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FCC Adopts Order to Tighten E-rate Auditing and Enforcement

The Federal Communications Commission August 4 adopted a report and order designed to strengthen the E-rate program's auditing and enforcement procedures. The order, the fifth specifically directed at the schools and libraries program, was fully supported by four commissioners, with Commissioner Kevin Martin dissenting in part.

The specific details of the order were not immediately available. However, Mark Stephens, a senior auditor for the Wireline Competition Bureau, said it would "strengthen processes for conducting audits and investigations" and codify procedures of the Universal Service Administrative Company and "update them as necessary" to protect against waste, fraud and abuse.

The new rules, Stephens added, would require applicants to make "important new certifications" and would "tighten technology planning requirements and document retention policies so that misdeeds can be more easily detected." The rules will strengthen the program administrators' ability to collect funds that were found to be disbursed in violation of program rules, and will bar participants from receiving "additional fund benefits if they have failed to repay" the program, according to Stephens. Last week, the commission adopted an order that will enable funds to be collected from applicants if they are found to be responsible for the rule violations.

These new rules do not involve changes in the program's discount matrix, an issue the commission is still reviewing.

All of the five commissioners voiced strong support for the E-rate program. Commissioner Jonathan Adelstein predicted that the program would be regarded as "one of the most important educational initiatives in American history." Chairman Michael Powell described the program as "an enormous and tremendous success" and said it "has to be one of the more successful federal programs that I'm aware of."

However, the commissioners also acknowledged that steps needed to be taken to protect the program from individuals who would seek to profit from it.

"Where there is a pool of money," said Commissioner Kathleen Abernathy, "there are a pool of people who want to divert that money to themselves." The commission, she said, must "balance the need to prevent waste, fraud and abuse with the need to ensure that the program is not so complicated that the schools can't fill out the forms and get the funds…." This, she acknowledged, is "a delicate balance."

Commissioner Michael Copps said the order would commit the FCC to resolve appeals within six months, but it was unclear whether that commitment applied to appeals of commitment adjustment (COMAD) orders, or a more broad range of appeals to the commission. Program stakeholders have complained that substantive appeals to the FCC can languish for years without resolution.

The meeting marked the last for William Maher, chief of the Wireline Competition Bureau. He will be succeeded by Jeffrey J. Carlisle, the bureau's senior deputy chief.

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