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Published in Print: May 12, 1999, as FCC Chairman To Seek Full Funding for E-Rate Program

FCC Chairman To Seek Full Funding for E-Rate Program

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Chairman William E. Kennard of the Federal Communications Commission will recommend full funding of the federal E-rate program, he announced last week at an event organized by education and library officials.

He and the four other FCC members must decide early next month on the funding level for the second year of the program, which awards discounts on Internet and telecommunications services and related infrastructure, such as wiring, to schools and libraries.

When the FCC created the education-rate program, under provisions of the Telecommunications Act of 1996, it set a cap of $2.25 billion annually for the fund, which is collected from telecommunications carriers as a percentage of their revenues.

Last spring, however, the fcc allocated just $1.3 billion for the first year of the program, plus $600 million over an additional six months to cover services delivered from January 1998 through June 1999.

After paying various start-up and administrative costs, the Universal Services Administrative Corp., which runs the program, awarded $1.66 billion in discounts for that period, an amount far short of the $2.3 billion in total requests. About 26,000 out of 30,000 applications from schools and libraries received discounts.

USAC has received 32,000 applications for the second year of the program--from July of this year through June 2000--and projects that the requests will total $2.4 billion.

Divided Reaction

Speaking at the headquarters of the National Education Association here, Mr. Kennard told representatives of education and library organizations and several telecommunications and computer companies what they wanted to hear: He will push for the entire $2.25 billion.

William E. Kennard

He said the E-rate would continue to be focused on providing telecommunications services to every school and library that applies and to provide internal connections to schools serving poor children and those in rural areas. "Funding it fully would connect one-third of the rural schools throughout America" as well as many urban schools, Mr. Kennard said. "We owe it to the barrios, inner cities, those on Indian reservations."

In an apparent response to critics who have argued that the E-rate has caused telephone bills to rise, Mr. Kennard contended that telecommunications companies have reaped financial windfalls from regulatory changes in recent years. "Even if we fund [the E-rate] to its cap, we will have available another half-billion that could and should be used to lower long-distance rates for the American consumer," he said.

Mr. Kennard's announcement drew swift endorsements from Sens. Bob Kerry, D-Neb., Jay Rockefeller, D-W.Va., and Olympia J. Snowe, R-Maine, all staunch advocates of the program.

But Rep. W.J. "Billy" Tauzin, R-La., said last week that he would introduce a bill in the House that would eliminate the program. He has said he would replace it with one financed by a portion of an existing federal telephone tax.

Vol. 18, Issue 35, Page 16

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