Some members of Congress have begun speculating whether a government entitlement program riddled with waste and corruption and funded by taxes on telecommunications companies should be terminated. If the so-called E-rate program ended, the average phone bill would drop by $10 or more a year, an annual total of $2.25 billion.
Rep. Joe Barton, chairman of the House Committee on Energy and Commerce, suggested at a hearing last week that the E-rate program had become a billion-dollar boondoggle. "This committee has no choice but to develop legislation to scrap the status quo and apply some common sense to the E-rate program," the Texas Republican said.
E-rate was created in 1996 to wire schools and libraries to the Internet by providing discounts of up to 90 percent on approved products and services. Since then, E-rate administrators have vacuumed in $14.6 billion in telecommunications taxes but have, inexplicably, handed out only $9.2 billion.
A recent Government Accountability Office report exposes the Federal Communications Commission's slipshod management of the E-rate program. Among the GAO's findings: There's no way to tell whether E-rate is working or worth keeping around, its current setup likely violates federal law, and nobody seems to be in charge.
"FCC established an unusual structure for the E-rate program but has never conducted a comprehensive assessment of which federal requirements, policies and practices apply," the report concluded. No wonder one E-rate "provider" pleaded guilty last year to bid rigging and wire fraud, and agreed to pay $20 million in restitution.
If E-rate were run by a private firm that had to follow standard accounting rules, this scheme would have been toast long ago.
But this is Washington, D.C., where the mere act of questioning an entitlement program counts as political doughtiness of the first order. Barton deserves credit for being courageous enough to raise the possibility of rethinking E-rate, which has been a third rail of technology policy for nearly a decade.
"The mismanagement of the E-rate program seems to know few bounds," Barton said. "Unscrupulous vendors have fleeced the program, while underserved communities and telephone customers are paying the price. The FCC, these merchants and certain schools all must share the blame for this disgrace."
This is shaping up to be a partisan divide. At last week's hearing, Rep. Jay Inslee, D-Wash., suggested that he might be open to modest reforms such as moving E-rate away from the FCC and to another agency. More partisan Democrats, including Michigan's John Dingell and Bart Stupak, seem opposed to any changes.
A taxing reform process
A decade ago, when Internet connections were rare and expensive, there was some justification for a national effort to link up schools and libraries.
Today, though, broadband connections are plentiful and inexpensive: More than 94.3 percent of U.S. ZIP codes had high-speed lines available through one or more providers as of last year. In 2002, according to the Department of Education's estimates, 99 percent of public
Biography
Declan McCullagh is CNET News.com's chief political correspondent. He spent more than a decade in Washington, D.C., chronicling the busy intersection between technology and politics. Previously, he was the Washington bureau chief for Wired News, and a reporter for Time.com, Time magazine and HotWired. McCullagh has taught journalism at American University and been an adjunct professor at Case Western University.
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So all the phone companies recklessly tack on these illegal and numerous fees but don't follow through with what they are intended for. So how many telecom bigwigs has this made rich? We'll never know and the government won't regulate these companies; they're never going to crack down on them.
Wasn't there a law some time ago that service charges could not have taxes added? What happened? The phone and cable companies make millions off of their customers from basic charges alone. There should be no other "fees" whatsoever added to "services". More fleecing by our government - what's new?
If you're a privileged libertarian, then Big Government sucks no matter what the purpose. If you care about bridging the digital divide, then a reformed E-Rate is a good approach.
This country has long engaged in modest income distribution for purposes like getting telecom access to rural areas where it was too costly in a business sense to put up phone lines. Why some people want to rip the DSL connection out from some poor kid whose library or school can barely afford textbooks is beyond me.
Fix E-rate. Create accountability. But don't ditch a program with such lofty aims as getting poor children and disadvantaged library patrons on the Net.
It matters in my library because our community is in the 80% discount bracket. That means that the community we serve has 80% at or near the poverty level. Since we are located in what's considered a rural area, we don't have the sort of funding that a metropolitan library would have. With E-Rate, we are able to use the money from that 80% discount to help fund literacy efforts, purchase more books, and/or cover budget items that have been cut as "unimportant".
Please take the time to investigate all sides of an issue before standing on your soapbox and declaring right or wrong. I'm planning to give Rep. Barton and his colleagues the same advice.
Thank you for your time.
- The Real Culprit Behind E-Rate Problems?
- by March 29, 2005 11:02 PM PST
- I am never surprized at the duplicity that the public displays for government programs that are intended address a serious national problem to suddenly becoming expendable because of poor, inept management and corruption. We somehow convince ourselves that it was either illegal to begin with or was a bad idea in the first place. On the one hand we complain about how bad the public educational system is and needs reform. Then when an attempt to standardardize equal access to the Internet for all of our children occurs the effort is undermined and betrayed by greedy companies and local policians. I don't hear many calls for making the companies and local administrators pay for defrauding schools and children. Instead let's save $10.00 per year on our phone bills and come up with another well intended government program and start the process all over again.
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(6 Comments)Lack of funding, undermining of federal educational initiatives by Congressional and Senate members along polictical lines, not having competent IT Staff at local school districts, local inside political deals with IT companies, inadequate accountability standards from the federal government to local municipalities are all factors that continue to hinder improving the quality of public education this country. For once I would like to see a government educational initiative not abused and discarded due to poor planning in the begining and no safeguards to assure success.