Computers stay in the warehouse

Observations on Puerto Rico

Say what you like about the United States: it sometimes has good ideas. It recently sent internet equipment to 1,500 schools in Puerto Rico, financed from a surcharge added to all US phone bills. Alas, the equipment lies dormant in a warehouse. Why? Nobody checked that the island had enough computers to use it.

Congress has now begun hearings into the "E-Rate" programme, a tax-funded scheme aiming to provide internet access to all schools, libraries and healthcare practices in the US and its territories. Since E-Rate's introduction in 1998, the programme has been plagued by poor management and fraud. In Puerto Rico, $101m went down the drain.

E-Rate is run by the Federal Communications Commission through a non-profit organisation, Usac, which pays between 20 and 90 per cent of the cost of internet services, with the poorer applicants getting the higher percentages. Its troubles began when the Clinton administration asked for the tax on phone bills to be "camouflaged" by telephone companies within ordinary call charges.

Although many Americans have recognised the benefits of a scheme that has almost doubled schools' internet access, Cesar Rey, the Puerto Rican education secretary, is less enthused. The tech- nology provided by E-Rate was useless: the impoverished schools lacked the PCs and electrical systems for its implementation. Such basics are not covered by the E-Rate scheme.

The programme is full of holes. Usac has only three auditors to monitor the scheme, leaving it open to fraud. Last year, five people were charged with billing E-Rate for products never delivered to schools in Chicago and Milwaukee. Investigators in Puerto Rico claim to have uncovered evidence of possible bid-rigging.

E-Rate's complicated application process also leaves bids open to manipulation by vendors. Schools must submit detailed plans before applying, covering a full description of the services and equipment required. As a result, districts lacking proper technical support rely on vendors to help fill out requests. This enables companies to tailor bids to their own products.

Congress is scheduled to reauthorise the scheme in 2005, and despite its problems most observers think it is unlikely it will be abandoned completely. Proposals for improvements have been made, and the programme has pledged to increase inspections of schools to 1,000 a year. However, this falls far short of the 30,000 institutions receiving equipment. To do this, while maintaining technological support for schools, would require more funding than currently available. But with wastage levels as high as those in Puerto Rico, it looks like being an all-or-nothing decision.