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 STATEMENT  OF  COMMISSIONER  MICHAEL  J.  COPPS 
 RE:  Federal-  State  Joint  Board  on  Universal  Service,  Rural  Health  Care  Support  Mechanism,  Lifeline  and  Link-  Up,  Changes  to  the  Board  of  Directors  of  the  National  Exchange 
 Carrier  Association,  Inc.,  Comprehensive  Review  of  Universal  Service  Fund  Management,  Administration,  and  Oversight,  CC  Docket  Nos.  96-  45,  02-  6,  02-  60,  03-  109 
 and  97-  21,  Notice  of  Proposed  Rulemaking. 
 Today’s  NPRM  is  about  keeping  the  Universal  Service  Fund  on  good  footing  and  being  good  stewards  of  our  programs.  Let  me  focus  on  one  of  those  programs.  No  doubt  about  it,  the  E-  Rate  is  one 
 of  the  nation’s  great  success  stories.  Thanks  to  this  program,  schools  and  libraries  across  the  country,  including  those  in  rural  areas  and  in  our  inner  cities,  have  access  to  telecommunications  services  and  to 
 the  Internet.  The  critical  importance  of  this  program  means  that  it  needs  regular  review  and  care.  We  continue  that  process  today.  I  want  to  commend  the  Chairman  for  recognizing  the  importance  of 
 application  simplification  to  improving  the  program,  saving  scarce  resources,  and  reducing  too  common  ministerial  and  clerical  errors.  I  am  particularly  pleased  that  we  make  a  tentative  conclusion  to  move  to  a 
 multi-  year  application  process  for  Priority  One  services.  This  is  a  real  step  forward  and  I  look  forward  to  seeing  it  instituted  soon.  We  must  also  always  be  mindful  of  protecting  the  program  from  those  few  who 
 would  abuse  it.  While  instances  of  intentional  fraud  are  infrequent,  our  goal  must  be  to  eliminate  them  altogether.  I  therefore  support  the  NPRM’s  conclusion  that  we  will  strengthen  our  debarment  rules  and 
 take  new  steps  to  identify  and  punish  predatory  contractors. 
 I  am  concerned  about  one  aspect  of  the  NPRM.  It  asks  if  we  should  replace  the  application  process  and  distribute  E-  Rate  funds  directly  to  schools  and  libraries  according  to  their  size.  Such  a 
 change  could  also  allow  funds  to  be  used  for  unspecified  communications-  related  services  and  equipment,  rather  than  requiring  applications  that  specify  services  and  equipment.  So  many  questions  about  this 
 approach  remain  unaddressed.  Distributing  funds  directly  to  schools  could  conceivably  exclude  Catholic  and  other  private  and  parochial  schools  from  the  E-  Rate  program.  Tying  funds  to  school  size  could 
 conceivably  result  in  our  rural  and  insular  schools  being  denied  the  funds  they  need  for  the  extraordinary  cost  of  services  in  these  areas,  just  because  they  have  fewer  students.  And  if  schools  are  given  a  sum  of 
 money  to  be  used  for  unspecified  purposes  rather  than  for  specified  and  verifiable  services  and  equipment,  it  could  be  much  more  difficult  to  identify  fraud.  Without  assurances  that  parochial  schools 
 and  rural  schools  would  not  be  disadvantaged,  and  fraud  detection  would  not  be  undermined,  I  must  express  my  concern  with  this  aspect  of  a  generally  very  sound  item.  I  urge  all  those  who  share  this 
 concern  to  respond  to  this  notice  so  that  our  record  leaves  no  doubt  about  the  effects,  including  those  always  pernicious  unintended  effects,  of  proposals  that  would  so  dramatically  affect  this  very  successful 
 program. 
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