WASHINGTON-The Clinton administration’s free Internet plan would discriminate against wireless carriers by forcing them to pay extra into the universal service fund without the likelihood of gaining access to monies to connect schools and libraries, say wireless industry executives.
While policymakers say they want to make universal service competitively and technologically neutral, right now the deck is stacked against the wireless industry.
“We are not supportive of the administration’s goal of providing (free) Internet service to every school through the universal service fund,” said Rob Cohen, manager of government relations for the Personal Communications Industry Association.
Cohen, however, said PCIA would back a narrowly crafted universal service fund.
Thomas Wheeler, president of the Cellular Telecommunications Industry Association, said the Internet initiative is laudable but questioned why the private sector is being asked to finance it when the government is giving away spectrum for unlicensed PCS that could provide wireless connections to the internet.
CTIA, on its own, sponsors wireless Internet links in various schools around the country through its carrier and manufacturer members.
In the past, the administration hinted at using spectrum auction revenues to meet Vice President Gore’s goal of linking every classroom, library and hospital to the Internet by 2000.
But Republicans accused the administration of wanting to spend the money as fast as it received it.
More recently, key Republicans and Democrats with telecom oversight have chided Clinton and congressional budgeters within their own ranks for paying for government programs with anticipated auction proceeds.
Even before Clinton volunteered the industry to connect all public schools and libraries to the Internet for free in an Oct. 10 speech at the University of Tennessee in Knoxville, the wireless industry was behind the eight ball on universal service. The Clinton-Gore plan makes the situation potentially worse.
The telecommunications law enacted earlier this year requires all carriers to pay into the universal service fund but restricts who can draw from it. For example, one criterion for eligibility to withdraw money is providing service to a substantial majority of residential customers. That gives local telephone companies, which are unlikely to lose significant market share any time soon, a leg up on universal service funding. Yet, wireless telecom carriers would still be forced to contribute to the fund.
Even local Baby Bells, despite being beneficiaries, appear leery of the White House Internet plan. Roy Neel, president of the United States Telephone Association, said the Federal Communications Commission “faces a huge burden figuring out how to fund these new services in the competitively neutral environment envisioned by Congress and embodied in the Telecom Act.”
“If we do the right thing with the powers Congress has given us, we can address people’s concerns for the education of their children with tools of the future,” said Reed Hundt, chairman of the FCC.
Not included in those powers is a mandate for the industry to fully underwrite Internet hook-ups for educational purposes.
Contributions to the fund, which subsidizes basic telephone service of low income and high-cost rural subscribers, would increase to offset the cost of linking every lower, middle and upper school and library in the country for free.
Larry Irving, head of the National Telecommunications and Information Administration, pegs the cost of the plan at between $1.5 billion and $2.5 billion but says “we can’t know for sure.”
The figure cited by NTIA, which filed a formal proposal at the FCC with backing from the departments of education and agriculture, is for connections only. Internet access charges, software, hardware and support services are not factored in, but they could increase costs significantly. It is possible that some costs could be underwritten by federal education technology appropriations.
Paging operators want completely out of universal service fund obligations. Wireless telephony carriers are willing to pay into the fund, but want to draw on it to serve high-cost rural residents-perhaps in a more cost effective manner-than landline telcos.
Wireless connections may not only be cheaper than wireline links, but the only safe way to get students on the internet, particularly those in older schools where drilling holes for wires is unfeasible because of asbestos.
A federal-state joint board will make recommendations to the FCC on universal service in two weeks, which in turn will solicit comments and make a decision next year.
The joint board met in Washington last week to discuss the issue.
A big issue still unresolved is pricing methodology. That is made difficult by the question of who pays for what, not to mention defining those whos and whats.
School districts, under the plan, would put out requests for bids and award the contacts.
Therein lies another catch that works against wireless companies.
Because the Clinton-Gore initiative envisions advanced Internet services, which some schools and libraries will want but will have to pay for, wireless firms would face a distinct disadvantage in that they lack technical capabilities of wireline telcos and cable TV operators. Thus, wireless companies would lose contracts despite being able to provide basic internet connectivity.
