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Senators slam FCC over Net fund

A national program to give schools and libraries Net access discounts is being called into question by three senators and a federal agency.

A national program to give schools and libraries Net access discounts is being called into question by three Republican senators and a federal agency, who say Congress should have more oversight of the fund.

Sen. Ted Stevens (R-Alaska), Sen. John McCain (R-Arizona), and Sen. Conrad Burns (R-Montana)--all members of the Commerce Committee--are charging that the Federal Communications Commission overstepped its bounds when it created two corporations to approve applications for the universal service fund, which promises to give out up to $2.5 billion annually in Net discounts to low-income or rural schools, libraries, and health care providers.

The FCC is in charge of universal service, and it set up the Schools and Libraries Corporation (SLC) and Rural Health Care Corporation as nonprofit entities. They were established to carry out the agency's May 1997 rules that laid out the discounts as mandated by the Telecommunications Act of 1996.

According to a General Accounting Office (GAO) report requested by Stevens and released Wednesday, the FCC "exceeded its authority when it directed the National Exchange Carriers Association to create the [nonprofit corporations]."

The three senators, who have strongly criticized the implementation of universal service in the past, want to work with the FCC so that Congress can watch more closely how the funds are disseminated.

"I fully support the goal of bringing advanced telecommunications services to schools and libraries, but as I have stated in the past, I don't believe that multimillion-dollar bureaucracies are necessary in order to accomplish this goal," McCain said in a statement.

Stevens, who last year pushed through a mandate that the FCC review all its rules for universal service, also stated, "From the beginning, this program has been fraught with controversy. Not only were the corporations created without authority, the collection rates have raised havoc and consumer rates. In light of this legal opinion, I have asked [FCC] Chairman [William] Kennard to work with Congress to revamp the schools' and libraries' and rural health care programs."

The GAO report clearly states that the FCC was not authorized by Congress to create the corporations. But the FCC counters in the GAO report that it has authority under the Telco Act, which said the "Commission may perform any and all acts" to carry out the new universal service rules.

The FCC wasn't immediately available for comment. However, the SLC contends that it has already received 10,000 applications, and hopes the FCC and Congress work out the dispute.

"We, of course, will work with Congress and the Commission on the issues raised in the GAO report. Our focus is on administering the universal service schools and libraries fund, effectively and efficiently," Jodie Buenning, a spokeswoman for the SLC, said today.

A Senate Commerce subcommittee is expected to hold hearings on the issue February 25.