How Obama’s Plan for Faster Internet Could Raise Your Phone Bill

Obama’s school broadband plan may not add a dime to the deficit, but it could add a dime to your phone bill.

Telephone bills, which contain information for an AT&T customer, lie in a pile May 12, 2006 in Chicago, Illinois.
National Journal
Laura Ryan
Feb. 11, 2014, midnight

Pres­id­ent Obama has a plan to con­nect 99 per­cent of U.S. schools to high-speed In­ter­net with­in five years without adding “a dime to the de­fi­cit” and “without wait­ing for Con­gress.”

It sounds too good to be true, but the ad­min­is­tra­tion has a trick up its sleeve: a fed­er­al pro­gram that col­lects fees on Amer­ic­an phone bills and uses the rev­en­ue to fund In­ter­net ac­cess at schools and lib­rar­ies in rur­al and low-in­come areas.

The pro­gram, known as E-Rate, was cre­ated in 1996 and is ad­min­istered by the Fed­er­al Com­mu­nic­a­tions Com­mis­sion as part of the Uni­ver­sal Ser­vice Fund. The pro­gram is cur­rently capped at about $2.3 bil­lion per year, but the FCC has the power to lift the pro­gram’s cap — even without con­gres­sion­al ap­prov­al — and raise funds for it by bump­ing up phone fees.

Tech­nic­ally, the FCC is not dir­ectly re­spons­ible for the fees on U.S. phone bills. The agency re­quires all tele­com­mu­nic­a­tions com­pan­ies, both wire­less and land­lines, to pay in­to USF fund, but most com­pan­ies re­coup that money from its cus­tom­ers, noted on con­sumers’ monthly bills as the Uni­ver­sal Ser­vice con­tri­bu­tion. The USF fee has already stead­ily ris­en from 9.5 to 16.4 per­cent since 2009 to ac­count for in­fla­tion and grow­ing costs from the USF’s oth­er three pro­grams.

For now, the FCC is not cur­rently con­sid­er­ing new rev­en­ue for E-Rate, in­stead fo­cus­ing on re­form­ing the pro­gram to bet­ter spend its ex­ist­ing budget.

But FCC Chair­man Tom Wheel­er didn’t rule out the pos­sib­il­ity of a fu­ture cap raise dur­ing re­marks as part of Di­git­al Learn­ing Day at the Lib­rary of Con­gress last Wed­nes­day, and prom­in­ent Sen­ate Demo­crats are ask­ing the chair­man to do just that.

“Now is the time for the FCC to take ad­vant­age of this unique op­por­tun­ity — to ex­pand and up­date that pro­gram and provide it the ne­ces­sary sup­port to make sure that every child is con­nec­ted to the trans­form­at­ive power of tech­no­logy,” said Demo­crat­ic Sen. Jay Rock­e­feller, one of the ori­gin­al au­thors of the E-Rate pro­gram and whose home state of West Vir­gin­ia is both rur­al and im­pov­er­ished.

E-Rate’s budget and struc­ture haven’t changed much since it was cre­ated 1996, but tech­no­logy has changed a lot. The FCC an­nounced last week that it is doub­ling its in­vest­ment in high-speed broad­band in schools im­me­di­ately — from $1 bil­lion to $2 bil­lion — mostly from un­spent funds from pre­vi­ous years. This “down pay­ment” is part of a long-term re­struc­tur­ing of the pro­gram’s man­age­ment and pri­or­it­ies over the next year to speed up the ap­plic­a­tion pro­cess, in­crease over­sight, and phase out fund­ing for out­dated tech­no­lo­gies like dial-up In­ter­net.

“The cur­rent E-rate pro­gram is bur­den­some, slow and not al­ways fo­cused on the right goals,” Wheel­er said. “As man­agers of the pro­gram, the FCC must im­prove the speed and ef­fect­ive­ness with which E-rate is run.”

But the com­mis­sion faces a mam­moth task in bring­ing the na­tion’s schools up to speed: Obama wants schools and lib­rar­ies too have In­ter­net 10 times as fast as their cur­rent speeds with­in five years.

Ac­cord­ing to the FCC, al­most 50 per­cent of schools re­port the same In­ter­net speed as most U.S. homes. But schools share that speed with hun­dreds of people, rather than the hand­ful that make up a typ­ic­al house­hold.

The Con­nec­tED ini­ti­at­ive — the form­al name for the White House school ini­ti­at­ive — got a $2 bil­lion boost from the FCC last week and a $750 mil­lion from the private sec­tor, but it’s un­clear how far that will go.

The White House hasn’t lis­ted a spe­cif­ic fig­ure for how much its Con­nec­tED ini­ti­at­ive will cost, but the FCC re­por­ted last spring that schools and lib­rar­ies re­ques­ted more than $4.9 bil­lion in E-Rate fund­ing for the 2013-14 school year. The Obama ad­min­is­tra­tion es­tim­ates that, if the FCC de­cides to ex­pand E-Rate, it could be done for less than $5 per phone line per year.

Demo­crats also tout the eco­nom­ic po­ten­tial that high-speed In­ter­net in schools could un­lock by cre­at­ing more de­mand in an already-luc­rat­ive edu­ca­tion tech­no­logy in­dustry.

Like many Demo­crat­ic spend­ing plans, any push for ex­pand­ing the pro­gram would meet stiff Re­pub­lic­an op­pos­i­tion — but this time de­bate would go dif­fer­ently.

Even be­fore Wheel­er an­nounced his re­forms, top Re­pub­lic­ans had sent a let­ter telling the FCC to fix the pro­gram be­fore ex­pand­ing it. And E-Rate has a leg­acy of waste and mis­man­age­ment due to its cum­ber­some ap­plic­a­tion pro­cess, out­dated clas­si­fic­a­tion sys­tem, and lack of trans­par­ency.

But if the FCC de­cides to ex­pand the pro­gram, Re­pub­lic­ans would be left with lots to bark about but noth­ing with which to bite. The com­mis­sion would only need a ma­jor­ity of its five mem­bers to sign off on the in­crease, and with three Demo­crats sit­ting on the com­mis­sion, Re­pub­lic­ans would have little re­course to block it.

{{ BIZOBJ (video: 4710) }}

What We're Following See More »
STAFF PICKS
What the Current Crop of Candidates Could Learn from JFK
1 days ago
WHY WE CARE

Much has been made of David Brooks’s recent New York Times column, in which confesses to missing already the civility and humanity of Barack Obama, compared to who might take his place. In NewYorker.com, Jeffrey Frank reminds us how critical such attributes are to foreign policy. “It’s hard to imagine Kennedy so casually referring to the leader of Russia as a gangster or a thug. For that matter, it’s hard to imagine any president comparing the Russian leader to Hitler [as] Hillary Clinton did at a private fund-raiser. … Kennedy, who always worried that miscalculation could lead to war, paid close attention to the language of diplomacy.”

Source:
STAFF PICKS
Maher Weighs in on Bernie, Trump and Palin
1 days ago
WHY WE CARE

“We haven’t seen a true leftist since FDR, so many millions are coming out of the woodwork to vote for Bernie Sanders; he is the Occupy movement now come to life in the political arena.” So says Bill Maher in his Hollywood Reporter cover story (more a stream-of-consciousness riff than an essay, actually). Conservative states may never vote for a socialist in the general election, but “this stuff has never been on the table, and these voters have never been activated.” Maher saves most of his bile for Donald Trump and Sarah Palin, writing that by nominating Palin as vice president “John McCain is the one who opened the Book of the Dead and let the monsters out.” And Trump is picking up where Palin left off.

Source:
×