As a federal program that is designed to give U.S. schools and libraries access to affordable telecom and Internet services, E-Rate has allotted more than US$22 billion to recipients since its inception in 1998. The program gives priority to funding telecom services such as Internet access, as well as wireline and wireless voice. If the program still has leftover money from funding these prioritized services, it can also be used to pay for cabling, routers, switches and network services to improve telecommunications systems delivering data to schools and libraries.

However, the GAO says it cannot make a concrete assessment of the program's success because the FCC needs to establish what will make the program successful. Although the program does operate under the Universal Service Fund's goal of "providing telecommunications services to all Americans," it does not have a set of annual goals based on metrics such as new broadband connections or new phone services for libraries or private schools.

The lack of annual goals for the program makes it impossible to view any measurements of its performance in any proper context, the report contends. For instance, the FCC currently measures the annual number of applications it serves with E-Rate, as well as the average dollar amount awarded per funding request. But the FCC has not yet set any standards for how many applicants it should be serving nor how much money it should allot per funding request. In essence, the GAO says the FCC has established performance measures without establishing performance benchmarks.

The GAO says this is a major problem for the program, as it has no way of assessing its effectiveness and of reforming itself in a changing telecommunications market. In particular, the GAO says the FCC needs to consider prioritizing broadband connections over cell phone and landline services and it won't be able to do that until it sets specific benchmarks that correlate with broadband demand.