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FCC's O'Reilly Cites Possible E-Rate Abuse

FCC commissioner Michael O'Rielly has some questions about an allegedly "wasteful and duplicative" E-rate funding request by an Arizona school system, questions he wants answered ASAP.

That came in a letter to Cochise County School superintendent Jacqui Clay.

FCC Republicans have been looking into allegations of waste, fraud and abuse in the billions of dollars in Universal Service Fund subsidies the government gives out to carriers to get broadband to the poor, rural residents, students and others. The commissioners are particularly unhappy with funds going to build educational Wide Area networks (WANS) that overbuild existing service to schools.

Back in April, O'Rielly asked the USF administrator whether E-rate subsidies should be used to fund wide area networks (WANs) where government subsidies have already been used to lay fiber.

The head of the Universal Service Administrative Co., which administers broadband subsidies under the Universal Service Fund, has said that E-Rate fund recipients can indeed overbuild existing fiber plant with WANS if it is the most cost-effective use of the subsidy to get advanced communications to schools and libraries.

Related: FCC's O'Rielly Vows to Keep Fighting USF Overbuilds

O'Rielly told Clay that "the Cochise County’ Education and Technology Consortium (CCETC) is seeking funds to build out a wide area network (WAN) to fiber the schools "even though most of these schools and libraries already have a fiber-based Internet connection from existing local providers."

O'Rielly also said that the CCETC was proposing to serve eight county government locations not eligible for E-Rate (schools and libraries) funding and is seeking "an astronomical level of funding for fiber construction to the private residence of the Cochise Technology District Superintendent, claiming that this location is F-Rate eligible."

Related: O'Rielly Grills USAC Over WAN Overbuilds

"The awarded contract—which would allocate $29 million of ratepayers’ hard-earned dollars to this

project—appears to lead to wasteful and duplicative spending," he said, including wildly overpaying for service that the schools could could get if they just used the current existing rural providers at current rates--due to construction charges for the new WAN.

he wants answers to the following questions by Sept. 21:

1. "How many school and library locations in Cochise County, in total, already have a fiber-based Internet connection? Have these schools or libraries had capacity/bandwidth demands that the existing service provider was unwilling or unable to provide?

2. "How many non-E-Rate eligible locations owned by the county government are included in the RFP and why were they included in an E-Rate proposal? What are the estimated costs under the accepted RFP for providing service to these facilities?

3. "Will the backbone network that would be used to provide service to these county government locations be the same backbone network used to provide service to the eligible locations? If not, is there a separate construction cost for the county locations?

4. "Does the RFP include a request to build fiber to the Cochise Technology District’s Superintendent’s private residence? If so, please explain why and the estimated cost of doing so.

5. "Did County leadership or your office monitor, supervise, or oversee the CCETC RFP preparation? Did you or your office approve the inclusion of non-eligible locations within the RFP?

6. "Did County leadership or your office conduct any cost analysis for fiber buildout and service to those schools and libraries that are unserved by existing providers? If so, please provide documentation of such analysis.

7. "Given the extensive costs involved, what efficiencies were presented to justify combining service to all the schools and libraries within the district under one provider? Please provide documentation and evidence of such representations.

8. "What private entities or consultants worked with the county to prepare its RFP?"

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.