FCC Chairman Rebukes USAC on E-Rate Administration

On April 18, FCC Chairman Ajit Pai sent an unusually stern and accusatory letter to USAC CEO Chris Henderson, alleging “serious flaws” and lack of transparency in USAC’s administration of the E-rate program, and declaring that “the current state of affairs is unacceptable.” The principal focus of Chairman Pai’s criticism is USAC's roll-out of the online E-Rate Productivity Center (EPC), designed as “an Internet portal that every school or library seeking E-Rate funding had to use for purposes of their applications” that would “make the E-Rate process fast, simple, and efficient.” Chairman Pai asserts that “things have not gone according to plan,” in that the EPC was to be fully operational for applicants by the beginning of the funding year 2016 filing window but “is still not adequately functional . . .  For example, the entire invoice system remains in the legacy IT system and will remain there until late summer.” He charges that “EPC implementation issues have created major headaches for applicants requesting E-Rate funding,” and adds that the cost estimate for EPC “is proving to be far understated,” already exceeding its $19 million estimate by over $11 million, and that new estimates may exceed $60 million.

Chairman Pai continued that “compounding these system failures is the lack of full transparency with the Commission,” charging that “USAC has not fully apprised the Commission about program issues that directly and materially affect applicants, such as system outages during critical application periods.” Specifically, he says that last October USAC failed to notify the FCC of a debilitating problem in USAC’s Invoice Deadline Extension Tool, leaving it to the Commission’s Wireline Competition Bureau to learn of it from E-rate stakeholders.

Chairman Pai’s letter closes by expressing support for the E-rate program, but adds:  “the program's mission can be achieved only with proper administration. The problems I've identified have persisted and have plagued schools and libraries for too long; we must solve them, and soon.” He calls for Mr. Henderson to respond with USAC's plan to address these issues by May 18.