Inquiry of school Net funding deepens

The U.S. House of Representatives wants detailed information about the $2.25 billion federal program subsidizing Internet access for schools and libraries.

Declan McCullagh
Declan McCullagh Former Senior Writer
Declan McCullagh is the chief political correspondent for CNET. You can e-mail him or follow him on Twitter as declanm. Declan previously was a reporter for Time and the Washington bureau chief for Wired and wrote the Taking Liberties section and Other People's Money column for CBS News' Web site.
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WASHINGTON--The U.S. House of Representatives is accelerating its investigation into a troubled federal program that subsidizes Internet access for schools and libraries.

On Thursday, the House Committee on Energy and Commerce asked for detailed information about the management, funding and oversight of the "E-rate" program, which amounts to about $2.25 billion in federal spending a year.

Chairman Billy Tauzin, R-La., said in a letter to Federal Communications Commission Chairman Michael Powell that the committee is "investigating the potential for and troubling reports of waste, fraud and abuse" totaling over $200 million and requested that the relevant documents be delivered to Congress by April 4.

"Targeted audits of funding beneficiaries over the first two years identified more than $10 million in inappropriate funding disbursements," wrote Tauzin and Rep. James Greenwood, R-Penn., who heads the investigation subcommittee. "Recently, we learned there are at least 30 active federal and state investigations of either vendors or recipients of E-rate funds around the United States--involving, in aggregate, more than $200 million of questionable funding."

The FCC said it was preparing a response to the letter.

Created as part of the Telecommunications Act of 1996, the E-rate program relies on taxes levied on Americans' telephone bills to provide subsidies for Internet connections. It's been plagued with controversy since the beginning, with some conservatives dubbing it a tax-and-spend boondoggle and the nonprofit Center for Public Integrity concluding E-rate "is honeycombed with fraud and financial shenanigans."

An October 2002 report from the FCC's inspector general noted "weakness" in oversight of the program, which is handled by the FCC but overseen by the government-created Universal Service Administrative Company (USAC). The inspector general said audits were still underway "but preliminary results indicate potential irregularities at many locations."

Thursday's letter, also sent to the head of the USAC, includes a barrage of questions asking for "all records relating to analysis of USAC administrative budgets and funding" and "how USAC verifies that schools and libraries have installed and put to use the services and products subject to discounts."

Last week, the U.S. Supreme Court heard oral arguments over the constitutionality of tying E-rate funding to a requirement that schools and libraries install filtering software to regulate their Internet connections.