YOU ARE AT:Archived ArticlesINDUSTRY, CONSUMER GROUPS OPPOSE FCC SUBSIDIES INCREASE PLAN

INDUSTRY, CONSUMER GROUPS OPPOSE FCC SUBSIDIES INCREASE PLAN

WASHINGTON-A Federal Communications Commission plan to increase subsidies to connect schools, libraries and rural health care providers to the Internet has come under fierce attack from wireless carriers, consumer groups and a top telecom lawmaker in Congress.

The plan would hike quarterly contributions to the schools and library program from $325 million to about $524 million, roughly $1.67 billion total for this year.

The increase in universal service payments is based on reduced access charges of $700 million.

“Although reductions in access charges may ameliorate the burden of increased contributions on long- distance carriers, they will have no such beneficial impact on wireless carriers who are subject to termination charges rather than access charges,” Sprint PCS told the FCC.

Likewise, wireless trade groups were taken aback by proposed increase payments for the schools and libraries program.

“How can the wireless industry recover costs from access charges when our industry isn’t subject to those charges in the first place?” asked Jay Kitchen, president of the Personal Communications Industry Association.

Not only does Kitchen claim universal service payments are unfair to wireless carriers, which are not in a position to draw on the subsidy pool, but he says the proposal undermines the overarching policy to foster local competition.

“Just as important is the fact that mandating increases in universal service funds contributions-like any other tax increase-will further hinder the wireless industry’s ability to compete in the local loop,” Kitchen stated.

The Cellular Telecommunications Industry Association reiterated its criticism that wireless universal service payments are incorrectly calculated.

Though the wireless industry is not winning at the FCC on universal service, it has strong support on Capitol Hill. Sen. John McCain (R-Ariz.), chairman of the Commerce Committee and a possible Republican candidate for president in 2000, has asked the General Accounting Office to investigate and audit the Schools and Libraries Corp.

GAO previously declared the entity, created by former FCC Chairman Reed Hundt and mandated by Congress to give discounted Internet hook-ups to schools, libraries and rural health care centers, was improperly established.

McCain said increases in universal service payments mean “consumers will ultimately pay for this subsidy in the form of higher bills for telephone, cellular and paging services.

“Moreover, because the subsidy is subject to a yearly maximum, any payments made for ineligible services will either unnecessarily increase consumer bills, or else unnecessarily decrease the funding that would have been available for eligible services.”

The FCC’s emphasis on wiring schools, libraries and hospitals to the Internet has attracted criticism from lawmakers, consumer groups and the industry. The groups argue the FCC has yet to figure out if subsidies are available to support traditional recipients of universal service, the poor and citizens in rural areas.

Moreover, some GOP lawmakers say the schools and libraries Internet initiative is being pushed so hard because it is a pet project of Vice President Gore, a leading contender for the Democratic presidential nomination.

The Consumer Federation of America and the Consumers Union have urged the FCC to suspend collection of increased contributions for the program until interstate access charge reductions kick in.

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