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FCC Votes to Fully Fund E-rate Program

The Federal Communications Commission voted May 26 to fund the E-rate program at its $2.25 billion cap for the 1999-2000 funding year.

Based on Schools and Libraries Division projections of the demand reflected in applications submitted during this year's filing window, that amount would support all eligible requests for telecommunications services and Internet access and the requests for internal connections of almost all applicants with discount rates of 60 percent or higher. The SLD has noted, however, that its projections have a margin of error of between 5 and 6 percentage points and said that error would increase as smaller samples, such as the requests of a particular discount bands were calculated. The SLD had projected that altogether, applications submitted during this year's filing window contained requests totalling $2.43 billion.

As the commission voted to increase the available funding by nearly a billion dollars, when compared on an annual basis, it appeared that the political climate surrounding the E-rate program had shifted noticeably since last June, when the commission moved to reorganize the Schools and Libraries Corporation, extend the funding year by six months and limit the available funding.

At an oversight hearing by the Senate Commerce Committee the day before, the five commissioners were grilled on the full range of issues before the FCC, not just the E-rate program, which had dominated a similar hearing the year before. Long-time supporters of the E-rate program, including Sen. John D. Rockefeller IV, D-WV, and Sen. Olympia Snowe, R-ME, praised the commission for the progress the program has made so far. Only Sen. Kay Bailey Hutchinson, R-TX, focused her questions on old charges about the E-rate amounting to an illegal "tax" on the American consumer.

The program's supporters had long contended that once schools and libraries actually received the funding, that attacks on the program would be muted. Most of the criticism of universal service centered on the commission's failure to move as rapidly to reform the program designed to subsidize the cost of service to high-cost areas, primarily in rural America. Senators from rural states warned the commission that support for universal service could be jeopardized if that program suffered while the schools and libraries program flourished.

The commission reordered its agenda the next day to address two matters related to the high-cost program first before moving on to its vote on the schools and libraries program. And E-rate supporters were bolstered by what was acknowledged as the unprecedented attendance at a commission meeting of more than a dozen members of Congress-all members of the Congressional Black Caucus, on hand to demonstrate their support for the program.

In the end, the vote was 3-2, with Commissioner Harold Furchgott-Roth dissenting, and Commissioner Michael Powell, dissenting in part. In his comments, Powell said he "remained uncomfortable with the structure and the parameters of the program" and was unsure that "the increase is needed as opposed to wanted." He said he found it "unremarkable" that demand was high, and noted that the commission makes no judgment on the educational value of the requests, but "leaves it to local officials who have insatiable appetites."

Powell added that it "feels like we are driving very fast along a dark road without our headlights on. . . .We speed along as if we are racing a dyingchild to the emergency room. . . . Doing things a little slower is more likely to assure a safe arrival."

Commissioner Gloria Tristani then abandoned her prepared remarks to talk passionately about her father, who served in Congress with only a 7th-grade education "and what he was taught in the libraries of Albuequerque." But she said not every student is as motivated as he was, and that opportunities must be made available. When she wound up by saying there was no time to lose when it came to getting technology into underprivileged schools, supporters in the audience broke into applause.

Furchgott-Roth, a persistent critic of the program, complained that he had been unable to get any information about whether the funds had gone to the lowest bidder, how effective the first year funding commitments had been or which states would get the money in the second year. Then he added, " 'Don't worry,' I'm told. 'Consumers will never know about it.' "

But in the end, the program had the three votes it needed to achieve full funding. And the SLD has a funding cap with which it will be able to start processing funding commitments for the coming year, once its data entry and Program Integrity Assurance reviews are finished.

Following the FCC vote, Cheryl Parrino, CEO of the Universal Service Administrative Company, said, "We are pleased that the commission has provided timely direction to us so that all consumers continue to receive universal service support efficiently and effectively without delay." SLD CEO Kate Moore added, "We appreciate the decisive action taken today by the FCC. This decision gives the SLD the guidance necessary for processing applications for Year 2 discounts and for issuing funding commitment decision letters.

As for the first year of the program, through May 21, the Universal Service Administrative Company had distributed about $350 million worth of the $1.665 billion in funding commitments that the SLD had approved by the end of February, either through reimbursement checks or discounts on service provider invoices. The SLD has taken steps to try to boost the volume of reimbursement forms that are filed.

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