USAC to Commissioner O'Rielly: E-Rate Overbuilds Are OK

On April 1, Universal Service Administrative Company (USAC) CEO Radha Sekar wrote to Federal Communications Commissioner Michael O'Rielly to respond to his concerns that E-rate funds may be used to potentially overbuild fiber networks. Specifically, Commissioner O'Rielly had written to Sekar in March seeking answers as to whether government broadband subsidies should be used to subsidize wide area networks (WANS) where government subsidies have already been used to lay fiber as well as how many of those were being subsidized. Sekar did not have an answer for the latter, saying USAC did not track whether the money was going to WANS or whether the money for WANS or other special projects was overbuilding. But as to whether "the E-rate rules permit funding for special construction projects, whether self-provisioned networks or networks owned by a commercial provider, that would duplicate, in whole or in part, fiber networks that have been built using federal funds?" The answer from Sekar was yes. "If the cost of applicant ownership over the life of the network is less expensive than the cost of using an existing network, the applicant can be approved for fiber construction funding of their own network," Sekar said.