Riley Attacks Burns-Tauzin Proposal to Reform E-Rate

(July 30, 1998)  Secretary of Education William Riley ratcheted up the partisan rhetoric in the debate over how the e-rate should be administered in a speech on Wednesday.   He accused Members of Congress of "trying to pull the plug on the program."  He also argued that phone companies cannot bill customers for the universal service charges assessed to them to pay for the e-rate, and that the federal government should also provide schools with "hardware, the software, the wiring, and the teacher training."

Sec. Riley's speech came just six days after the introduction of identical bills in the House and Senate to reform the way the e-rate is administered.  However, Riley's half hour speech never mentioned by name the "Schools and Libraries Internet Access Act" or its main sponsors, Sen. Conrad Burns (R-MT) and Rep. Billy Tauzin (R-LA).

Last month Rep. Tauzin sent a "Dear Colleague letter" to other members of the House in which he proposed that any reform of the e-rate include transferring administration of the e-rate from the controversy plagued Federal Communications Commission to the Department of Education.  The two bills introduced last week would instead transfer control of the program to the National Telecommunications and Information Agency (NTIA) at the Department of Commerce and the state education agencies.

In addition to leaving Riley's Education Department out of the loop, the Tauzin-Burns proposal, HR 4324 and S 2348, would continue support for wiring schools and libraries to the Internet.  However,  it would not use universal service as the funding mechanism.  Instead, it would pay for the program out of the existing excise tax on phones.  It would transfer administration of the program to NTIA, which would distribute money to the state education agencies in the form of block grants.  Also, the program would end after five years, when the excise tax would be terminated.

Riley criticized the Congress in a manner rare for Cabinet secretaries.  "Some Members of Congress have sought short term political gain by trying to pull the plug on the program," he claimed.

Riley continued that:

"If the e-rate is taken away or if it's reduced any further, students in schools, and citizens out there in the libraries who might not have other access to using the Internet and computers, all across the country are going to be left high and dry.  That is wrong in my judgment, and people, I think, need to speak out on the subject.  Let me tell you, in no uncertain terms, President Clinton, and Vice President Gore and I will continue to fight any efforts to dismantle the e-rate and widen this digital divide."

He also said that "the majority in Congress has so far, been only negative."

Riley alluded to long distance phone companies as "powerful special interest" which are trying to sidetrack or derail the program.

Currently, the FCC sets universal service contributions, which the phone companies can and do pass on to their customers.  In a novel and original interpretation of the 1996 Telecommunications Act, Riley said that these phone companies cannot get reimbursement from their customers for the charges which the FCC makes them pay to pay for various universal service programs.  He stated:

"In exchange for their continued support for universal service, the long distance telephone carriers were given significant reduction in their cost through reduced access fees and deregulation.  That was part of the arrangement.   Unfortunately, after the plan was enacted, some of the long distance companies sought to change the way that it was funded, jeopardizing the e-rate. ...  Long distance companies added a surcharge to phone bills in order to recover the costs of the universal service, been going on for sixty years plus this small e-rate.  We argue that they have already been reimbursed through the reduced access fees and the benefits of deregulation."

Riley's speech also suggested that schools also ought to have items not currently covered by the e-rate.  The FCC's e-rate program covers telecommunications services, Internet access, and internal wiring and computer networking.  However, it does not cover computers, software, or instruction (although it does cover network servers and server software).

Riley spoke of the e-rate as access to the Internet and computers.  He also said that "we need  ... to make sure that all schools have the hardware, the software, the wiring, and the teacher training that they need."

Much of Sec. Riley's speech was devoted to arguing that technology is an important learning tool, and that there is a digital divide," in that blacks and poor people have less access to computers and the Internet.

Sen. John Glenn (D-OH), who also spoke at the same event, praised the e-rate, but refrained from criticizing the Congress and partisan hyperbole.