On a strict partisan vote, the five-member Federal Communications Commission (FCC) decided late on June 12 to cut the eRate program and set 1998 funding at $1.275 billion, approximately 43 percent less than the $2.25 billion FCC supporters originally had sought.

Both Republican commissioners voted against the eRate, but FCC Chairman William Kennard and his two Democratic colleagues voted to fund the program. The FCC, with the same split vote, also agreed to provide $650 million in subsidies for the first half of 1999.

Funding tops $1.9 billion

That boosts to $1.925 billion the total that schools and libraries are to receive for internet hookups during the next 18 months. In the first round of applications, schools and libraries had asked for subsidies amounting to $2.02 billion. Even though funding for the program fell short of the amount requested, FCC Chairman William Kennard considered the June 12 vote an accomplishment.

“You’re never going to satisfy everyone,” he said. “What I’m trying to find is a reasonable middle ground so that people can put the politics aside and make sure that the kids don’t have to wait any longer.”

“If we were to fund at the full $2.25 billion rate,” he explained, “there would probably be some upward pressure on long-distance rates. My goal has been to have both lower rates and more money for universal service.” The eRate is part of the universal service fund.

The FCC vote followed weeks of increasingly strident attacks on the eRate, culminating with a letter from four powerful members of Congress calling on the FCC to postpone any funding of the eRate.

In spite of the lowered eRate funding, long-distance telephone companies still plan to add special surcharges to residential phone bills starting on July 1, the Washington Post reported on June 13.

Truth in billing

Although the FCC action does not specifically prohibit telecommunications companies from attributing surcharges to the eRate, a six-point plan written by Chairman Kennard’s office contains a “truth in billing” section designed to ensure that consumers receive clear and complete information on their phone bills. Telecommunications carriers may not provide misleading or untruthful information to their customers, the FCC plan declared.

Other provisions of Kennard’s plan:

Freeze Collection Rates—

For the next four quarters, $325 million will be collected (on top of the $625 million that has been collected thus far) for a total of $1.275 billion for 1998 and $650,000 for Jan. 1 to June 30, 1999.

Priorities to the Neediest Applicants— Telecommunications and internet services will be funded fully, but only the poorest schools (those receiving 80-90 percent discounts) will receive funds for wiring initially. If there are funds left, other schools will receive discounts for internal wiring.

Extend Start-up Costs over 18 Mos.— The initial funding period will change from a 12-month cycle to 18 months to realign the cycle to more closely resemble the school-year calendar. The next funding cycle will begin on July 1, 1999. Applications received before April 15, 1998, will continue to be reviewed for funding.

Revamp Administration Structure—

The School and Libraries Corporation (SLC) and the Rural Health Care Corporation (RHCC) and a third corporation will be combined into one entity, the exact nature of which has yet to be worked out. The positions of CEO for the SLC and RHCC will be combined, and the salary for the new post will be capped at $151,000 immediately. The head of the SLC had received a base salary of $200,000, according to press reports.

Ensure Program Integrity—

Any violation of the rules will result in a denial of funding. Complete audits must be made before commitments are given.

Although the FCC’s action saves the eRate, at least in the short term, representatives of school and library groups expressed disappointment that the program will not receive full funding.

“We can talk all we want about how much we love our children, but when push came to shove, profits for the telecommunications industry were apparently more important than our kids’ future.”

“Many children and communities will be left unconnected,” said a spokeswoman for the National School Boards Association.

Said a lobbyist for the American Library Association, “Clearly we’re disappointed that [the FCC’s action] will put a lot of school kids and libraries on hold.”

National Education Association President Bob Chase had this to say: “We can talk all we want about how much we love our children, but when push came to shove, profits for the telecommunications industry were apparently more important than our kids’ future.”

Vice President Al Gore, a leading eRate proponent, warned that the FCC action will not end the assault on the eRate. “Congress will still try to end [the program] as soon as next week,” Gore predicted in a speech to educators and technology executives in mid-June. “But let me be clear: We will fight any effort by Congress to end the eRate.”

eRate opponent Sen. John McCain, R-Ariz., told the Washington Post the FCC action was “an exercise in futility.” In light of the FCC vote, he declared, “legislation must be enacted immediately to stabilize the schools and libraries program and give the entire telephone industry subsidy system the coherence and permanence that Congress intended.”

The American Association of School Administrators (AASA) warned of renewed eRate opposition in Congress during the week of June 15. “The Congress is not done with this program,” said a June 12 report on the AASA web site. Said the AASA report, “Rush Limbaugh has riled up the anti-eRate troops, and one Hill office said the calls were coming in 10-1 against the program.”

AASA advised educators to keep their own calls coming in to their lawmakers in Washington.