahead and roll over the undisbursed funds now, when the need is so great. The Universal Service Administrative Company is about to report to the FCC that its current pool of undisbursed funding from multiple funding years is more than $400 million,” Fitzgerald said.


Federal Communications Commission

Funds for Learning LLC

eSchool News Staff

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