Responding to criticism of the plan to subsidize Internet access to schools and libraries, Federal Communications Commission Chairman William Kennard said Wednesday that the program will be slowed but not abandoned.
Kennard said the FCC realizes changes need to be made to the universal service program but said the agency does not want to deny funds to the 30,000 schools and libraries anticipating funding from the education-rate, or e-rate, program.
“I submit that the best thing we can do, in the best interest of this program and the public, is to proceed ahead prudently,” Kennard said in testimony to the communications subcommittee of the Senate Commerce Committee. “This program is important to the future of America.”
The e-rate program is to provide as much as $2.25 billion a year to help schools and libraries connect to the Internet. Kennard said he recommends that amount be the goal for an 18-month period instead.
The program has fierce critics and passionate supporters. The program is designed to help achieve the goal of President Clinton and Vice President Al Gore to have all schools wired to the Internet by 2000.
Republicans and Democrats alike are upset, however, that long-distance phone users would pay for the program through fees charged by the telecommunications industry. Some Republicans, including House Speaker Newt Gingrich (R-Ga.), have derided the surcharge on long-distance calls as the “Gore tax.”
“The president and vice president cannot tell you what to do,” Sen. Ted Stevens (R-Alaska) told Kennard and four other FCC commissioners appearing before the subcommittee. “I urge you to read the law. It does not say you have to hook up every school by the year 2000.”
Kennard said the program’s timetables will be re-examined and that the FCC will give priority to providing funds for low-income urban and rural areas.
“Nobody at the FCC is interested in hiding taxes on people’s phone bills,” Kennard said. “This committee has been interested in resizing this fund from the very beginning.”
The FCC must determine by Friday the rates telephone users will be charged for the second half of 1998. The commission also can vote to suspend the program, although no indication of that was given at the hearing.
A total of $625 million has been earmarked for the e-rate program for the first half of the year.
The Chicago Public Schools are hoping for nearly $47 million from the program, according to Estelle Maajid, Chicago Public Schools e-rate manager.
Senators and FCC commissioners considered other ways to pay for the schools and libraries program. One suggestion was using the federal excise tax, which has been placed on phone bills since the turn of the century.
“It’s definitely an idea worth pursuing,” Kennard said. “I think you guys are on the right track of finding a way to preserve universal service with less burden on the taxpayers.”
The Commerce Committee chairman, Sen. John McCain (R-Ariz.), urged a freeze on the e-rate program.
“Just because I support the goal of wiring our schools and libraries doesn’t mean I support the program concocted by (the FCC),” McCain said. “Any dispassionate assessment of the current e-rate program leads to the conclusion that (the FCC) made a series of bad mistakes in the choices it made to implement the program.”
Other subcommittee members said the surcharge on long-distance bills is a result of untruthful billing by telephone companies.
Sen. Byron Dorgan (D-N.D.) said long-distance companies like AT&T and MCI are socking consumers with surcharges of up to 5 percent of their long-distance bills. He said the phone companies have blamed this surcharge on federal requirements, but the companies did not tell consumers that their access fees to local phone companies were lowered by the FCC to offset the e-rate program.
Some lawmakers are angry about the surcharges because telecommunication companies agreed to fund the e-rate program as part of the Telecommunications Act of 1996. But, instead of paying for the program from profits, the companies added a surcharge to long distance bills.
“They made that commitment and now they are trying to walk away from it, ” said Sen. John D. Rockefeller (D-W.V.).
