E-Rate: The Road Ahead

Federal officials are scrutinizing the E-rate program to determine whether it should be overhauled, or even ended.

The federal E-rate program has for eight years provided the financial momentum behind the increasing use of the Internet and other telecommunications services in schools across the country. The greater use of up-to-date communications in classrooms, including distance learning and virtual schools, attests to the success of the program.

But in the next few years—perhaps sooner—the $2.25 billion-a-year program, which Congress and President Clinton authorized as part of the Telecommunications Act of 1996, will face arguments in Congress and elsewhere that it has fulfilled its purpose, or that it must be significantly overhauled because of mismanagement or fraud in the use of E-rate aid.

Those developments are likely, in part, because of a current congressional investigation into admitted, and alleged, waste and fraud by companies that have provided services under the program. Also pushing a re-examination of the program is the expected reopening of U.S. telecommunications law to respond to vast changes in the industry since the “education rate”...