The Schools and Libraries Division (SLD) of the Universal Service Administrative Co., which administers the $2.25 billion-a-year eRate program, expects to announce some administrative changes for the 2004 program year, but says more specific information will follow.

“We anticipate some changes, but we are not ready to talk about them,” SLD spokesman Mel Blackwell said. “We haven’t got all the details yet.”

For instance, the Oversight and Investigations Subcommittee of the House Committee on Energy and Commerce, which has been investigating eRate waste, fraud, and abuse during the past year, plans to hold several hearings on the eRate this fall.

“The hearings that we anticipate happening are out of the investigations committee,” which is unusual for most hearings, said Leslie Harris, legislative consultant for the Consortium for School Networking, during a Sept. 23 webcast called “eRate and Other Federal Issues: What You Need to Know.”

eRate insiders say applicants should watch for forthcoming hearings and rulemaking that might affect the eRate as early as this year.

Sara Fitzgerald, of eRate consulting firm Funds for Learning, said in an interview, “It’s unclear when [the hearings] are going to take place and how they will be framed. A lot depends on who they invite to speak. They may highlight best practices or not-best practices.”

The Federal Communications Commission (FCC), which oversees the eRate and is responsible for making new rules, is developing a debarment process to ban “bad actors” from participating. Already, one companyConnect2 Internet Networks of New York has been banned, and there might be another debarment soon (see

The debarments “demonstrate that law enforcement is moving forward to address cases where outright fraud was found,” Fitzgerald said.

The FCC also will be considering recommendations proposed by a special eRate Task Force formed by the SLD to help prevent further waste, fraud, and abuse in the program. The proposals most likely to be adopted would change the discount bracket and set a ceiling on the amount of funding for internal connections an entity can receive, Harris said.

However, it’s unlikely these recommendations would affect the program this year. “These changes are on the table, but there is a fairly stringent process that would have to happen to makes these changes [a reality],” Harris said.

Also, the House Subcommittee on Tele-communications and the Internet is holding hearings to decide how best to revise the Universal Service Fund, which pays for the eRate and other programs. The Universal Service Fund is under-funded, because its funding mechanism is based on a world that used landline phones, not cell phones.

As Congress considers how to revise the way funds are collected from telecommunications companies to pay for universal service, eRate advocates will be watching closely to see how any changes might affect the eRate.

Other program changes announced earlier this year will take effect during the coming application cycle. For example, beginning next July, service providers must give applicants a choice of what kind of payment method they would like to use. Applicants can choose between receiving discounted bills or paying in full and then being reimbursed.

Regarding eRate-eligible services, the FCC recently changed the definition of “educational purpose” to mean anything that happens on school property to support education, Fitzgerald said. That means items such as cell-phone service for school bus drivers and telephone lines used to dial directly to police and fire officials when an alarm signals are now eligible.

Voice mail also is conditionally eligible starting this year. “The FCC said voice-mail services should be treated much the same as eMail services,” Fitzgerald said, adding that further clarification of this ruling is expected later this fall.

Applicants are strongly advised to download a copy of the revised Eligible Services List that was posted on the SLD web site Oct. 10, and contact their state eRate coordinator if they have any questions.

See these related links:

School and Libraries Division

Federal Communications Commission

Five sure-fire ways to kiss your funding bye-bye

Want to make sure your funding requests are denied? Want to make sure theres practically no chance for a successful appeal? Its easy! Just do one of these five things:

  • Sign a contract less than 28 days after you filed your Form 470 listing that service.
  • List a service provider as a contact on your Form 470.
  • Submit a funding request for a service that was not listed on a Form 470.
  • Miss the Form 471 filing window.
  • Fail to certify a Form 470 by the close of the Form 471 filing window.