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Summary:
Passage of the Telecommunications Act of 1996 (P.L. 104-104) codified the long standing policy commitment to ensure universal service in the provision of telecommunications services. The 1996 Act also expanded the concept to include, among other principles, that elementary schools and classrooms, and libraries should have access to telecommunications services for educational purposes at discounted rates. The Federal Communications Commission (FCC) was tasked with implementing the universal provisions of the Act and on May 7, 1997, adopted its order detailing its guidelines. Included within that order was the establishment of the schools and libraries, or Erate, program. Under this program telecommunications services, Internet access, and internal connections will be provided at discounts ranging from 20% to 90 % to eligible schools and libraries. The FCC established the Schools and Libraries Corporation (SLC), an independent, not-for-profit corporation to administer the program. As the result of a January 1, 1999 reorganization, however, the SLC became the Schools and Libraries Division of the Universal Service Administrative Company and ceased to exist as a separate corporate entity. The program receives no federal funds but is funded by mandatory contributions from interstate telecommunications service providers. Many of these providers have chosen to pass through universal service charges directly to consumers and earmark a universal service charge on subscribers' bills. Although most support the concept, the FCC's implementation of the schools and libraries provisions of the 1996 Act has generated significant and diverse controversy. The decision by various telecommunications service providers to pass through and itemize universal service contributions on subscribers' bills has focused further attention on this issue. Concerns focus on : the administrative structure designed to implement the program; the scope and funding level of the program; and the potential for application fraud, waste and abuse. Oversight of the program by the 105th Congress was intense, but no legislative measures were enacted. Legislation alternatives introduced in the 106th Congress ranged from those that sought to expand the program, eliminate the program, develop a new funding source, change its administrative structure or call for an in depth GAO study of the program; none of these measures were enacted. To date only one bill (H.R. 346) dealing with the use of unexpended program funds has been introduced in the 107th Congress. In response to congressional concerns the FCC reduced the program's funding level for the first year and restructured the administrative aspects of the program. However, in a May 27, 1999 action the FCC increased the second year funding level for the program to its $2.25 billion cap where it has since remained. For the first three years of the program $6.0 billion has been committed. Funding commitments for the fourth year, funding year 2001, are currently at $2.28 billion. The application window for funding year 2002 closed on January 17,2002; as of September 4, 2002, $778.5 million has been committed for that year. In a January 2002 action the FCC initiated a notice of proposed rulemaking to further examine certain aspects of the program; action is still pending.
