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FCC Net fund cuts called on carpet

Two key lawmakers ask the Federal Communications Commission for details regarding its decision to slow down its program to wire schools and libraries.

Two key lawmakers have asked the Federal Communications Commission for details regarding its December 16 decision to slow down its program to wire schools and libraries.

Sen. John McCain (R-Arizona) and Rep. Thomas Bliley (R-Virginia), chairmen of the Senate and House commerce committees, respectively, served the FCC with a letter December 19 requesting the information. Both are concerned that the decision was not publicly debated before adoption.

"We are writing in reference to recent press reports of apparent nonpublic discussions between commission staff, the [Clinton] administration, and long distance carriers about the universal fund contributions and how these carriers would reflect any resulting rate changes on their subscribers' bills," the letter states.

As part of the decision, long distance companies will pay lower fees than expected to subsidize the program.

The letter goes on to request materials such as lists of meetings and telephone calls and any written or emailed messages between FCC members, the Clinton administration, and private parties regarding "the new caps reflected in the commission's December 16 order." It also asks for analysis by the commission about exactly where the funds for universal service will be found if long distance carriers are asked to contribute less.

The legislators are concerned that customers of carriers such as AT&T and MCI will have the cost of the subsidies passed on to them.

"Congress must be assured that the commission's implementation of the Telecommunication Act of 1996 not only complies with the law but is reasonable, efficient, and fair to the interests of all involved," the letter adds.

When the decision was handed down last week, FCC chairman William Kennard was asked if the commission was reducing contributions by the large long distance carriers to head off a rate hike for consumers and businesses. He said the move was meant more to ensure that overall phone rates will decrease.

Kennard also noted the FCC had ordered a cut in the charges long distance carriers pay local phone companies to complete calls. That, the commission reasoned, would keep long distance carriers from having to boost private customers' rates to offset the contributions to the universal service program for wiring the classrooms and libraries.

Businesses, however, would see the cost of the contribution itemized. Some at the FCC and in the Clinton administration had feared a political backlash if consumers saw the cost itemized on their bills.

Reuters contributed to this report.