The eRate withstood another flurry of assaults in early August and won a short reprieve as Congress took a three-week recess. The program was pronounced “unconstitutional” during a hearing of the House Ways and Means subcommittee on oversight, and lawmakers threatened to kill the program with an appropriations bill amendment. But in the end, no decisive action was taken before Congress adjourned for the summer Aug. 7, 1998.

The fate of 30,000 applications seemed to hinge upon semantics as Congress held an oversight hearing Aug. 4 to determine whether the eRate in its present form constitutes a “tax”—and therefore is unconstitutional—or a “fee.”

“The charges that the FCC has imposed on telecommunications carriers [to pay for the eRate] appear to be taxes,” said subcommittee chair Nancy L. Johnson, R-Conn. “If [the program] is indeed a tax, it has not been levied by Congress but by an executive branch agency and therefore is illegal.”

Finding funding for the eRate is a priority, Johnson said, but “we must follow the constitutionally prescribed process.”

Ranking minority member William Coyne, D-Penn., agreed. If Congress determines that the eRate is a tax, Coyne said, then “we should exercise our jurisdiction and attach an amendment to the Commerce appropriations bill which would block funding of the program.”

But FCC General Counsel Christopher Wright disputed the subcommittee’s characterization. Wright argued that the courts have ruled repeatedly that the federal universal service fund—as administered by the Commission since 1934—is a fee, not a tax.

Besides, Wright said, Congress itself authorized the eRate under Section 254 of the Telecommunications Act of 1996, which extended universal service discounts on telecommunications services to schools and libraries.

The “tax” vs. “fee” dispute was raised by protests from long-distance companies, which pay the bulk of the eRate’s cost in the form of surcharges to the FCC. AT&T has passed the cost of these surcharges on to its customers as a “federal universal service fee” of 93 cents per month, while MCI charges its customers a 5 percent universal service fee on their interstate calls.

In response to the rate hikes from these companies, critics of the eRate have labeled it the “Gore Tax.”

Though no action was taken by the subcommittee, the constitutionality of the eRate remains in question. The issue has appeared before the courts again, as telecommunications companies (telcos) have filed suit against the FCC declaring the eRate unconstitutional. The Fifth Circuit Court of Appeals in New Orleans is scheduled to hear arguments in the case later this year.

Growing divide

While the House Ways and Means committee debated the legality of the eRate, the full House was considering its Commerce appropriations bill. Rep. Joe Scarborough, R-Fla., had vowed to attach an amendment to the bill that would block the FCC from collecting any more money from long-distance carriers to pay for the eRate, but the bill passed the House Aug. 5 without such action.

An aide to Rep. Scarborough told eRate Update the congressman decided not to introduce his amendment at the last minute, but he remains committed to a similar stand-alone bill he introduced in July.

Scarborough’s bill—H. R. 4065, the “eRate Tax Moratorium Act of 1998″—would temporarily suspend the collection of fees from telcos until Congress has had the chance to examine the program more closely.

“We had an outcry from constituents when they learned about the so-called ‘Gore tax,'” said David Stafford, Rep. Scarborough’s press secretary. “So we took what we thought was a balanced approach to protect consumers.”

Stafford said H. R. 4065 would allow the FCC to disburse the current amount collected from telcos—now about $800 million—to schools, while freezing the rest until the lingering concerns of Congress can be addressed.

Sources on Capitol Hill, though, were hinting that the Clinton administration’s renewed push for the eRate may have granted the program at least a temporary reprieve.

Bolstered by the latest Commerce Department study showing that the digital divide is growing, Education Secretary Richard Riley delivered a July 29 address reaffirming the administration’s support of the program.

“Let me tell you in no uncertain terms,” Riley said, “President Clinton, Vice President Gore, and I will continue to fight any efforts to dismantle the eRate and widen the digital divide.”

“This debate has never been about technology,” he continued. “It has been about what our children have the opportunity to do. What good is it to be the richest nation in the world…if the ability to benefit from technology is dependent on whether a student goes to a particular school?”

The study Riley referred to, “Falling Through the Net II: New Data on the Digital Divide,” was conducted by the Commerce Department’s National Telecommunications and Information Administration.

A follow-up to the department’s 1995 report, the study confirmed what educators have suspected: Overall home computer and internet use has increased during the past three years, but so has the disparity between the technology “haves” and “have-nots.”

Rep. Earl Blumenauer, D-Ore., himself a strong supporter of the eRate, told the trade publication Communications Daily that members of Congress didn’t want to be seen as “anti-education, anti-library, anti-high tech, or anti-kid” as they headed home for recess Aug. 7.

Be that as it may, educators should brace for another flurry of action when Congress resumes Aug. 31. In addition to pending bills from the Republican side of the aisle (see “Lawmakers,” page 3), Rep. John Dingell, D-Mich., the ranking minority member of the House Commerce Committee, is working on his own measure.

Like bills introduced by Sen. Burns and Rep. Tauzin, Dingell’s legislation would use part of an existing telephone excise tax to pay for the eRate.

Dingell’s legislation wouldn’t convert the funds to block grants as would the Burns and Tauzin bills, but it would restrict the amount of bandwidth schools could apply for discounts on and would restrict eligibility to only the neediest schools.