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The following is an excerpt of E-rate related news recently published by The Atlanta Journal-Constitution. If you have already subscribed to The Atlanta Journal-Constitution, you may access the full article http://www.ajc.com/metro/content/metro/0704/11erate.html. If you are not currently a member, you will be directed to fill out a short registration form in order to view the article. Registration is free.
By Ken Foskett
The Atlanta Journal-Constitution
Published on: 07/10/04
E-rate deal squanders $19 million
Over the summer of 1999, nearly 200 Georgia schools received some of the hottest high-tech gear on the market, thanks to the national E-rate program.

Each school was given equipment intended to capture video from passing satellites and route the pictures to classroom computers. Teachers might easily display images of African lions circling their prey or South American rain forests a continent away.

A little-known state agency spent about $19 million trying to make the project work. It never did.

State officials awarded the lucrative contract to a company composed of two salesmen, a businessman and a lawyer not one of whom had the engineering expertise necessary for such a technically sophisticated project.

The company's marketing strategy was to sell the project to the schools that could obtain the fattest government subsidies some of the poorest schools in Georgia.

Company executives paid themselves six-figure salaries and about $900,000 in bonuses before two of the principals negotiated $1 million buyouts less than a year into the venture.

Some schools later cannibalized the equipment they received for other uses, but now most of it sits boxed in district warehouses or is pushed to the side in school storage closets, slipping steadily toward obsolescence.

Today, the failed project survives as a testament to the greed, waste and mismanagement that have put E-rate in the cross hairs of a congressional inquiry. The $2.25 billion-a-year program, launched in 1998 to help poor school districts get Internet access and funded by telephone users everywhere, is the subject of more than 40 criminal investigations nationwide.

Atlanta's Metropolitan Regional Educational Service Agency, or MRESA, a state agency devoted primarily to teacher training, was among the first educational consortiums to take advantage of E-rate. Now, the agency's video-on-demand project ranks as one of E-rate's most colossal failures. "This ranks up there right at the top," said Mel Blackwell, spokesman for E-rate in Washington.

The debacle began with the unchallenged claims of the video system's viability and ended with an FBI inquiry, three federal audits and corporate bankruptcies.

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