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Barton Proposes Funding 'E-Rate' From General Tax Revenues

By Lynn Stanton
Courtesy of TRDaily
Telecommunications Reports
April 12, 2005

The chairman of the House Energy and Commerce Committee said today he would like to see the "E-rate" program abolished, or at least changed from a Universal Service Fund program to one that receives its funding through the federal appropriations process.

In addition he said he would limit the program to paying for "hook-ups and equipment" and end support for recurring telecom and Internet access service.

"If I had to vote today, I'd vote to abolish it," Chairman Joe Barton (R., Texas) said at a Federal Communications Bar Association event in Washington. "If I can't kill it, I'm going to do everything I can to so underfund it that it goes away."

The E-rate program currently provides applicants a range of discounts on inside wiring, telecom services, and Internet access based on population density and income levels in the school or library's location, with funding collected through mandatory contributions from providers of interstate telecom services. Each year, the $2.25 billion maximum funding authorized by the FCC is allocated, first funding telecom and Internet services (priority 1) and then funding internal connections (priority 2), in both cases starting with the neediest and most rural applicants, until the money runs out. Each quarter, providers are billed for their share of the contributions, based proportionately on their interstate telecom service revenues. Competitive bids from vendors must be sought through the Web site of the Universal Service Administrative Co.'s Schools and Libraries Division.

Rep. Barton said he would replace the current E-rate program with a system of one-year grants for low-income areas that would require competitive bidding from vendors. Support would only be provided for hook-ups and equipment - known as internal connections in the current system. No support would go toward "maintenance" - known as telecom and Internet services in the current system - which he said was currently consuming "more and more" of the funding. "Maintenance should be up to the local district," he added. Finally, he said the E-rate program should be funded through the general federal appropriations process, not through a "specific contributions process." - Lynn Stanton