I’ve written extensively about the fact that the U. S. is losing competitiveness in science and technology because of a lack of focused public investment in cutting-edge research. Universities and graduate institutes have noted the impact for years. Now elementary schools, secondary schools and public libraries are feeling the pain.
You’ll recall that in 1997, as a corollary to the Telecommunications Act of 1996, the FCC implemented a revised universal service provision (USP) that essentially subsidizes Internet-related services to elementary and secondary schools and public libraries. The USP order created a new quasi-governmental agency called the Universal Service Administrative Company (USAC), which collects money from infrastructure-based telcos (roughly 9% of telecom revenue) and distributes it to schools and libraries. USAC has disseminated more than $11 billion in so-called “e-rate” funds since 1997.
Then and now, I think the structure was dumb. I fully support providing low-cost Internet access to schools and libraries. But this structure imposes a hidden tax, and a biased one at that (it’s another example of the tilted playing field against infrastructure-based telcos that I mentioned in my last column).
More to the point, it creates an enormous bureaucratic mess: Instead of paying the schools directly, we’re paying telcos to pay the government to pay the schools – and the collection and distribution is handled by a shadowy agency with no clear oversight. It’s no surprise that over the past six years numerous questions have been raised about the management and administration of this $11 billion. Handling USP in this fashion is shortsighted and stupid.
It seems the federal government finally agrees. But in typical bureaucratic fashion, the cure is worse than the disease.
On Aug. 16, the FCC notified the USAC that it was drastically tightening up accountability standards for e-rate funding. In particular, the FCC required the USAC to have the money in hand before promising it to schools – a 180-degree reversal of the way the USAC had been operating for the past six years, during which the USAC would promise funding based on estimated future contributions by telcos.
The USAC responded Aug. 19 by informing thousands of schools and libraries that it could no longer promise funding for fiscal year 2004, which started in July.
The upshot is that schools and libraries are now drastically reducing services because they’re unexpectedly not getting the funding they were promised. The USAC blames the FCC. The FCC blames the USAC. Congress blames everybody. In the middle of all this finger-pointing, Johnny and Janie Schoolchildren are left staring at screens that have suddenly gone dark.
This is nuts. Of course the e-rate program needs a thorough overhaul. By all accounts it’s a mess, and as noted, it was never such a hot idea in the first place. But abruptly shutting off funds at the start of the school year is even worse. If this kind of federal flailing and flip-flopping is how we’re planning to handle our investments in science and technology, we have a problem.
