Internet Promotion Program Abused
Congress investigates failures in E-Rate effort to bring Internet access to poor and rural communities.
Grant Gross, IDG News Service
WASHINGTON -- U.S. House members are promising to investigate an embattled government program intended to bring telephone and Internet access to schools and libraries in poor areas.
Members of the House Subcommittee on Oversight and Investigations heard testimony Thursday about alleged mismanagement of the E-Rate program in Puerto Rico. The nationwide program has a $2.25 billion annual budget funded by telecommunications carriers through the federal Universal Service Fund. In February, subcommittee staffers found $23 million worth of networking equipment intended to go to Puerto Rico schools sitting in a warehouse, reportedly not moved out of the warehouse for about four years.
The Puerto Rico problems are a fraction of the "waste and abuse" found during a year-and-a-half subcommittee investigation into the E-Rate program, said subcommittee chairman Jim Greenwood, a Pennsylvania Republican.
Abuse Acknowledged
In late May, NEC-Business Network Solutions pleaded guilty to defrauding the E-Rate program and agreed to pay $20.6 million in fines and restitution.
Earlier this year, SBC Communications agreed to return $8.8 million to the Federal Communications Commission after equipment was not installed in Chicago schools. The Department of Justice has investigated E-Rate fraud in New York City and Milwaukee, and recent newspaper reports have alleged abuse in several other cities.
"We have found that the program's current structure and administration invites scams--both simple and sophisticated--and wastes serious amounts of money," Greenwood said. "Whether it be bid-rigging, poor planning, a lack of meaningful competition or loopholes in the program's rules, a common and tragic theme occurs--many children, perhaps hundreds of thousands, are deprived of the educational benefits."
Private Oversight Questioned
The E-Rate program, sometimes called the "Gore tax" after E-Rate champion and former U.S. vice president Al Gore, was developed as part of the Telecommunications Act of 1996. Telecom companies often pass the tax onto consumers in the form of "universal service fees," and the program has become a target of some congressional Republicans. Administering the E-Rate funding is Universal Service Administrative, a subsidiary of the National Exchange Carrier Association, a telecom trade group.
Greenwood questioned this private control of the program by the telecom companies paying the tax.
"This management structure is troublesome, and at the very minimum, its fox inside the henhouse appearance is more than a little disconcerting," he said.
The subcommittee plans more hearings on the matter. Representative Gene Green, a Texas Democrat, said legislation may be necessary to fix the program's problems.
Improvements Suggested
During the hearing, Manuel Diaz Salda??a, comptroller of the commonwealth of Puerto Rico, outlined several recommendations to fix past problems with the E-Rate program there, including a warning to Puerto Rico's Department of Education to follow competitive bidding rules.
"The proper use of commonwealth and federal funds, especially in ... programs that are directly related to the proper education of children, is a matter of serious and vital concern to our office," Salda??a told the subcommittee.
Others at the hearing defended the E-Rate program, despite abuses. The program has helped many schools and libraries in poor areas, said Representative Bobby Rush, an Illinois Democrat. "We should not let a few bad apples spoil the bushel," he added.
