FCC says federal funding to wire schools and libraries to the Internet should start flowing again soon

Federal funding to wire schools and libraries to the Internet should start flowing again soon, U.S. Federal Communications Commission (FCC) Chairman Michael Powell said last week, a day after congressional lawmakers attacked the agency for stopping funds. The FCC froze new commitments from the $2.25 billion E-Rate program in August because of questions about how the fund is counted on the government's books. That put on hold $300 million in aid, but that amount could balloon to $1.3 billion by year-end. Although popular, the E-Rate program has been dogged by allegations of waste and abuse, prompting investigations by federal prosecutors, the FCC, and Congress. Mr. Powell said the agency had no choice but to stop new funding while it made sure the E-Rate program, administered by the Universal Service Administrative Co. (USAC), complies with government accounting standards, but that the FCC may be able to resume funding commitments within weeks. Despite Mr. Powell's pledge, USAC spokesman Mel Blackwell said that under current rules, requests will far outstrip available funds. "We will have more commitments to issue than money in the bank. We would have to wait until we collect more money." FCC Commissioner Michael Copps said the decision to stop new commitments was poorly timed, since the school year just got under way. He disputed comments by Mr. Powell that the accounting changes would help root out fraud from the program. "The chairman of USAC said yesterday that these accounting changes would not make it easier to perform audits or root out fraud and abuse," Mr. Copps said.

[Editor’s Note: For background on E-Rate investigations and the funding delay, see below.]