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LECs Receive Most of the Early Payments

According to a recent report released by the Federal Communications Commission, 53 percent of the $191.8 million in discounts or reimbursements that had been distributed by the E-rate program through April 16, 1999 went to local exchange carriers. Another 31 percent went to "non-telecommunications providers," primarily internal connections vendors, 6 percent went to Internet service providers and 4 percent went to interexchange carriers. No other category of service provider captured more than 1 percent.

The tilt toward the LECs probably reflected reimbursements or discounts for local telephone services that E-rate applicants had already been purchasing when their funding commitments were approved in early 1999. For the 1998 funding year, the Schools and Libraries Division authorized $661 million for telecommunications services, $101.8 million for Internet access and $897 million for internal connections.

Through the end of July, the Schools and Libraries Division had authorized about $700 million worth of actual payments.

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