Commission failed to keep track of program intended to connect schools and libraries to the Internet WASHINGTON – A U.S. House of Representatives subcommittee report has faulted the U.S. Federal Communications Commission (FCC) for fraudulent activities found in a government program intended to connect schools and libraries to the Internet.The report, released Tuesday by the House Energy and Commerce Committee’s oversight subcommittee, says the FCC failed to adequately keep track of the E-Rate program, resulting in waste and fraud. The E-Rate program has spent more than $10 billion since 1996.The subcommittee’s investigation of the E-Rate program uncovered “serious instances of waste, fraud and abuse,” the report said. Since early 2004, law enforcement authorities have charged several companies and people with defrauding the program. In May 2004, NEC-Business Network Solutions Inc. pleaded guilty to defrauding the E-Rate program and settled criminal and civil cases through a US$20.6 million plea agreement. The company pleaded guilty to one count of wire fraud and one count of violating the Sherman Antitrust Act. In December, Inter-Tel Technologies Inc. agreed to plead guilty and pay fines of $8.71 million on charges of bid rigging and wire fraud.E-Rate funding comes from the FCC’s Universal Service Fund, funded through fees on long-distance telephone service. The Universal Service Administrative Co. (USAC), a subsidiary of the telecom trade group the National Exchange Carrier Association, administers E-Rate funding.The FCC set up this “unusual” funding structure, but failed to conduct a comprehensive assessment of what federal government policies should apply to the E-Rate program, the subcommittee report said. The FCC also failed to develop any performance goals and measures for the program, the report said. “This [investigation] highlighted instances in which all program participants — the FCC, USAC, schools, and vendors — have neglected their respective obligations and responsibilities under the program’s rules,” the report said.An FCC spokesman said Wednesday that agency officials were still reviewing the report and couldn’t comment on it. But the FCC launched an investigation into the Universal Service Fund in June, noted spokesman Mark Wigfield.FCC Chairman Kevin Martin “was aware of concerns with the program, and one of his first initiatives was to open a proceeding considering fundamental structural reform to try to address those issues,” Wigfield said. Software Development