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Net discounts may be reviewed

Congress may examine the Federal Communications Commission's management of a Net access discount program for schools and libraries.

Congress may soon take a closer look at the Federal Communications Commission's management of a program designed to give schools and libraries discounts on Net access.

The Senate Appropriations Committee yesterday passed legislation requiring the FCC to deliver a report by May 8 detailing its plan to dole out up to $2.5 billion in annual discounts. The bill is scheduled for a floor vote in the Senate.

The program began this year under the direction of the FCC. About 39,000 schools and libraries have applied for the discounts, which, as mandated by the Telecommunications Act of 1996, are made possible through the nation's universal service fund.

To administer the program, the agency set up two nonprofit organizations--the Schools and Libraries Corporation and the Rural Health Care Corporation--to approve applications by a deadline set for today. But the creation of the corporations has come under fire by a group of senators who argue that Congress should have more oversight of the program.

"This is a request to tell us how they expect to manage the universal service fund, and how they plan to distribute the funds," said John Raffetto, a spokesman for the Senate Appropriations Committee. "The main concern is that, whenever a government corporation has been set up, it has been done by Congress. Nobody seeks to dismantle the corporations, but the objective is to get the FCC to put on the record what its plans are."

Senators Ted Stevens (R-Alaska), John McCain (R-Arizona), and Conrad Burns (R-Montana) say the agency overstepped its bounds when it created the two corporations.

Their accusation has been backed up by a General Accounting Office report, requested by Stevens and released last month, which states that the FCC "exceeded its authority when it directed the National Exchange Carriers Association to create the [nonprofit corporations]."

"I am happy to supply Congress with any information on universal service that it requests," FCC chairman William Kennard said in a statement today regarding the proposed report.

"I share Congress's goal that universal service be administered in the most effective, efficient, and accountable manner possible," he added. "This will help us carry out the important task of assuring affordable service to rural Americans and bringing classrooms and libraries into the information age."

The provisions requiring the FCC to file the report were buried in an emergency spending bill that called on the FCC to propose a "revised structure" for the program by scaling it down to one oversight corporation. In addition, the corporation should be "limited exclusively to the ministerial acts of processing the applications necessary to determine eligibility for discounts," the legislation states.

The proposed report will have to document how much money has been contributed to the fund by telecommunications companies--money that is collected from customers--as well as how the money was collected.

Last year, Congress also mandated that the FCC review definitions in its universal service rules. The report, due next month, has to clarify the definitions of "information service," "local exchange carrier," "telecommunications service," and "the impact of the interpretation of those definitions on the provision of universal service to consumers in all areas of the nation."