Published Online: March 19, 1997


Discount 'E-Rate' for Schools and Libraries Nearly Lost in Debate

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Like a small car on a busy interstate, the proposed discounts on telecommunications services for the nation's schools and libraries seem in danger of being delayed or even sideswiped.

As powerful companies vie for commercial advantage, the vulnerable position of schools and libraries became clear at a hearing here last week before the Senate Commerce, Science, and Transportation Committee.

The committee's chairman, Sen. John McCain, R-Ariz., called the hearing to review the Federal Communications Commission's progress in writing rules for last year's telecommunications law.

At issue are the "universal service" portions of the law, which foster telephone service for rural and high-cost areas. The FCC must complete the rules on those provisions by May 8. The new law expanded traditional universal service to include schools and libraries and access to advanced telecommunications.

Last November, an influential FCC advisory panel recommended regulations that would give schools and libraries discounts of between 20 percent and 90 percent--dubbed the "E-rate"--for such services. The exact level would be based on need.

The proposal would require telephone companies to pay as much as $2.25 billion annually into a fund for reimbursements to companies that provided the services. Other universal-service rules would help ensure affordable telecommunications services for people and businesses in remote and high-cost areas.

Packed Hearing

Throughout most of the March 12 hearing, there was a standing-room-only audience, and some attendees stood in line for more than 10 hours to get in.

Billions of dollars are at stake. Complex details, such as exactly which types of companies would pay into the various funds, what services would be eligible for reimbursement, and how the reimbursement amounts would be determined, will have far-reaching implications.

The senators urged Reed E. Hundt, the FCC chairman, to produce sensible regulations that open the highly subsidized enclaves of the telephone industry to market competition. Mr. Hundt complained of fierce lobbying by the industry, whose estimate of the yearly cost of universal service has soared to $24 billion.

Later, four telephone executives clashed with one another as they sought to frame the issues of universal service to favor their different segments of the rapidly shifting industry.

Sparks flew as two representatives from local phone companies defended the access fees they charge to long-distance companies for using the switches and lines that complete calls to local businesses and residents.

Their counterparts from long-distance companies replied that the access fees are exorbitant and that slashing them would provide the wherewithal to pay for universal service.

Conflicting Interests

All the speakers came with their own sets of numbers and used them to paint drastic scenarios--such as higher telephone bills and restricted service--of what would happen if their own particular needs weren't met.

Although none said they opposed affordable services for schools, each of the corporate representatives advocated positions that would shift more of the cost to their competitors within the phone industry as well as to companies providing Internet services and software.

When the corporate fireworks ended, most of the audience rose to go. The final speaker, Anthony Wong, a school board member from Cecil County, Md., was almost overlooked before Sen. Conrad Burns, R-Mont., called for order.

Mr. Wong spoke on behalf of a coalition of more than 30 education and library organizations that supports the most comprehensive discounts possible for schools and libraries. ("School Groups Join Forces in Quest of Telecomm Discounts," Oct. 2, 1996.)

He told the hearing that his district cannot not afford two-way distance-learning services because of the $13,000-per-school annual cost. The FCC advisory board's plan would save the 14,900-student district $1 million over five years, he said.

Mr. Wong, who is also an assistant professor of computers and information at Cecil Community College, said he spends too much time teaching his students computer skills they should have learned in high school.

Sen. Jay Rockefeller, D-W.Va., one of the two senators who remained at the hearing, commented wryly on the exodus that preceded Mr. Wong's presentation.

"It's indicative of what goes on in Congress that you end up last," he told Mr. Wong. "There went a cascade of about 200 highly paid lobbyists who chat their way out and go on to their next triumph."

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