Lawmakers Ask FCC To Maneuver Funds To Safeguard USF

Telecom Policy Report, Dec 11, 2006

Some 31 members of the House of Representatives from both political parties have asked the Federal Communications Commission (FCC) to manipulate available rollover universal service fund (USF) money to keep the entire subsidy program viable -- especially the so-called E-Rate segment for U.S. schools and libraries.

Democrats and Republicans primarily from the House Committee on Energy and Commerce are asking the regulatory agency for an accounting transfer maneuver that will keep the USF's E-Rate in compliance with the Anti-Deficiency Act (ADA) that requires federal entitlement and grant programs to have funds in coffers that back up disbursement commitments.

The request came as the U.S. Congress adjourned its 109th session, apparently without taking action on a sweeping telecom act that would have included giving E-Rate statutory extended exemptions from ADA for one year or longer. The provision reportedly has been in danger since larger House and Senate bill proposals began to waver on Capitol Hill (Telecom Policy Report, Sept. 23), although legislative support on E-Rate supposedly was building with many bill co-sponsors over the course of the whole year.

The congressional request says the Universal Service Administrative Co. (USAC), which has been handling USF calculations, collections and allocations for several years, must act swiftly to help ensure uninterrupted funding because the previous statutory extension for E-Rate - the Universal Service Anti- Deficiency Temporary Suspension Act - will sunset Dec. 31. Without timely action by the FCC and USAC, according to a letter from the representatives, the USF programs will be in jeopardy.

In their one-page, Dec. 6 letter to FCC Chairman Kevin J. Martin, the federal lawmakers promised to keep working toward lasting solutions toward USF viability - including a much-discussed permanent exemption - but asked that whatever necessary be done on behalf of the USF and E-Rate. They said the "FCC can assist in the short term by directing USAC to utilize unused, rollover funds to meet its commitments in 2007 while also remaining ADAS compliant."

Among the signatories were Reps. Barbara Cubin (R-Wyo.), Lee Terry (R- Neb.), Edward J. Markey (D-Mass.), Rick Boucher (D-Va.), Tammy Baldwin (D- Wisc.), Bobby L. Rush (D-Ill.), John Shimkus (R-Ill.), Bart Stupak (D-Mich.), Albert R. Wynn (D-Md.), Charles A. Gonzalez (D-Texas), Mike Ross (D-Ark.) and Jay Inslee (D-Wash.).

USF reform itself fell victim to the past year's larger legislative failure, but there have been repeated arguments on the legislative and regulatory levels over both the base of collections, disbursement methods and qualifying recipients. The biggest squabbles have been for the appropriately named "high-cost segment" destined for rural carriers, but E-Rate a couple of years ago was caught up in criminal scandals and congressional inquiries over fraud and abuse. These tended to be high-profile cases but represented a small portion of the total dollar value.

Inspector General Reports

The letter to the commission came around the same time that the FCC Office of the Inspector General (OIG) under Kent R. Nilsson issued its semiannual report to Congress - covering the April 1-Sept. 30 period - on its overall activities, including USF and USAC oversight, which other federal agencies have said needs tightening up, new audit initiatives and better management techniques.

Since about mid-June, the OIG said it was overseeing an unprecedented number of audits of every component of the USF program and high levels of scrutiny in conjunction with KPMG, LLP. It also reports numerous changes in roles, responsibilities and functions of various FCC bureaus and offices aimed at making USF more efficient and effective as well as working with the U.S. Department of Justice (DoJ) Antitrust Division that has established a task force to conduct USF investigations.

"Our involvement in E-Rate beneficiary audits and investigations has not lessened our concerns about fraud, waste and abuse," the OIG said, adding, "We believe we are making significant progress toward achieving our goal of achieving an effective oversight program." The office outlined the status of many internal inquiries and criminal cases surrounding USF and E-Rate plus it disclosed to lawmakers its progress on additional oversight efforts over the FCC's Telecommunications Relay Service (TRS) program for the hearing impaired that also can involve subsidy money.

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