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E-rates by mid-November

Schools and libraries that have been eagerly waiting for billions of dollars in federal Net access discounts will have to hold tight a bit longer.

Schools and libraries that have been eagerly waiting for billions of dollars in federal Net access discounts will have to hold tight a bit longer.

The discounts--known as the e-rate--were supposed to be doled out by fall. They will still meet the deadline, but just barely: The national subsidies will arrive in mid-November, the Schools and Libraries Corporation (SLC) said.

More than 30,000 schools and libraries are hoping for the best. Most schools approved their yearly technology budgets before last summer--before they knew the fate of the e-rate. For all they know they could be waiting on money that will never show up or will be less than they've hoped for.

"As the SLC gets a green light to begin issuing Funding Commitment Decision Letters, the letters will go out in several waves," according to the SLC's statement.

Based on the way the program is set up, a vendor agrees, for example, to discount internal wiring costs. The SLC must approve the purchase or service order, and, if it does, the SLC directly reimburses the vendor to subsidize the service. For instance, the school might pay 70 percent of the cost of the service with the SLC paying the remaining 30 percent.

The program is supported through universal service fees paid by long distance carriers to phone companies; the bulk of the cost is passed on to consumers. The FCC estimates that the e-rate accounts for 19 cents of every dollar paid into universal service, which mainly subsidizes phone service.

Funding could reach $2.25 billion for 1999, although it was scaled back to nearly half of that earlier this year.

Set up by the Federal Communications Commission to comply with the Telecommunications Act of 1996, the SLC is charged with administering $1.275 billion in discounts to cover most of the internal wiring costs for the nation's poorest schools and to subsidize Net access for the rest of the applicants.

The Telecommunications Act had called for government support for advanced communication services for public schools, libraries, and rural health care facilities.

Backed by a General Accounting Office report, some members of Congress have argued that the FCC didn't have constitutional authority to set up the two nonprofit companies to administer the program, the SLC and the Rural Health Care Corporation. Critics charged the corporations make up a new bureaucracy, hindering congressional oversight of the e-rate.

Foes had nicknamed the e-rate "the Gore tax" because the vice president has championed the program. But they failed to eliminate the e-rate this legislative session.

As soon as the SLC is done committing to funding for this year, it will open up the e-rate application process for next year. The application window is scheduled to open on December 1 and close 80 days later.