The Senate Commerce Committee hearing was initially called to address reported problems of fraud and abuse in the e-rate program, but the meeting’s focus was shifted instead to the decisions that led to the program’s suspension.
“It’s really difficult to understand why these changes were made,” said Sen. Olympia J. Snowe (R-Maine), who helped draft the legislation that created the program in 1996. Sen. Jay Rockefeller (D-W.Va.) criticized the FCC for not sending officials to the hearing to explain their decisions. “I’m very disappointed that the FCC declined to testify,” he said. “I do not think this is accidental.”
Frank Gumper, chairman of the Universal Service Administrative Company, which administers the e-rate program, also pointed out that under the new rules, the FCC had ordered the USAC to liquidate more than $3 billion in assets, resulting in a loss of nearly $5 million.
USAC spokesman Mel Blackwell said the suspension could delay more than $1 billion in expected grants. “Some schools may end up having to pay for their [Internet] service before they get paid from us, which may put them in a bind,” he said, according to an October 5 Associated Press report.
FCC Chairman Michael K. Powell has said the accounting changes are necessary to help root out fraud and abuse. “We are working on this 24 hours a day and I want to assure you that we’re moving aggressively to get those funding commitments going again,” Powell said in an October 6 Reuters report.
Posted October 8, 2004.