Senate Approves Last Minute Telecom Package

As its final act of 2004, the U.S. Senate late Wednesday night approved a telecommunications package that includes reopening the E-Rate financial pipeline and creating a federal agency spectrum relocation fund. Lawmakers also authorized matching grants for state E-911 program enhancements.

In the wake of charges of fraud and abuse in the federal E-Rate program, the Federal Communications Commission (FCC) in August moved to shore up the accounting practices associated with the fund, which provides financial support for schools and libraries to connect to the Internet.

Part of the changes involved forcing the E-Rate fund to have enough upfront cash to cover its commitments, even if payments were not due until 2005. The new accounting rules forced the Universal Service Administrative Company (USAC), which administers the program, to delay more than $400 million in payments to schools and libraries.

Wednesday night’s Senate vote grants a one-year exemption to the accounting rules and will allow payments to be made when President Bush, as expected, signs the bill. FCC Chairman Michael Powell said earlier this week that the exemption was necessary to avoid telephone companies increasing the E-Rate fees on consumer bills.

“USAC recently filed its projections of demand and total contribution base for the first quarter of 2005. These filing demonstrate that the [exemption bill] is necessary to mitigate unnecessary increases,” Powell said.

The spectrum relocation legislation provides a funding mechanism to help federal agencies relocate to comparable spectrum to make way for private wireless carriers’ advanced wireless service offerings. The government already has identified the 1710-1755 MHz band, used mainly by the military, for relocation to the private sector.

According to Jennifer O’Shea, press secretary for bill co-sponsor Conrad Burns (R-Mont.), the legislation requires the Office of Management and Budget and the National Telecommunications and Information Administration to provide a cost estimate and timeframe for relocation before an FCC auction of the vacated spectrum.

The FCC would then auction the spectrum, but cannot close the auction until the bidding equals at least 110 percent of the estimated relocation cost.
The winning bidder’s money will be placed in a trust fund and the relocating agency will draw from that fund.

The E-911 bill authorizes $250 million in matching grants to state and local governments to improve emergency communications. The grants can be used for infrastructure improvements, equipment purchases and personnel training. The legislation also bars states from participating in the program if they divert E-911 telephone bill surcharges for non-E-911 purposes. The bill was co-sponsored by Burns and Hillary Rodham Clinton (D-N.Y.).

“Since September 11 we have all been working to improve our homeland
security and make our nation a more secure place, and I think folks around the country have rallied behind this critical safety bill,” Burns said in a statement. “Many people have played a part in this, and getting the E9-11 bill through the Senate is a huge win.”

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