FCC makes new rules to reform troubled program

Introduction

The Federal Communications Commission has adopted new rules aimed at cleaning up financial fraud and abuse within a multi-billion-dollar program that helps wire schools and libraries to the Internet.

A January 2003 Center for Public Integrity report chronicled widespread fraud and a lack of proper government oversight of the FCC‘s schools and libraries program, also known as E-Rate. (See the Center report, which drew on documents acquired under the Freedom of Information Act and an FCC Inspector General’s investigation.)

Two of the most powerful members of Congress who oversee telecommunications issues—Rep. W.J. Tauzin, R-La, and Sen. Conrad Burns, R-Mont.—announced investigations and hearings on the $2.25 billion a year program soon after the Center report was released. The program is funded by universal service fees, which are paid by virtually anyone who uses a telephone.

Top among the reforms adopted by the FCC were new rules allowing the suspension of contractors convicted of criminal or civil fraud against the program.

Four of the five members of the FCC, including FCC Chairman Michael Powell, said the reforms they approved were “a good first step” in cleaning up the program.