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'E-Rate' Discounts Attract Scrutiny on Hill

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The federal "E-rate" program of telecommunications discounts for schools and libraries is off to a fast start across the country but has run into a new round of flak on Capitol Hill.

Several influential senators, including John McCain, R-Ariz., Ernest F. Hollings, D-S.C., and Ted Stevens, R-Alaska, have raised questions about the Federal Communications Commission's handling of the program.

Some political observers say the senators could be seeking more control over the program, which touches directly on the high-profile issues of education and telecommunications reform.

"There are huge political incentives for members of Congress to be involved," said Sarah Binder, a fellow at the centrist Brookings Institution in Washington who specializes in congressional politics.

A Popular Program

Schools, districts, libraries, consortia, and states could begin applying to the Schools and Libraries Corp. for "E-rate'' telecommunications discounts on Jan. 30. The following statistics were compiled Feb. 24.


Total applications received: 19,300
Percentage received on-line: 85
Percentage received by mail: 15
Number applying for new services: 13,800
Number of districtwide applications: 5,228
Number of statewide applications: 24
SOURCE: Schools and Libraries Corp.

Schools and libraries have been lining up in droves to apply for the education-rate discounts since the filing period began Jan. 30, according to the Schools and Libraries Corp., which is administering the program.

Those institutions are eligible to receive discounts of 20 percent to 90 percent, depending on student poverty levels, for a wide range of telecommunications services, including Internet access and school networks.

As of Feb. 24, the SLC had received 19,300 applications, most of which were filed electronically at the corporation's World Wide Web site. Nearly 14,000 of those applications were for discounts on new services.

"We're very pleased," said SLC Executive Director Ira Fishman. "It's particularly heartening that this is ranging across all the folks who can benefit--rural, poor, urban, suburban, Native American. It's across-the-board participation."

Political Scrutiny

But Sens. McCain and Stevens, along with a few other members of Congress, have criticized the way the FCC set up the discount program last year under the Telecommunications Act of 1996.

In a report requested by Mr. Stevens, the General Accounting Office found that the FCC exceeded its authority when it directed an industry group, the National Exchange Carriers Association, to create the SLC and the Rural Health Care Corp., which runs a similar discount program for nonprofit health providers.

The GAO said the Government Corporation Control Act, passed in 1945, says a federal agency must be specifically authorized to establish or acquire a corporation to act as its agent. The law was intended to curb the proliferation of government-owned corporations that are not accountable to Congress.

The telecommunications law did not give the FCC statutory authority to direct the exchange carriers' association to set up the two corporations, the GAO said.

The FCC has disputed the conclusion of the congressional investigative agency. A hearing at which FCC Chairman William E. Kennard was scheduled to respond to the report was postponed last week.

In another sign of lawmakers' interest in playing a bigger role in the E-rate program, Mr. McCain, the chairman of the Senate Commerce Committee, presented a bill last month to require schools to install filtering devices to block out pornography transmitted over the Internet as a condition of receiving the discounts. Schools and library groups that have lobbied for the E-rate program have called the proposal an unnecessary and unwanted federal mandate. ("Bill Would Pressure Schools To Filter Out On-Line Smut," Feb. 18, 1998.)

And much of the telephone industry is still against key features of the program. Phone companies object to underwriting the E-rate fund, into which they may have to pay $2.25 billion annually.

Last December, under corporate and congressional pressure, the FCC reduced its collections for the fund for the first six months to $625 million. But the surge of funding requests by schools and libraries may lead to much higher collections before the year's end.

Conservative commentators and economists have recently assailed the funding method as a new tax. Larry Irving, the administrator of the National Telecommunications and Infrastructure Administration, an agency in the U.S. Department of Commerce, replied last week that providing telecommunications discounts to underserved populations is "a concept that's existed for decades" and now has been expanded to schools and libraries.

Popularity Counts

Other observers put the GAO report into political perspective.

"The Congress can fix [the fcc's mistakes] relatively quickly," said a lawyer for a school group who would not be quoted by name. "The question is going to be how much support there is on the Hill for the program."

Adam Thierer, an economist and fellow at the conservative Heritage Foundation in Washington who opposes the E-rate on economic grounds, said he nonetheless doubted that Congress would scotch such a popular program.

"They want to take this to their stump speech. If Congress doesn't make this their baby, Al Gore will," he said. The vice president has positioned himself as a champion of educational technology.

School and library representatives who pushed for the E-rate are banking on the program's appeal to insulate it from politics.

Lynne E. Bradley, the deputy executive director of the American Library Association and a Washington lobbyist for a coalition of schools and library groups, said, "Our message to schools and administrators who are filing applications and preparing technology plans is 'Do not be disheartened.'"

Leslie Harris, a lawyer who is a consultant to the International Society for Technology in Education and the Consortium on School Networking, agreed.

"When members of Congress understand how important this is to their communities, then that will trump all the gamesmanship and political maneuvering that is the stuff of Washington," she said.

But, she added, "nothing is ever over in Washington."

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