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November 23, 1998

GORE’S E-RATE POISED TO LAUNCH IN SPITE OF CRITICS

By CBR Staff Writer

The US Government is poised to pay almost $2bn to provide net access to 40,000 schools and 7,000 libraries, according to Vice President Al Gore. The first set of grants from Gore’s controversial e-rate program is intended to subsidize internet access for poor schools and libraries. Originally outlined in the 1996 Telecommunications Reform Act, the program has fallen into disrepute since AT&T, MCI and Sprint used it as a pretext to charge their customers up to 5% more for every phone bill. The Federal Communications Commission had expected the three to absorb the e-rate subsidy charges levied on them, because it had already discounted the access charges they are required to pay to local exchange carriers (LECs). The Big 3, however, accepted the LEC discounts and passed on the e-rate charges. They say they have cut prices elsewhere in quantities which amount to what they saved on the LECs. Ironically, consumer backlash against the 5% price hikes has not been felt by the Big 3 but by the hapless FCC. Republicans in Senate and Congress pointed out that they did not pass the Telecommunications Act only to see residential and business customers paying more for telephony (CI No 3,462). Some have questioned whether the FCC is consitutionally entitled to levy taxes like the e-rate. The FCC retorts that it isn’t levying taxes; the carriers are. Even so, the Commission has had to scale down what it had originally hoped to give to libraries and schools from $2.25bn to $1.275bn, according to the magazine Data Communications. Meanwhile, the schools themselves are clamoring for funds, not only for net access but also for paint, carpeting and asbestos removal. The more egregious claims are likely to be disqualified. FCC chairman William Kennard says he is confident the program will enjoy bipartisan support as soon as it gets under way. Vice President Gore had even more of the visionary in his tone: These new tools are making it possible for a child in the most isolated inner-city neighborhood or rural community to have access to the same world of knowledge at the same instant as a child in the most affluent suburb, he said.

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