FCC Issues New E-Rate Rules To Help Simplify the Program

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In an effort to curb E-rate waste, fraud, and abuse—as well as simplify the $2.25 billion federal program for applicants—the Federal Communications Commission has announced a series of new program rules.

The rules contained in the FCC's "Third Report and Order," which go into effect Jan. 23, prevent schools from transferring discounted telecommunications equipment to other locations for three years, establish a simpler method for updating the list of eligible E-rate services, and limit financial support for internal telecommunications connections.

The FCC also announced that it would allow $420 million in unused E-rate funds left over from previous years to be utilized for the current funding year. The surplus was available because schools didn't use all of their appropriated funds.

"There are some positive changes that will make the overall program align with the original goal," said Sara Fitzgerald, the vice president of communications with Funds for Learning, an educational technology consulting firm based in Arlington, Va.

Established by Congress in 1996, the E-rate program provides discounted telecommunications services for U.S. schools and libraries. However, it is under scrutiny because of criticisms that waste, fraud, and abuse have plagued the program. ("FCC Moves to Purge Corruption From E-Rate," April 30, 2003.)

Mel Blackwood, a spokesman for the Universal Services Administrative Co., a nonprofit corporation created by the FCC to oversee the E-rate program, said USAC officials would administer the changes as directed by the report. But he would not comment on the effects the new rules might have on schools.

Ms. Fitzgerald said the new rules reflect the FCC's growing awareness of some of the program's problems, the rapid evolution of the school technology market, and the need for applicants to assume more responsibility for the funding they receive.

One major benefit for schools outlined by the report will be the more straightforward list of eligible services. The FCC plans to distribute the list earlier in the application cycle.

Internal Connections

Some educators are not happy, though, with the limits that the FCC has placed on financial support for internal connections, including aid for wiring, file servers, and local networks. Under the new rule, applicants will be eligible for discounts on those items only two out of every five years, starting in 2005.

Moreover, with the high demand for internal connections, experts say that only extremely poor school districts may end up qualifying for the limited aid.

"I think this is going to be a very challenging thing to manage," Ms. Fitzgerald said.

The new rule on internal connections, she said, is designed to encourage schools to plan ahead.

"The FCC is hoping this will enable everyone to plan, but that may be wishful thinking on their part," Ms. Fitzgerald said, "because schools are forced to work with the budgets they have today."

Vol. 23, Issue 18, Page 11

Published in Print: January 14, 2004, as FCC Issues New E-Rate Rules To Help Simplify the Program
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