WASHINGTON-House Commerce Committee Chairman Billy Tauzin (R-La.) has launched an investigation into mounting evidence of widespread fraud in the $2.25 billion government program to link schools and libraries to the Internet with wireless and wireline technologies.
Ken Johnson, a spokesman for Tauzin, said efforts are under way to collect documents and conduct interviews. “We’re determined to get to the bottom of this. This is clearly a scam,” said Johnson.
Tauzin’s decision to direct congressional investigators to probe the E-Rate program-so called because educational institutions can obtain Internet links at discounted rates-follows the second straight critical report on E-rate from the Federal Communications Commission’s inspector general and the first of what is expected to be additional Justice Department criminal actions against E-Rate recipients.
The FCC’s inspector general said numerous E-rate audits and investigations are in progress and that some have been referred to the FBI.
E-rate, which is governed by FCC rules but overseen by the Universal Service Administration Co., was added to the family of universal service funds (which subsidize telephone service for low-income citizens, rural residents and rural health-care providers) by Congress in the 1996 telecom act.
“We intend to hold USAC’s feet to the fire,” said Johnson.
An investigative report by the Center for Public Integrity said IBM Corp., whose $352 million in E-Rate contracts ranked highest among all service providers in fiscal 2001, is tied to many of the problematic E-Rate applications being scrutinized by federal authorities. IBM offers both wireless and wireline E-Rate solutions.
IBM and USAC did not return calls for comment.
A spokeswoman for Senate Commerce Committee Chairman John McCain (R-Ariz.) said no hearings or actions were planned on E-Rate problems.
