The Universal Service Fund is a fund operated by the Universal Service Administrative Company (USAC) and the FCC. It facilitates availability of cost effective broadband internet and telecommunications for certain qualifying schools and libraries under the E-Rate program. E-Rate covers services involving internet access, telecommunications, connections, and maintenance. The program seeks to assist qualifying schools and libraries to obtain broadband services which meet their educational requirements at the most effective cost possible. Schools seeking bandwidth for their educational purposes, in addition to libraries interested in high speed connectivity, can apply for discounts on qualifying purchases through the E-Rate program.
The E-Rate program requires applicants to seek competitive bids. Part of this process requires the applicant to provide sufficient details of the services requested to prospective bidders. Service providers provide a "lowest corresponding price" ("LCP") which cannot exceed the price charged to different non-residential users. This process is intended to keep prices on services as low as possible. Variation in prices can be a source of concern when seeking to keep prices low on qualifying services, and to keep the process free from waste or abuse. Differences in prices can occur between large cities and rural areas. Some believe that prices for service to rural areas should be higher than for areas with high population density because of greater difficulties in servicing rural areas. However, prices for broadband service are not always lower in urban areas.
Compliance with the E-Rate program's requirements can be involved for the applicant and the service provider. The USAC provides assistance with training and education regarding the program for schools and libraries to help them determine what they qualify for and how to satisfy the E-Rate program's rules and procedures. E-Rate's rules protect against abuse of its processes and its intended objectives. They are also intended to encourage efficient commitments and disbursements of funds. There are significant administrative requirements on all parties for any funds disbursements under the E-Rate program. Auditing is used to enforce the rules, including statements of the LCP, and to ensure that E-Rate applicants are not charged above the LCP.
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