WASHINGTON-In a stunning setback for the Clinton administration that bodes well for the wireless industry, a bipartisan group of top telecom lawmakers last week ordered the Federal Communications Commission to scrap plans to subsidize Internet connections for schools, libraries and rural health-care providers and to start over with a new rule making that better balances the interests of all universal service eligibles.
“The commission’s efforts to implement the universal service provisions of the act have been a spectacular failure, and-more importantly-a raw deal for consumers,” said Sens. John McCain (R-Ariz.) and Ernest Hollings (D-S.C.) and Reps. Thomas Bliley (R-Va.) and John Dingell (D-Mich.), in a June 4 letter to FCC Chairman Bill Kennard.
In apparent reaction, the FCC late last week canceled an open meeting scheduled for Tuesday to address universal-service collection levels for schools, libraries and rural health-care centers.
Instead, the FCC will meet behind closed doors today on whether to proceed as planned or to defy the lawmakers’ stern directive.
The Internet discount for schools, libraries and hospitals has been subject to intense criticism in recent months by the wireless industry, lawmakers and consumer groups.
Some critics say schools and libraries have taken priority over traditional universal service recipients-poor and rural residents-for political reasons.
Vice President Gore long has supported linking all schools, libraries and hospitals by 2000, the year he likely will run as the Democratic candidate for president. McCain, a big critic of the FCC’s implementation of the Internet discount program, is a possible Republican presidential nominee in 2000.
Sen. Conrad Burns (R-Mont.), chairman of the communications subcommittee, dubs the universal-service fee underwriting Internet links for schools and libraries the “Gore tax.”
Burns added confusion to the controversy last week by floating a proposal to use the 3-percent telephone service excise tax to pay for educational and health-care Internet connections.
McCain and House telecom subcommittee Chairman Billy Tauzin (R-La.), with strong wireless industry backing, want to repeal the 100 year-old-tax.
The controversy came to a head when AT&T Corp. announced it will pass the cost of the schools-and-libraries program onto consumers despite government-mandated access charge reductions that were supposed to reduce long-distance telephone bills.
Wireless carriers, which claim the FCC forces them to pay too much for universal service, also are hitting up subscribers for universal-service fees.
It is argued paging operators should not have to pay into the universal-service fund because they cannot draw on the subsidy, while other wireless carriers say the formula for calculating payments is skewed.
Some policy makers claim they are being made scapegoats by large long-distance carriers regarding a program that had strong bipartisan support when the telecom law was enacted two-and-a-half years ago.
“I am gravely disappointed in the long-distance companies’ behavior,” said Sen. Bob Kerrey (D-Neb.), a co-sponsor of the Internet discount plan for schools and libraries, in letters to AT&T Chairman Michael Armstrong and MCI Communications Corp. Chairman Bert Roberts.
“Congress passed a law that opened vast new opportunities for profit to you and you are now complaining about sharing a piece of a substantially growing pie with school children and [citizens in] rural and high-cost areas,” said Kerrey.
Kerrey commented that he will seek to have companies disclose profits on their telephone bills. “If afterward you feel the 1996 law is costing you too much money, I will be happy to entertain any suggestions for repealing it.”
The FCC’s Kennard gave no sign he is ready to throw in the towel.
“America’s children, especially low-income and rural children, need access to today’s technology if they are to compete in tomorrow’s work force,” said Kennard. “To do this, we need discounts to hook up classrooms.”
“Ending this effort is not in the best interest of the American people,” said Kennard. “We need to find a way to ensure that this effort continues. I am committed to this.”
