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Results in Brief
Requests for e-rate support by schools and libraries in all three categories
of service have been steadily increasing. During the program's first and
third years (1998 and 2000), requests substantially exceeded the program's
available funding level. Because priority is given to funding
telecommunications and Internet access requests first, not all internal
connections requests for those 2 years were met. This situation has
intensified for the fourth program year (2001). Applicants have requested
nearly $5.2 billion in e-rate support, more than double the program's
current $2.25 billion funding cap. Since the requests for
telecommunications and Internet access services total about $1.7 billion, it
appears that most of the nearly $3.5 billion in internal connection requests
could go unfunded under the current funding cap and priority rules. We
provided a draft of this report to FCC and USAC for comment. USAC's
Chief Executive Officer responded that the report provides a useful
update, and FCC agreed with our presentation of the data.
Three Categories of
Service Eligible for
Support
The e-rate program does not provide support for all the
telecommunications services that schools and libraries may need or
desire. The Telecommunications Act directed FCC to convene a Federal-
State Joint Board on universal service. On the basis of the board's
recommendations, FCC's May 1997 Universal Service Order, along with
several subsequent orders, defines three categories of service that are
eligible for e-rate support:
* telecommunications service, such as local, long-distance, and international
telephone service, as well as high-speed data links (such as T-1 lines);
* Internet access, such as dial-up Internet access, and e-mail services; and
* internal connections, such as telecommunications wiring, routers,
switches, and network servers that are necessary to transport information
to individual classrooms.
Telecommunications and Internet access services can include both
recurring costs, such as monthly service charges, and one-time installation
costs. Internal connections are generally one-time costs to purchase and
install eligible equipment and software. Some items within these
categories are eligible only if certain conditions are met. For example,
personal communications service (PCS) and cellular telephone service are
conditionally eligible if used at a place of instruction for educational
purposes. Some other items are always ineligible for e-rate support, even
though they may be necessary or desirable for providing students or
library patrons with access to advanced telecommunications services,
GAO-01-673 Schools and Libraries Program
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