You paid for it. Some politician looked like a hero. The benefits were minimal. Business as usual.
Tucked into the Telecommunications Act of 1996 was a little-known program called the "e-rate," setting up a tax that has cost consumers and phone companies upward of $2 billion a year. What has that money bought? A rudderless program riddled with fraud and waste.
The e-rate fund has distributed $12 billion over six years, and estimates place the amount wasted in the billions. Because of lack of oversight, it's impossible to know the extent of the losses.
During a recent House hearing, legislators documented some of the lapses. They showed, for instance, how most of the $101 million in e-rate funds spent in Puerto Rico went to dubious purchases, such as 73,000 wireless connection cards for individual computers. The cards, purchased at more than $300 apiece five years ago, have grown obsolete in a warehouse outside San Juan. Most Puerto Rican children still access the Internet through dial-up modems on roughly two computers per school.
Other rural projects cited by supporters as successes have enormous per-pupil costs. A conflict of interest is built into the program's core: Its dollars are doled out by a nonprofit corporation run by telecommunications service providers whose businesses benefit from the money. They are barely overseen by the Federal Communications Commission.
Did I say "typical?"
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