FCC Cuts $1 Billion From 'E-Rate' Program

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The Federal Communications Commission, in a 3-2 vote last Friday, nearly cut in half the new federal "E-rate" subsidies to help the nation's schools and libraries buy telecommunications services.

The FCC will collect $1.28 billion in 1998, well short of the $2.25 billion annual cap the agency had set for the program. It will also fall short of the $2.02 billion in funding requests for 1998 submitted by schools and libraries earlier this year.

FCC Chairman William Kennard, in a statement after the vote, suggested that the reduction was necessary to appease congressional critics of the subsidy program, some of whom wanted to kill it.

"Today's actions respond as fully as possible to the concerns voiced by Congress, yet reflect my unshakable commitment to implementing the [1996] Telecommunications Act's directives that schools, libraries, and rural health centers are afforded access to communcations," he said.

Acknowledging that the funding level would not satisfy the demand, the agency adopted rules of priority that would direct money first to provide discounts for recurring services, such as telecommunications services and Internet access. Only the most disadvantaged schools and libraries would receive discounts for internal connections, such as classroom wiring.

In addition, the agency will shift the program's funding year from a January-to-December cycle to a July 1-to-June 30 fiscal year. It decided to stretch out the first "year" of the program over 18 months.

Some critics on Capitol Hill were not mollified by the changes. Sen. John McCain, R-Ariz., the chairman of the Senate Commerce Committee, said in a statement, "The FCC's latest attempt to recalibrate its schools and libraries program is an exercise in futility."

Vol. 17, Issue 40, Page 35

Published in Print: June 17, 1998, as FCC Cuts $1 Billion From 'E-Rate' Program
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