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COMMUNET Home

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COMMUNET  June 1997, Week 2

COMMUNET June 1997, Week 2

Subject:

[CNI->RRE->CIT->]FCC LEADERSHIP GRILLED ON UNIVERSAL SERVICE RULINGS

From:

Curtiss Priest <[log in to unmask]>

Reply-To:

Community and Civic Network discussion list <[log in to unmask]>

Date:

Thu, 12 Jun 1997 09:57:08 PST

Content-Type:

text/plain

Parts/Attachments:

Parts/Attachments

text/plain (73 lines)

FCC LEADERSHIP GRILLED ON UNIVERSAL SERVICE RULINGS

JUNE 3 - Members of the Senate Communications Sub-Committee had their
first
opportunity to directly question the FCC leadership since the Commission
handed down its May 8 ruling adopting most of the Federal-State Joint Board
Recommendations.  After praising the Commission for their dedication and
hard work, the senators immediately took to asking pointed questions.
Senators John McCain (R-AZ) and John Rockefeller IV (D-WV) both
questioned
the final cost of guaranteeing Universal Service.  Citing a study by the
RAND and McKinsey groups that estimated a cost of $20 billion to
interconnect America's schools, Senator McCain fears that local telephone
rates will rise if carriers are forced to increase their fund
contributions.

Chairman Reed Hundt replied such studies are just estimates, that the
system will take years to implement and the states will be carrying most
of
the financial burden in interconnecting our nation's schools.  Committee
Chairman Conrad Burns (R-MT) expressed concern that with the telecom
industry being "forced" to contribute 2 billion annually to the fund, the
computer and Internet industry could unfairly take advantage of not
having
to pay into a program which is encouraging use of their services.  Hundt
cited provisions within the order that ensure use of the fund is for
non-commercial use only, while Commissioner Rachelle Chong noted that
commission rules limit discounts, and the resale of such discounts can only
be used for telecom services.  Considering the somewhat vague and at
times
contradictory language within the Telecommunications Act as to what
constitutes a telecom service, one may view Chong's remarks with some
skepticism.

Senator Ted Stevens (R-AK) certainly let his doubts be known.  Stating
that
the Universal Service Fund will be depleated by the year 2000, he
questioned the logic of exempting Internet Service Providers from paying
into the fund.  Giving Chairman Hundt no time to formulate a coherent
response, Stevens was relentless in questioning why the burden had been
placed on the telecom industry to finance universal service?  What
Senator
Stevens failed to note, and Chariman Hundt failed to articulate, is that
Internet Service Providers are paying into the fund, albeit indirectly,
through the leasing of telephone lines that are essential for their
services.  Unless this is made clear to Senator Stevens and others with
similar concerns, pressure might be exerted to formulate a corrections bill
that would force the FCC to redo the entire process.  Any challenges to
the
FCC ruling will probably take place in the court system, with the
Regional
Bell Operating Companies leading the charge to the courtroom. It is more
likely, however, that the Universal Service provisions within the
Telecommunications Act will remain unchanged for the forseeable future.

The afternoon portion of the hearing provided the private sector with an
opportunity to comment on the FCC ruling and morning session.  Most of
the
panelists' testimony had been heard before.  Arguments were made against
the wireless service industry having to contribute to the fund. Mr. Bob
Rowe of the National Association of Utility Commissioners stated that the
FCC had failed to recognize the potential of the wireless industry in
providing services to rural areas.  Mr. Roy Neel, President of the United
States Telephone Association criticized the FCC for cutting access
charges
before mandated universal service could be implemented in high cost and
rural areas, while Mr. Jonathan Sallet, Chief Policy Counsel for MCI
Communications, agreed that Internet Service Providers should not be
required to pay into the fund, and did not constitute a threat to the
telephony industry. Although citing a willingness to work together, it is
doubtful that the various parties will ever reach an agreement on funding
that they perceive as mutually beneficial.

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