O’Rielly Sharply Questions USAC on WAN Overbuilds

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FCC Commissioner Michael O’Rielly has always been a stickler for curbing wasteful government spending. Now, he has his eyes trained on the Universal Service Fund and specifically, whether E-Rate funds have been used to support Wide Area Network  (WAN) overbuilds in Texas. E-Rate money is used to link schools and libraries to the internet.

He pointedly asks several questions about this issue in a letter to Radha Sekar, CEO of the Universal Service Administrative Company, which administers the USF subsidies. O’Rielly says according to Central Texas Telephone Cooperative, Peoples Telephone Cooperative and Totelcom Communications, “at least three regional-based consortia have sought proposals for the construction of WANs to provide internet access to entire school regions.” Each of those would cover more than 10,000 square miles, “even though multiple fiber-based providers are already capable of serving the individual schools within each region,” he states.  

The three have mostly been approved for “over $100 million” in subsidies to lay new fiber to schools already served by fiber networks partially paid for with federal funds, according to the Commissioner. The overbuilding is “troubling,” he says, and it’s also “likely that support for these fiber builds will also subsidize warehousing of fiber capacity not needed for E-Rate purposes.”

He asks Sekar to respond to several questions by April 1. He wants to know, among other things, whether Sekar believes the E-Rate rules allow funding construction projects (like WANs) that duplicate, part or all, of fiber networks already built using government funds. O’Rielly also seeks information on how many such WANs have already been built and at what cost, and how many are in the pipeline. He also asked whether the USAC told the FCC about the risk of overbuilding WANs.

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March 12, 2019

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