E-rate under new attack in Congress

Federal legislators have prepared at least three bills that would end or dramatically change the program, dubbed the "e-rate."

Passed as part of the 1996 Telecommunications Act, the subsidy provides schools and libraries with discounts of up to 90 percent on Internet services and wiring costs. Funds for the program come from a small surcharge on consumers' long distance bills, as part of the universal service system that also subsidizes telephone service in rural and low-income areas.

Last year, Republican lawmakers took aim at the program, dubbing it the "Gore tax" and working to kill the charge or scale it back. GOP critics charged that it was essentially an illegal tax being used for political benefit by the Clinton administration.

After considerable congressional pressure, the Federal Communications Commission slimmed the program's first year funding from an initial $2.5 billion to $1.275 billion. The first round of funds was distributed after long delays in November.

Rep. Tom Tancredo (R-Colorado), beginning his first term in Congress this year, is planning to introduce a bill initially called the E-Rate Termination Act. That measure, which would end the program as it now exists, has won the support of two other GOP representatives, Ed Royce of California) and Pete Sessions of Texas), who have signed on to the measure as co-sponsors and are helping solicit more support in the House.

"If it wasn't for impeachment, this issue would be the No. 1 issue we've heard about from our constituents in recent months," said Bryan Wilkes, Royce's press secretary.

More worrisome to backers of the e-rate is a joint effort from Sen. Conrad Burns (R-Montana) and Rep. Billy Tauzin (R-Louisiana), two influential figures on telecommunications issues.

Both plan this year to reintroduce legislation that would phase out the subsidy program's connection to consumer telephone bills and the universal service fund, a link they say makes it an unconstitutional tax by the FCC. Instead, they would halve the current federal excise tax, which reaps about $4 billion from taxpayers at large, and dedicate the remaining $2 billion to school and library telecommunications needs.

"That would legally fund the program," said Ken Johnson, a Tauzin spokesman. "If anyone challenges the program [as it is now], it is likely to get thrown out. The FCC does not have the constitutional authority to raise taxes or collect them."

Supporters of the program say the Burns-Tauzin effort is not a genuine attempt to save the program, however. They say that by pulling the e-rate funding out of the universal service program, and requiring its funding to be reviewed by Congress every year, critics are setting it up for future cutbacks.

"The plan to transfer the e-rate into an annual appropriation is an attempt to strangle the program," said Jeff Chester, executive director of the Center for Media Education, an advocacy group that supports the program. "The Tauzin-Burns bill is a bald-faced attempt to kill the e-rate."

The battle is likely to win the attention of Silicon Valley companies such as 3Com, which have strongly supported the program and have benefited from school and library spending on Internet wiring and equipment.

E-rate critics also may tie their opposition to scrutiny of the FCC, which has been under fire from many of the same lawmakers for its implementation of other pieces of the Telecommunications Act.