WASHINGTON-Outspoken Federal Communications Commission member Harold Furchtgott-Roth joined the wireless industry on June 4 in blasting the agency’s latest plan to fund discounted Internet connections for schools and libraries and in criticizing the overall administration of the universal service program.
“There will be no offsetting reduction in access charges whatsoever for wireless customers, who will simply have to pay higher rates,” said Furchtgott-Roth in a dissenting statement accompanying the FCC’s announcement.
Furchtgott-Roth, a minority Republican FCC member and free-market economist, claims some FCC E-rate actions are illegal.
Federal regulators insist discounted Internet access rates for schools and libraries-the E-rate-will not lead to higher bills for consumers of telecom services. They say reduced access charges-fees paid by long-distance carriers to local landline telcos to terminate calls-will pay for the long-distance portion of increased E-rate funding.
But wireless carriers do not pay access charges, so neither they nor their customers realize any benefit from the FCC policy.
Moreover, despite paying into the universal service fund, wireless carriers-like Western Wireless Corp.-are finding it difficult to tap into the multibillion fund that historically subsidized basic telephone service for rural and high-cost areas but has been expanded to encompass low-income citizens and Internet hook-ups to schools, libraries and rural health-care facilities.
The FCC downplays fears that the E-rate will increase wireless bills. The wireless industry, increasingly hit by local, state and federal taxes on carriers, vehemently disagrees.
“It’s going to have a major impact,” said Angela Giancarlo, director of federal regulatory affairs for the Personal Communications Industry Association.
Giancarlo said the increase of $230 million from second-quarter 1999 funding for the E-rate represents a 42-percent hike. She said PCIA supports legislation, cosponsored by House telecommunications subcommittee Chairman Billy Tauzin (R-La.) and Senate communications subcommittee Chairman Conrad Burns (R-La.) to reduce the 3-percent federal excise tax on telecom service and to earmark the lowered tax to help underwrite Internet connections for schools, libraries and health-care centers.
The National Telecommunications and Information Administration, not the FCC, would run the Burns-Tauzin E-rate program.
The new universal service contribution requirements, likely to go into effect by week’s end, add fuel to a mushrooming political controversy that is making big targets out of FCC Chairman William Kennard and Vice President Gore from Republicans who run Congress.
Gore, odds-on favorite to be the Democratic presidential nominee in 2000, has long promised to connect all schools and libraries to the Internet by the turn of the century. Republicans call E-rate the “Gore tax.”
Furchtgott-Roth said the schools and libraries program has expanded in cost, size and function beyond what Congress intended when lawmakers included E-rate in the 1996 telecom act.
In fact, according to Furchtgott-Roth, E-rate administrative costs are much higher than all other universal-service programs combined. In the meantime, it remains to be seen how much it will cost to subsidize basic telephone service for rural, high-cost and low-income citizens.
