White House Urges Greater Phone Access for the Poor

Acting on one of the most divisive issues of telecommunications reform, the Clinton administration on Friday urged federal regulators to promote universal telephone service by barring phone companies from disconnecting low-income customers’ local phone service for overdue long-distance bills.

The administration also asked the Federal Communications Commission to pass rules making subsidized telephone service more readily available to the poor and to people in rural areas.

In a 77-page filing made late Friday with the agency, the National Telecommunications and Information Administration said universal telephone should be a national priority. NTIA, an arm of the Commerce Department, argued that a telephone not only connects “an individual to neighbors and loved ones [but] with the addition of a computer and a modem, it furnishes a pathway to the Information Age, offering enhanced employment and educational opportunities.” Although the United States has the third-highest rate of telephone penetration in the world among major countries, the federal government is preparing to undertake a multibillion-dollar effort to ensure that every American who wants it has access to the telephone network, and perhaps to more advanced services as well.

A sweeping telecommunications bill enacted last month requires the FCC to establish a joint federal-state board to define universal service and develop ways to finance it. The new law also authorizes states to adopt universal service rules so long as they do not conflict with federal initiatives.

An eight-member universal service board, headed by FCC Chairman Reed Hundt, is scheduled to hold its first meeting Thursday amid controversy over what kind of communications services should be subsidized.

While some conservatives, including House Speaker Newt Gingrich, have spoken favorably of the idea of helping the poor connect to the Internet, others have sharply criticized federal efforts to make communications technology more widely available. They say a competitive marketplace--rather than federal intervention--will work to make technology affordable to all.

FCC commissioners resorted to a round of finger-pointing over universal access at an FCC hearing Wednesday, after Rep. Jack Fields, chairman of the house telecommunications subcommittee, chided the agency earlier this month for allegedly developing a proposal that called for public subsidies of telephone pagers for the homeless.

Although Hundt said no such proposal exists, others have expressed concern about other agency trial balloons involving universal service, such as providing electronic voice mail or calling cards for those with no fixed address.

“When they first talked about universal service as a system of subsidies for rural [telephone] service, I could live with that,” said Lawrence Gasman, director of telecommunications and technology studies at Cato Institute, a conservative Washington think tank.

“But what concerns me now is that they seem to want to extend the universal service doctrine to Internet access, cable TV access” and other communications services, Gasman said. “It’s always been the case that rich people buy things before poor people do. Natural penetration rates are different for different products. You can’t second-guess the market.”

In the plan it filed with the commission, NTIA carefully avoided citing any specific telecommunications services it believed should be subsidized.

But noting that there are wide disparities in telephone penetration rates between rural and urban areas, and between high-income and low-income and minority communities, the administration said the FCC “should give proper weight to the importance of access to advance services.”

Because Hundt is considered a close ally of the White House, industry officials fear the administration’s position is likely to be given considerable weight as the FCC develops its final universal access rules.

And at least one long-distance carrier voiced strong objection Friday to the administration’s plan.

“We don’t support that proposal,” said Chris Frentrup, senior regulatory analyst for MCI Communications Inc.

Frentrup went on to fault an administration study attached to the plan, which he said showed that states that have passed rules barring local phone companies from cutting off phone service to customers with overdue long-distance bills saw their telephone penetration rates rise.