FCC to Cut Phone Firms’ Share to Wiring Fund

The Federal Communications Commission will soon announce that it is cutting the size of long-distance telephone company payments into a fund that will help pay for linking the nation’s schools and libraries to the Internet. Under the 1996 Telecommunications Act, long-distance companies are required to pay into a fund, known as the Universal Service Fund, to help subsidize the cost of wiring schools, libraries and rural health-care facilities beginning Jan. 1. The FCC has decided to collect $625 million mostly from long-distance companies in the first half of 1998 to wire the nation’s schools and libraries, and $50 million to hook up rural health-care facilities, FCC Chairman William Kennard told reporters. To offset the cost to the long-distance companies, the FCC voted in May to cut $1.7 billion a year from the $23 billion in annual fees long-distance companies pay to local phone companies to complete calls. The long-distance companies say the cuts won’t generate enough savings to pay for the costs of the school-wiring program, forcing them to raise rates to make up the difference. The FCC says that shouldn’t be necessary.