FARNET's Washington Update

[Jeff Ogden]

FYI
  -Jeff

>Date: Fri, 22 Nov 1996 18:02:15 -0500
>To: legup@farnet.org
>From: Heather Boyles <heather@farnet.org>
>Subject: FARNET's Washington Update
>
>FARNET's Washington Update --- November 22, 1996
>
>IN THIS ISSUE:
>
>o  Federal-State Joint Board's Recommendations on telecom discounts for
>schools and libraries
>
>o  CDA case continues to progress toward Supreme Court
>
>^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
>^^^^^
>
>FEDERAL-STATE JOINT BOARD'S RECOMMENDATIONS ON TELECOM DISCOUNTS FOR
>SCHOOLS AND LIBRARIES
>
>On November 7, the Federal-State Joint Board, established by Congress in
>the 1996 Telecom Act to address changes in the FCC's Universal Service
>mechanism, released for public comment it's recommendations to the FCC on
>the future of universal service as well as the special provision of the Act
>giving discounted telecommunications services to schools and libraries.  A
>copy of the recommendation is available from the FCC at
>http://www.fcc.gov/Bureaus/Common_Carrier/Reports/decision.html
>
>The Board essentially recommends that the FCC allow schools and libraries
>to receive 20-90% discounts (dependent upon need) for the whole range of
>"telecommunications services" and "Internet access."  The total yearly
>discounts would be capped at $2.25B.
>
>Significantly, the Board recommends that the provision of
>"telecommunications services" under the discount plan NOT be limited to
>just those services available from "telecommunications carriers." The
>definition of 'telecommunications carriers' under the 1996 Act, many have
>argued, does not include, for example, ISPs and they therefore would not be
>subject to providing schools and libraries such discounts.  The Joint Board
>cites a provision of the Telecom Act [Sec. 254(h)(2)(A)] that says the FCC
>"should establish COMPETITIVELY NEUTRAL RULES..." to provide, "access to
>advanced telecommunications AND INFORMATION SERVICES."  (emphasis added)
>The Board argues that allowing schools and libraries the flexibility to
>choose among the whole realm of "telecommunications services" not limiting
>themselves to those provided by just "telecommunications carriers" will
>them to utilize the most efficient services and technologies and comply
>with Congress' intent for "competitively neutral rules."
>
>A number of commenters on the Universal Service NPRM [from which the Joint
>Board makes its recommendations], had argued against non-telecommunications
>carriers  being included in the discount plan.  A lot of these arguments
>stem from concerns about the potential for non-telecom carriers (like ISPs)
>to be engulfed by the regulatory morass of the current and past universal
>service fund mechanisms.  Also looming on the horizon for ISPs is the issue
>of being made to pay access charge fees to the local telephone companies -
>something that long-distance telephone companies already do as a way to
>help support the universal service fund.  A potential theory might be that
>the argument for the lifting of the ESP exemption might be bolstered by the
>fact that ISPs would now be eligible to also receive universal service
>funds.
>
>Whether the Joint Board can make the inclusion of non-telecommunications
>carriers stick in the FCC's final ruling might be a little shaky.  While
>the Board cites Sec. 254(h)(2)(A) as proof that Congress intended discounts
>for non-telecommunications-carrier services as well, the very next
>paragraph [Sec. 254(h)(2)(B)] asks the FCC to "define the circumstances
>under which a telecommunications carrier may be required to connect its
>network to such public institutional telecommunications users."  In
>addition, the Board concedes that the other significant provision of the
>section, providing for discounts on core services, is limited to
>"telecommunications carriers."
>
>This leads directly into the Joint Board's recommendation that "Internet
>Access" be eligible for discount to schools and libraries as well.  The
>Board only does a slightly better job at defining exactly what they mean by
>"access" than did the FCC in its NPRM. Essentially though, the Joint
>Board's recommendations include "basic conduit" (i.e. the dial-up or leased
>line link from school or library to ISP) and the "subscription fee paid to
>the ISP."  Then they get a little confused over email and web access.  But
>again, essentially the recommendation is for transport to the ISP and the
>connectivity fee at the ISP.  The Board then specifically rules out other
>"content services" (like, e.g. the proprietary content fees at AOL) from
>being eligible for discount, but does positively affirm that the provision
>of "free content" of the web and email be eligible.
>
>The third significant recommendation the Board makes for schools and
