================================================================= ALAWON Volume 7, Number 56 ISSN 1069-7799 May 29, 1998 American Library Association Washington Office Newsline In this issue: (184 lines) E-RATE RECEIVES SUPPORT AND SCRUTINY: -ACTION NEEDED: THANK SENATE AND HOUSE SUPPORTERS WHO HAVE RENEWED SUPPORT FOR E-RATE -SEN. MCCAIN CALLS FOR GAO INVESTIGATION OF E-RATE INTEGRITY; KEY FCC DECISIONS SOON -AT&T CITES E-RATE FOR NEW 5% FEE ON RESIDENTIAL BILLS _________________________________________________________________ ACTION NEEDED: THANK SENATE AND HOUSE SUPPORTERS WHO HAVE RENEWED SUPPORT FOR E-RATE ACTION NEEDED: Library and school supporters, especially those represented by the legislators listed below, are asked to say "thank you" to these representatives and to ask other representatives to sign onto any new letters or initiatives in support of the e-rate. The U.S. Capitol Switchboard number is 202 224-3121. BACKGROUND: Key congressional supporters of the e-rate in both the House and the Senate recently demonstrated their ongoing strong support for the program. This support comes at a critical time; the Federal Communications Commission (FCC) must determine shortly if and how to fund all of the over 30,000 applications received by the Schools and Libraries Corporation. Although demand for funds is estimated at $2.02 billion, the FCC has proposed that only $1.67 billion be made available in 1998. On May 22 Sens. Ted Kennedy, (D-MA), Jim Jeffords (R-VT), Jay Rockefeller, (D-WV), Rick Santorum (R-PA), John Chaffee(R-RI), Olympia Snowe (R-ME), Chris Dodd (D-CT) and Bob Kerrey (D-NE) sent a joint letter to FCC chairman Bill Kennard urging the FCC to fully fund all valid applications for the e-rate program. The letter read in part, "Technology skills are no longer a luxury for students -- they're a necessity. Jobs increasingly require high-tech skills. Without knowledge of computers and the Internet, today's students will have great difficulty competing in tomorrow's economy..." In the House, Rep. Earl Blumenauer (D-OR) and Loretta Sanchez (D-CA) have been instrumental in the e-rate effort. In a March 28 letter to FCC Chairman Kennard, they wrote, "The e-rate is a win-win proposition for our schools, our libraries and our economic prosperity...We want to be sure that the FCC's commitment to full implementation of the e-rate is not waning...We urge you not to hold our schools and libraries hostage to what are likely to be ongoing and acrimonious debates over the financial structure of our nation's telecommunications system...[and]urge you to ensure that this initiative is funded at the highest possible level." House members signing onto Blumenauer-Sanchez letter included: Sam Farr (D-CA), Bob Filner (D-CA), Zoe Lofgren (D-CA), Pete Stark (D-CA), John Lewis (D-GA), Cynthia McKinney (D-GA), Joe Moakley (D-MA), John Olver (D-MA), John Tierney (D-MA), Sherrod Brown (D-OH), Elizabeth Furse (D-OR), Ron Klink (D-PA), Ken Bentsen (D-TX), Lloyd Doggett (D-TX) and Max Sandlin (D-TX). A subsequent letter with 101 members' signatures urging full funding for the discounts was also sent to Kennard. Library and school supporters are asked to thank these representatives and to ask other representatives to sign onto any new letters or initiatives in support of the e-rate. _________________________________________________________________ SEN. MCCAIN CALLS FOR GAO INVESTIGATION OF E-RATE INTEGRITY; KEY FCC DECISIONS SOON On May 22 Sen. John McCain (R-AZ) requested a formal investigation by the General Accounting Office (GAO) of some internal procedures of the Schools and Libraries Corporation. The support and scrutiny of the e-rate program comes just before the FCC must make key decisions next week about the collection rate and how all the pending e-rate applications can be funded. McCain requested an expedited audit of SLC's internal integrity program ensuring that accounting and internal mechanisms to approve e-rate applications are sufficient. This request reflects McCain's concerns that schools and libraries have asked for too much or gold-plated their applications with unnecessary services. The request is a follow-up to his May 4 letter to the FCC requesting assurances that the SLC's internal integrity program would prevent applicants from committing fraud by requiring providers to provide ineligible services for "free." In the letter McCain expressed concern that applicants were ordering services that far exceeded their needs or the needs of research institutions. Apparently dissatisfied with the answers provided by the FCC on May 15, McCain has asked the GAO to investigate and provide a preliminary report by Friday, June 26. _________________________________________________________________ AT&T, MCI CITE E-RATE FOR NEW 5% FEE ON RESIDENTIAL BILLS AT&T Corporation indicated in a May 27 filing to the Federal Communications Commission (FCC) that, beginning in July, AT&T will add a line item charge of approximately 5% to all residential interstate long distance bills, appearing to cite the e-rate program for the new fee. AT&T's business customers had already received a 4.9% fee starting last January. Following AT&T's lead, MCI has also announced that it will be levying a similar fee; according to press reports, that fee might be as high as 5.9%. AT&T will call the new fee the Universal Service Connectivity Charge. Intrastate calls will be subject to a 1.8% fee. Such line item charges have long been the focus of ongoing debate over universal service fund (USF) collection issues. Some reports appear to connect this new AT&T 5% fee only to the e-rate. "We've been signaling for some time now that we would apply a similar charge to residential customers. We can't eat these costs," said Jim McGann, an AT&T spokesperson. According to a March 2, 1998 article in "Business Week," AT&T's profits for 1997 were almost $4.5 billion. FCC Chairman Bill Kennard responded by saying, "AT&T's announcement is premature, unwarranted and inconsistent with their own public proposals to the FCC." The United States Telephone Association (USTA) said that it is outraged that long distance carriers are using the schools and libraries program as "bait" to force the FCC to implement other policy changes. USTA is a trade association representing most of the local phone companies. These charges follow a call by several consumer and retail groups to put a halt on the e-rate program until other issues related to access charges are resolved by the FCC (see ALAWON, May 22, 1998, v7,n54). However, the e-rate discount program is really only a part of this new fee. By some estimates, half of the fee goes to fund other programs for rural and high-cost communities and low-income customers. These programs are part of decades of universal service -- a program based upon the policy that the entire nation benefits when the maximum number of residences, businesses and communities have comparable and affordable telephone service. For the first time in history, the new Act authorized libraries, schools and rural health care providers to be beneficiaries of universal service as well. Under the Telecommunications Act of 1996, providers are allowed to pass on universal service expenses explicitly. Previously USF contributions were essentially implicit in consumer bills. Some estimates put the overall new USF at roughly $4 billion with approximately half for the rural, high cost funds and half for the school and library program. However, it is also expected that the rural and high-cost funds could go up substantially next year once related decisions are made by the FCC about those programs. _________________________________________________________________ ALAWON is a free, irregular publication of the American Library Association Washington Office. To subscribe, send the message: subscribe ala-wo [your_firstname] [your_lastname] to listproc @ala.org. To unsubscribe, send the message: unsubscribe ala-wo to listproc@ala.org. ALAWON archives at http://www.ala.org/ washoff/alawon. Visit our Web site at http://www.alawash.org. ALA Washington Office 202.628.8410 (V) 1301 Pennsylvania Ave., NW, #403 202.628.8419 (F) Washington, DC 20004-1701 800.941.8478 (V) Lynne E. Bradley, Editor Deirdre Herman, Managing Editor Contributors: Carol C. 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