BUDGET CALLS FOR NEW FCC RULEMAKING ON E-RATE

Under White House proposal, FCC would broaden services eligible for e-rate money to include “additional services that promote effective use of telecommunications and information services, such as teacher training and software.” Such change “would destroy the program” by raising anew questions about its legality, said Emily Sheketoff, exec. dir. of American Library Assn. (ALA) Washington office. She said telecom carriers agreed to drop challenges to requirement that they collect e-rate money on phone bills only in exchange for having money spent on telecom services. AT&T had no comment for this story by our deadline.

In keeping with Administration’s accountability theme for education, budget also would require FCC to institute performance measures for how well funds were used by schools and libraries to increase student achievement and as part of “an overall technology plan.” Commission would have to rethink its rules for assessing schools’ and libraries’ need for funds, using as only one piece current system that’s based on percentage of children in district getting free school lunches. New rules would have to take greater account of private schools and libraries, for which school lunch measure typically doesn’t apply, and areas that cost more to serve, such as rural schools.

“Call me paranoid,” Sheketoff said, but proposal “concerns me. Why bury it in the Commerce Department?” Neither Education Dept. nor White House returned calls by our deadline. Administration has speculated publicly about transforming e-rate program into block grants for states, although it backed off earlier this year when faced with need for legislation repealing part of Telecom Act. However, longtime e-rate foe Adam Thierer of Cato Institute thought program’s long-term chances got boost from inclusion of it and other universal service funds in budget. “Here we see the new President giving it his stamp of approval,” he said, and e-rate is “on its way to becoming a full-blown, endless, Washington entitlement program.”

In other budget reaction, aide to House Commerce Committee Chmn. Tauzin (R-La.) cautioned FCC to take care in raising $20 million in new regulatory fees, as Bush budget contemplates. “The devil’s in the details,” spokesman Ken Johnson said. “If the FCC attempts to raise regulatory fees on small, struggling broadcasters, cable companies and wireless companies, then I suspect there will be howls of protest on Capitol Hill.” If agency does find good way to raise money, he said, Tauzin “hopes they use the money for a technological upgrade for their engineering staff.”

“We're examining it,” said spokesman for Sen. Snowe (R-Me.), one of e-rate’s most ardent supporters. “We want to understand the intent.” Funding for universal service “seems okay,” he said, and his office didn’t know yet what impact on e-rate program would be. Expansion of eligible services “may be well-intended,” spokesman said, but Congress had specific reasons for crafting current rules and needs to look closely at proposed changes.

Proposed increase in universal service fund, specifically any increase in high-cost support for rural areas, indicates need to lower subsidy level, staffer for Rep. Markey (D-Mass.) said. Markey supports technology subsidies for schools and libraries, but believes subsidies for high-cost areas should not be so large as to support service provider monopolies, staffer said. Sens. Burns (R-Mont.) and Stevens (R-Alaska), strong supporters of full universal service funding, hadn’t responded by our deadline.