>libraries is that "internal connections" also be eligible for discount.
>The Board finds that both the Telecom Act's provisions and Congressional
>intent provide for access by CLASSROOMS to the discounted services.
>Although the Board notes the myriad of arguments against inclusion of
>internal wiring in the discount plan, (including: that internal connections
>are not a service but a facility or equipment;  that internal wiring has
>specifically been de-regulated by the FCC in the past; and that the
>statutory language nowhere explicitly mentions internal wiring) it
>recommends that the FCC specifically allow schools and libraries to receive
>discounts under the plan for "internal connections."
>
>Even FURTHER, the Board recommends that internal connections include such
>things as "routers, hubs, network file servers, and wireless LANs, but
>specifically exclud[es] personal computers."  Even the wide-ranging
>"E-rate" plan from the Clinton administration didn't specify that such
>equipment would be eligible for inclusion in the plan (and the E-rate plan
>even relegated "internal connections" to a second tier of discounts - not
>reimbursable to the provider for many schools and libraries.)  One cannot
>imagine that this bit of language will not go unnoticed in further public
>comment on the Board's recommendations.
>
>Much of the rest of the Joint Boards recommendations deal with the
>calculation and administration of the discounts and the reimbursements to
>providers.  Very basically, discounts on a sliding scale from 20 to 90%
>would be determined by school or library "need" and deeper discounts would
>be available to schools or libraries in high-cost areas.  In terms of
>funding the discount plan:  The Board argues against the establishment of a
>separate funding mechanism for schools and libraries and recommends that
>funds come from the same pool of universal service funds for other
>purposes.  Providers to schools and libraries will be either reimbursed
>from the fund or be allowed to offset their universal service
>contributions.  Significantly, the Board recognizes that
>non-telecommunications carriers are NOT required to contribute to the fund
>and therefore would only have reimbursement as an option.  This would
>indicate that the Board believes that, for at least the time being, not all
>recipients of universal service funds must necessarily pay into the
>universal service fund.
>
>So, where to from here?  The FCC has announced that comments on the Board's
>recommendations are due by December 16, 1996.  Reply comments will be due
>January 10, 1997.  The FCC is expected to publish its final rules on the
>issue sometime in April or May of 1997.  Of course, the schools and
>libraries discount plan is only one small part of the entire
>recommendation, but one that's received probably the most attention.
>
>There was quite a bit of comment on the NPRM that preceded the Joint
>Board's recommendations.  With some of the surprises of the
>recommendations, there is sure to be much more comment in the coming
>months.  Clearly, no one wants to argue that telecommunications services
>and Internet access opportunities should be denied to the K-12 and library
>community.  On the other hand, as many of the consumer interest groups have
>argued, good intentions ultimately are paid for from the ratepayers
>pockets.  The $2.25B annual cap might mollify some protestors, but there
>are likely many more that will protest the extent to which the Board has
>included services and providers not traditionally involved in the universal
>service fund mechanism.
>
>
>
>
>CDA CASE CONTINUES TO PROGRESS TOWARD SUPREME COURT
>
>After a three-judge panel struck down parts of the Communications Decency
>Act early last summer, the US Department of Justice quietly announced that
>it would appeal the decision to the US Supreme Court.  That process has now
>begun with a filing from the plaintiffs on October 31 in response to the
>jurisdictional statement filed by the DOJ in September.
>
>Best guesses have oral arguments in front of the court sometime in April of
>1997.
>
>Just today, the New York Times reported that the third suit against the CDA
>- brought by Joe Shea, a reporter - would likely be combined with the case
>brought by both the ACLU and the CIEC coalition for argument before the
>Supreme Court.
>
>^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
>^^^^^
>Written from FARNET's Washington office, "FARNET's Washington Update" is a
>service to FARNET members and other interested subscribers.  We gratefully
>acknowledge EDUCOM's NTTF and the Coalition for Networked Information for
>additional support.  If you would like more information about the Update or
>would like to offer comments or suggestions, please contact Heather Boyles
>at heather@farnet.org
>


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