At least three members of the U.S. House of Representatives have announced their intention to kill the eRate, which helps schools and libraries defray the cost of connecting to the internet.
On Jan. 26, freshman House member Tom Tancredo, R-Colo., and returning members Pete Sessions, R-Texas, and Ed Royce, R-Calif., sent a letter to their colleagues soliciting support for legislation being drafted by Tancredo and tentatively called the “eRate Termination Act.”
In the letter, the three congressmen described the eRate as a “backdoor tax” that isn’t necessary because federal funding already exists to improve technology in schools.
“Our intention is to end the program,” Scott Slusher, press secretary for Rep. Tancredo, told eRate Update. When asked why, Slusher said the congressman is “opposed to taxeswhether you call them fees, or access charges, or whatever.”
Slusher said the bill is still being drafted but that it would be introduced “sooner rather than later.” Though he did not give any names, he said the congressmen were encouraged by other members of the House who have voiced their support as well.
The letter is sure to renew debate in Congress over whether the eRate should exist at all, and if so, how it should be paid for. Criticism of the program sprang up last year when telecommunications companies, which subsidize the discounts through fees collected by the Federal Communications Commission (FCC), started passing along the program’s cost to their consumers.
Responding to lawmakers’ concerns, the FCC scaled back the program last summer. But the surcharges continued despite the FCC’s actions.
Adding to the debate is legislation reintroduced by Sen. Conrad Burns, R-Mont., and Rep. Billy Tauzin, R-La., two influential figures on telecommunications policy.
The Burns-Tauzin legislation would use part of an existing 3 percent telephone excise tax to fund the eRate. The bills also would transfer oversight of the program from the FCC to the Commerce Department, which would turn the money over to the states to administer.
If not for impeachment…
Bryan Wilkes, press secretary for Rep. Royce, said the congressman’s office has received “a huge amount of mail and eMail” from voters who are angry about the surcharges on their phone bills. “If it wasn’t for the impeachment hearings, this would be the dominant issue,” Wilkes said. “[Rep. Royce] is listening to his constituents.”
Surcharges on residential customers’ bills depend on the carrier, but generally cost about a dollar per line per monththough for business customers, the surcharges are higher. Only 19 cents of every dollar actually pays for the eRate, according to FCC chairman William Kennard; the rest supports high-cost, low-income phone customers under the traditional universal service program.
While eRate supporters agree there shouldn’t be any surcharges at all, they say the telecommunications companies themselves are to blame, not the program.
“I’m disappointed that there are still people who are agitated about the program’s implementationI thought we were past that,” said Rep. Earl Blumenauer, D-Ore. “This is something that people across the country want. The public should get some benefit from the deregulation of the telecommunications industry.”
The eRate was a concession on the part of telecommunications companies in return for passage of the Telecommunications Act of 1996, Blumenauer said. In exchange for the deregulation of their industry, the companies agreed to extend universal service discounts to schools and libraries.
“There have been several billion dollars already saved by the telecommunications industry through deregulation,” Blumenauer said. “The eRate was to take some of those savings and direct them to schools and libraries. These companies shouldn’t have to increase their charges as a result of this program.”
Duplicative and unconstitutional?
Another reason the Republican critics believe the eRate isn’t necessary, Wilkes said, is a 1998 report from the General Accounting Office (GAO) concluding that some $12 billion in federal money was available to schools for technology last yearthough only $2.5 billion, which includes the eRate, was earmarked specifically for technology in K-12 schools, according to the report.
Commissioned jointly by the House Committee on Education and the Work Force and the Senate Commerce Committee to investigate what the committees termed “duplicative” sources of school technology funding, the report was released Sept. 15.
Blumenauer challenged the notion that the GAO’s report shows there is already more than enough federal money for school technology.
“It’s just flat wrong to suggest that there’s abundant resources to provide technology for our classrooms,” he said. “We could easily double these sums and still not meet the needs of schools. Have them ask their own districtsI think they’ll find out how wrong they are.”
According to Wilkes, the congressmen also believe the FCC’s implementation of the eRate is unconstitutional because the agency is imposing a “tax” that only Congress has the authority to levy.
A similar legal challenge to the eRate brought by GTE Communications Corp. is currently before the 5th U.S. Circuit Court of Appeals in New Orleans. A ruling is expected this spring.
Two other plaintiffs in the case, BellSouth Corp. and SBC Communications Inc., have withdrawn their complaints, believing they can resolve their differences with the FCC out of court.
“When they attack the eRate as ‘unconstitutional,’ they’re really attacking the universal service program as a whole,” Blumenauer said. “This is a backdoor way for some people to go after something they didn’t like in the first place.”
Another protracted battle
The Burns-Tauzin legislation, first introduced last year, would sever the program’s connection to the universal service fund entirely. The legislation is an effort to keep the eRate alive while addressing its critics’ concerns, the lawmakers said.<
The bills would cut an existing 3 percent telephone excise tax to 1 percent and use the remaining proceeds to fund the eRate and the rural health care telecommunications program.
The telephone excise tax was implemented in 1914, when telephone service was considered a luxury, to help pay for World War I. It was kept in place to combat the budget deficit. Last year, it generated about $4.5 billion for the federal treasury.
Under the Burns-Tauzin bills, the Commerce Department would control the fund. The department would award the money to states in the form of block grants.
“In the face of calls to discontinue this program entirely, I hope the administration would support what is indeed a rational compromise,” Burns said last year.
“In a nutshell, what we’re doing is cutting taxes for nearly everyone in America and saving the eRate program in the process,” Tauzin added. “In politics, that’s known as a win-win.”
Education groups have reacted more cautiously to the proposal, however. They say that pulling the eRate out of the universal service program will open it up for future cutbacks because funding would be determined by the appropriations process in Congress.
In an interview with online news source C/Net last year, Linda Roberts, special technology advisor to the U.S. Department of Education, said converting the program to block grants also may penalize small, rural states.
“If [they are] allocated the way most block grants are allocated, they will be allocated on the basis of population,” she said. “This is where the rural states will get hurt tremendously.”
Blumenauer said there were some legitimate concerns about the eRate last year, but those concerns have been addressed by the FCC’s actions to date.
“The program is finally off the ground, and it has widespread support,” he said. “It would be unfortunate if there were another protracted battle over its implementation again this yearbut we’re not going to give up.”