Watchdogs smack FCC over E-Rate

A report issued by the by the Government Accountability Office this week claims that it is virtually impossible to measure the success of the Federal Communications Commission's E-Rate program because the agency has still not set concrete performance goals.

As a federal program that is designed to give U.S. schools and libraries access to affordable telecom and Internet services, E-Rate has allotted more than $22 billion to recipients since its inception in 1998. The program gives priority to funding telecom services such as Internet access, as well as wireline and wireless voice. If the program still has leftover money from funding these prioritized services, it can also be used to pay for cabling, routers, switches and network services to improve telecommunications systems delivering data to schools and libraries.

However, the GAO says it cannot make a concrete assessment of the program's success because the FCC needs to establish what will make the program successful. Although the program does operate under the Universal Service Fund's goal of "providing telecommunications services to all Americans," it does not have a set of annual goals based on metrics such as new broadband connections or new phone services for libraries or private schools.

Click to see: Chart of erate's dispersement troubles

The lack of annual goals for the program makes it impossible to view any measurements of its performance in any proper context, the report contends. For instance, the FCC currently measures the annual number of applications it serves with E-Rate, as well as the average dollar amount awarded per funding request. But the FCC has not yet set any standards for how many applicants it should be serving nor how much money it should allot per funding request. In essence, the GAO says the FCC has established performance measures without establishing performance benchmarks.

The GAO says this is a major problem for the program, as it has no way of assessing its effectiveness and of reforming itself in a changing telecommunications market. In particular, the GAO says the FCC needs to consider prioritizing broadband connections over cell phone and landline services and it won't be able to do that until it sets specific benchmarks that correlate with broadband demand.

Participation rate, underfunding also are issues

The GAO also says E-Rate also faces problems with its rate of participation, as only around 63% of the estimated 150,000 eligible schools and libraries have taken advantage of the program. There is a very sharp divide in the participation rate between public and private schools, as 83% of eligible public schools utilize the program vs. 13% of eligible private schools. Additionally, the report finds that only half of eligible library systems participate in the program and that less than a third of eligible library branches utilize it.

The major reason for not participating in the program is that potential users find that "the application process is too complex, takes too much time, or requires too many resources." The GAO credits the FCC with making the application process more accessible over the past four years, as around 43% of participants surveyed by the GAO said the process for applying to E-Rate was easier than it was in 2005. However, 42% of users surveyed said applying to the program was just as difficult while 15% of users said the process was even harder than it was in 2005.