roundtable: Universal Service: a Preview of Industry's Response Forum

roundtable: Universal Service: a Preview of Industry's Response

Universal Service: a Preview of Industry's Response

Curtiss Priest (cpriest@juno.com)
Thu, 31 Oct 1996 10:46:30 PST 

To: communet@list.uvm.edu, cyber-soc@LISTSERV.READADP.COM,
Date: Thu, 31 Oct 1996 10:46:30 PST
Subject: Universal Service: a Preview of Industry's Response
Message-Id: <19961031.104631.4575.2.cpriest@juno.com>
From: cpriest@juno.com (Curtiss Priest)


Archive: Universal Service: a Preview of Industry's Response
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Inter@ctive October 28, 1996 p. 6
"Telcos To Clinton: No Such Thing As Free Access"

By Will Rodger


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CITS observations:
Dr. W. Curtiss Priest

As the industry responses to the FCC regarding Universal Services
stack up around me (LINCT was an original respondent and as a result
some later respondents have included us for a copy) I become all too
aware of what a maze of material there must be at the FCC.  When
my stack got to about one and 1/2 feet, I even stopped looking at
which teleco was on the label.

In 1974 I worked for a small Cambridge-based company that received
a $100,000 contract from the FCC just to analyze the responses to
Docket 2003 -- part of the divestiture activities.

Absent such generosity and with other CITS projects to pay the
rent, I find myself unable to compete with the PR departments of
the telecos.   For example, in our original filing we suggested
that the presence of a local carousel of 100 DVD's could easily cache at
least 95% of the relevant K-12 educational materials and that
to prevent "market distortion" the FCC should provide a subsidy
to those schools that opt for substituting local content for
distant content.  The E-rate calls for no such subsidy.

Also, the E-rate proposal applies only to the interstate part
of telecommunications cost.  If past history is any guide, this
is only 25% of the Universal Services fund.  The other 75% is
administered PUC by PUC in each state under the guidance of
NARUC.  While an e-rate at the federal level will have symbolic
importance as to what each state finally does, most of the
connectivity costs of schools are intrastate, not interstate.
Yet I never see this aspect of the State's role in any media
coverage of Universal Services.

Contained in this short but informative article are some glimpses
of industry responses to the Universal Services provision of the
Telecommunications Reform Act of 1995.  In the rhetoric about
E-rate for schools, libraries are conspicuously absent as are
rural health care providers.

****************************************************************

   As the Nov. 5 elections approach, the Clinton administration is making
a
public push for a plan, called E-rate, that promises to wire public
buildings
for Internet access by the year 2000. But telephone companies appear
leery of
any federal mandate to provide access without charge.
   The plan, submitted to the Federal Communications Commission on Oct.
11,
mandates that all schools receive a package of basic Internet services,
including World Wide Web and e-mail access, free of charge. Schools would
connect to the Internet at speeds as high as 1.5 million bits per second,
though
not all would have use for high-speed connections. Since costly hardware
necessary to run those connections may keep smaller schools from
requesting
them, they would likely use simple links that operate at a fraction of
that
rate, says Larry Irving, assistant Department of Commerce secretary.
   Several Bell companies have suggested the Clinton plan for 100 percent
discounts on basic services are too high. Frank Gumper, Nynex Corp. vice
president for federal regulatory planning, says his company believes free
anything is a bad idea. "Someone is going to have to pay for it," he
says. "This
money is going to be raised from other consumers."
   The Commerce Department estimates it will cost $1.5 billion yearly to
provide
the nation's 100,000 schools with the required lines. The figure does not
include costs for 9,000 public libraries as well as nonprofit schools
with
endowments of less than $50 million, nor costs for equipment and
training, which
are expected to dwarf other expenditures.
   Recent telecommunications legislation mandates that schools, hospitals
and
libraries be granted low-cost access to the Internet.
   Though few telephone companies have opposed outright the
administration's
plan, many have filed their own comments on how best to meet the
obligations of
supplying basic telecommunications services to all. Other public interest
groups
have filed comments as well.
   GTE Corp., for instance, recently suggested that local telephone
companies
begin bidding for the right to provide universal access to consumers and
businesses nationwide. Under the GTE plan, companies would present
one-time bids
to provide subsidized services in each of the thousands of the census
tracts
across the U.S. Such a plan, officials say, will introduce competition
not just
in urban areas but in rural and other hard-to-serve areas where barriers
to
entry have assured monopoly profits for incumbent phone companies.
   As with all universal access provisions, Irving says, a national fund
would
assure that schools, hospitals and libraries in remote, high-cost areas
would
get the same quality Internet service as those in urban areas. Beyond basic
service, all schools would receive "market-based" discounts based on
competitive
bids submitted directly to them by local suppliers. The federal
government would
also set aside money for poorer school districts and remote areas.
  Irving notes the new Science, Industry and Business Library in well-heeled
midtown Manhattan, New York. "But how are you going to get that in East
Harlem?
How are you going to get that in the Bronx?" he asks.
   "Allowing these decisions to be made locally helps to stimulate market
competition in ways that traditional subsidy schemes cannot, and is far
more
compatible with the decentralized nature of the Internet itself' Netscape
Communications Corp. President and Chief Executive Officer James
Barksdale wrote
FCC Chair Reed Hundt.

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