FCC backpedals on E-Rate management

The Federal Communications Commission last Friday proposed that Congress revamp the way the "E-Rate" and other federally subsidized telecommunications programs are administered.

The FCC's proposal was made after the General Accounting Office criticized the FCC for overstepping its bounds in administering the E-Rate and Telehealth programs, which give "universal service" subsidies to U.S. schools, libraries and hospitals for telecommunications equipment.

The E-Rate, or Education Rate, program is a mainstay of the Clinton administration's plan for using technology as an education enabler across the U.S. economic landscape. The program will provide schools and libraries with up to $2.25 billion annually for five years, starting this year.

The FCC proposed that Universal Service Administrative Co. (USAC)—- an existing organization that handles billing, collection and disbursement for universal-service programs—- be responsible for supporting the E-Rate and Telehealth programs.

Currently, Schools and Libraries Corp. (SLC) administers E-Rate, and Rural Health Care Corp. oversees Telehealth. Both groups are nonprofit organizations set up after the passage of the 1996 Telecommunications Act. In a February letter to Sen. Ted Stevens (R-Alaska), GAO said it found that the FCC had violated the Government Corporation Control Act, which governs the authority of federal agencies to create "agents" to act on agencies' behalf, when the FCC set up the two corporations.

FCC officials said the commission was reacting to GAO's charges but stopped short of acknowledging fault. "The commission stated its belief that it did act lawfully, but [it] welcomed action by Congress to resolve the issues raised by statutory authority that would eliminate any question concerning the commission's authority in this regard," according to a statement from the FCC.

In the May 8 report, the FCC allowed itself some leeway in reconstructing the manner in which the E-Rate and Telehealth programs are administered. "To preserve the distinct missions, expertise and integrity of the schools and libraries and rural health care, support mechanisms, board committees, subsidiaries or divisions within USAC may be appropriate," the FCC said.

The FCC proposed that the reorganization take place by Jan. 1, 1999, and directed USAC to work with officials at SLC and Rural Health Care Corp. on a proposal to consolidate.

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