FCC Announces Universal Service Fund Strike Force in Effort to Combat Wasteful Spending

WASHINGTON, July 14, 2014 – In an effort to combat ongoing complaints of inefficiency within the Federal Communications Commission’s Universal Service Fund, Chairman Tom Wheeler on Monday announced a strike force dedicated to “rooting out waste, fraud, and abuse.”

To be led by Loyaan Egal, a former public corruption attorney with the U.S. Attorney’s Office for the District of Columbia, the strike force expands the FCC’s Enforcement Bureau “to protect the integrity of the Universal Service Fund and ensure that the American people’s money is wisely spent.”

According to an FCC press release, the agency will investigate violations of the Communications Act, the FCC’s rules, and other laws tied to USF programs including the E-Rate. The force will also coordinate with the FCC’s Office of Inspector General and the U.S. Department of Justice to prosecute illegal conduct.

In 2012, the USF’s aggregate disbursements reached $8.7 billion, according to the FCC. The extent of expenditures on the USF has become a source of contention among critics, including agency commissioners Michael O’Rielly and Ajit Pai.

At the FCC’s open meeting Friday, Pai said “universal service contribution rates have jumped 60 percent under this administration.” He said this demonstrated a lack of fiscal responsibility.

O’Rielly wrote a blog post last week saying that “under the current structure, the [FCC’s] programs are scheduled to grow to $10 billion in 2015 and steadily increase thereafter to reach $11 billion in 202. Most of that growth will continue to be attributable to USF. This means that in 2024, the funds will be over 21 percent larger than they were in 2013 and in those 11 years, the funds will spend a remarkable $13 billion more than they would have if funding had been kept at 2013 levels.”

The Universal Service Administrative Company controlled by the FCC has also been critical of wasteful spending at the agency. It estimated that it committed $9.8 million for email services and almost $28 for web hosting in the funding year 2011. Roughly $934,000 that same year went to paging services in response to more than 500 E-Rate requests –despite the technology being viewed as obsolete today. Another 100 requests called for $95,000 in funding commitments to dial-up services.

The strike force will oversee the E-Rate portion of USF funds, as well other portions including the rural health care fund, the Connect America Fund and the Lifeline program for low-income access to phone services.

The agency said that its new strike force “will augment, but be separate from, the efforts of [inspector general].”