E-Rate Receives Relief

President Bush has signed a bill to free up money for a program to fund
Internet access for libraries and schools, according to the White House.

The Federal Communications
Commission (FCC) held up money for the E-Rate initiative earlier this year out of concern that the dispursements
were at odds with provisions in the federal accounting guidelines.

The measure (H.R. 5419) enacted into law by Bush exempts the program from those
rules until Dec. 31, 2005. Without the new law, officials had warned that the fees charged to customers to
fund the program could see significant increases.

Under the program, telecom companies or contractors provide eligible
equipment and services to schools and libraries at a discount, and the
federal government covers the difference through the E-Rate
fund.

The E-Rate subsidy was added to telephone bills in 1997 under the Clinton
administration and has been dubbed the “Gore tax” for former Vice President
Al Gore’s enthusiastic support.

The FCC oversees the program, but outsources administration to the Universal
Service Administrative Company (USAC), a private non-profit. Nearly
90 percent of U.S. schools and libraries receive subsidies from the fund.

E-Rate has been a favorite target of Republicans. The House and Energy and
Commerce Committee began investigating the program last year following
a January 2003 report by the Center for Public Integrity,
a non-profit public service journalism organization, that claimed E-Rate was “honeycombed” with fraud.

Two firms have subsequently struck deals
with the federal government related to fraud in the E-Rate program.

The bill signed by Bush also included items to expand 911 access and to pay
for relocation of federal agencies under a spectrum swap plan with Nextel .

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