FCC Likely to Boost Fees to Wire Schools, Libraries

In a move that could boost next year’s phone bills by as much as $1 billion, federal regulators are expected to nearly double the amount the government is spending to wire the nation’s schools and libraries for Internet access.

Federal Communications Commission Chairman William E. Kennard has proposed that the agency authorize $2.3 billion to hook up schools and libraries to the Internet--a nearly $1-billion increase from the current year.

The funds would be raised by boosting subsidies paid by local, long-distance and wireless phone companies starting in July. The companies have not decided how much of the increase they would pass along to consumers, but many experts expect a jump in federal charges listed in monthly bills of as much as 30 cents per month.

Kennard’s proposal, which is expected to be approved by the FCC next week, came amid renewed efforts by some members of Congress to reel in the controversial wiring program. New research also suggests that increases in government-mandated telephone taxes have all but erased any benefits that increased competition has offered many consumers.

Now that the nation’s more than 500 long-distance phone carriers have slashed calling rates to as low as 7 cents a minute, new and expanded taxes for wiring schools and libraries and other projects make up nearly 20% of some consumers’ phone bill, according to the Telecommunications Research & Action Center, a Washington watchdog group.

Critics charge that some of the money for the so-called e-rate wiring program has been spent to gold-plate schools’ regular phone systems. In the Fresno school district, for instance, telephone equipment giant Lucent Technologies Inc. installed a “homework hotline” that was paid for in part by funds from the federal Internet wiring program.

“The cost of having and using long-distance service has skyrocketed for most consumers,” said Samuel A. Simon, chairman of the Telecommunications Research & Action Center. “Today, fees and surcharges are rapidly becoming a large part of the long-distance bill and are having a major effect on the bottom line for consumers.”

Under the 1996 Telecommunications Act, the FCC was directed to subsidize the wiring of schools, libraries and rural health-care facilities for high-speed Internet access. The money was to come in part from fees that long-distance carriers pay local phone companies to connect long-distance calls.

Kennard maintains that his funding increase could be implemented without raising telephone rates if long-distance companies would pass through other rate reductions the FCC will authorize in conjunction with the funding increase for Internet wiring.

“By fully funding the e-rate program . . , we will be able to wire 528,000 additional public school classrooms to the Internet,” Kennard said in a speech to the National Consumers League this week. “Even with funding the e-rate to its cap, [phone companies] will have available another half a billion dollars which can be--and should be--used to further lower long-distance rates for American consumers.”

That would be a departure from last year, when many long-distance carriers passed along the cost of the various federally mandated telephone subsidy programs.

AT&T; Corp., for instance, began listing new charges of $1.78 a month last summer. MCI WorldCom levied a $1.07-a-month charge and is imposing additional fees equal to 6% of its customers’ international and interstate toll charges. Sprint Corp. began charging 85 cents a month plus 5.8% of its customers’ interstate and international toll calls to pay for the government-mandated programs.

Representatives of the carriers this week declined to say whether they would hold the line on new increases. But several lawmakers doubt that consumers would see a drop in their phone bills.

“The fact of the matter is consumers’ telephone bills would be significantly less but for the e-rate,” said Rep. W.J. “Billy” Tauzin (R-La.), chairman of the House telecommunications and finance subcommittee.

“I think it’s a perverse reading of the telecom act by the chairman [of the FCC] and his friend [Vice President] Al Gore to think they can keep funding this program the way they have. Most lawmakers think it is a good idea to wire up schools . . , but we would rather do it in a legal way rather than the badly mismanaged way they [the FCC] have been doing it.”

Opponents of the e-rate, however, could face an uphill battle in scaling down the program.

In contrast to a year ago, when there was an outpouring of consumer complaints about the massive spending to wire schools, recent polls show overwhelming public support.

“This program is of great benefit to our kids and is reaching out to the communities that cannot afford these services,” said Lynne Bradley, an official in the American Library Assn.’s Washington office.