Congressmen Decry the "Federal Computer Commission"

(March 31, 1998)  The House Subcommittee on Telecommunications, Trade, and Consumer Protection met today to question and hear testimony from all five Commissioners of the Federal Communications Commission. Congressmen strongly criticized the FCC's recent handling of providing universal internet access to schools and libraries.

At the heart of the issue is the FCC's creation of two corporations to administer aspects of the universal service provisions of Section 254 of the Telecommunications Act of 1996.  One of these, the Schools and Libraries Corporation (SLC), is a corporation that was formed by the FCC, and is responsible to the FCC. It administers a program for subsidizing internet access for schools and libraries. It will spend over $2 Billion per year, which it raises from charges on phone users.

According to subcommittee member Rep. Chris Cox (R-CA), the FCC's Schools and Libraries program is "essentially a two and one half billion dollar tax that is going to be used ..." for "sucking the internet into the vast web of the Federal Computer Commission." 

Cox admonished the Commissioners: "The FCC has no authority to impose a tax.  The FCC has no authority to create a corporation."  Moreover, creation of the SLC is a "gross violation of the 1996 Act and pre-existing law." Cox concluded: "The FCC should keep it hands off of the Internet."

Rep. Cox was not alone in his criticism. Commerce Committee Chairman Tom Bliley (R-VA) termed the SLC an "illegal bureaucracy," while Telecom Subcommittee Chairman Billy Tauzin (R-LA) said it had an "illegal existence".  Rep. Tauzin also stated that "the Commission devotes too many resources to areas where its authority is suspect," and not enough to "downsizing."

Rep. John Dingell (D-MI), the Ranking Minority Member of the Committee, called the SLC an "extravagant entitlement program." He sarcastically mocked the FCC Commissioners for allowing prosperous suburban libraries to take advantage of its subsidies to buy T1 lines, establish themselves as ISPs, and then give away free internet access, while ordinary phone users foot the bill.

Rep. Tauzin, who represents rural areas of Louisiana, also told the Commissioners that the SLC's  bureaucracy and application process is so complicated that many small communities are unable to comply with its requirements, and will thus be unable to avail themselves of the subsidies.

Rep. Joe Barton (R-TX) politely kidded the FCC. Why did it need a  new corporation when it already had 2,000 employees on the payroll?

William Kennard

FCC Commissioner Kennard reported to the Committee on the progress of the SLC.   "On January 30, 1998, schools and libraries began to submit applications to the Schools and Libraries Corporation for universal service support to connect our nation's classrooms and libraries to the Internet.  As of March 23, 1998, over 36,000 applications for universal service discounts from schools and libraries have been completed and certified.  Nearly 70% of these applications are for new services.   As of March 23, 51% of applications received have been from school districts, 31% from schools, 15% from libraries and library consortiums, and 3% from multiple entity consortiums.  The SLC will be processing and granting these applications later this spring, well before the start of the next school year in the fall."

The Subcommittee was not unanimous in its criticism of the FCC on this subject. Rep. Bobby Rush (D-IL) did offer support support for FCC Commission Chairman William Kennard.  Rush stated that he "supports the Chairman's initiative in this area.

The official purpose of the hearing was "Reauthorization of the FCC."

Senate Complaints About the SLC

The FCC has also been criticized on this issue by members of the Senate. Sen. Ted Stevens (R-AK) and Sen. Conrad Burns (R-MT) have both been active critics of the SLC deal.

On March 25, Burns wrote to FCC Commissioner William Kennard to complain about the unauthorized formation of the SLC.  He wrote that, "If it becomes clear that progress cannot be accomplished, I assure you that the FCC will be badly positioned as we consider FCC reauthorization later this spring. Sen. Burns also wrote: "I might remind you that other sectors of the economy, such as the computer industry, have not only survived but thrived without federal regulation."

GAO Report

Meanwhile, the General Accounting Office released a Legal Opinion today that concludes that the FCC had no legal authority to establish the Schools and Libraries Corporation.  Robert Murphy, General Counsel of GAO, also testified at today's hearing.

Regional Bells

Members of Congress were also concerned at today's hearing with the status of telephone competition, particularly with the FCC's denials of applications from regional Bell companies to provide in region long distance services.  However, Congressmen were split.   Some criticized the FCC for denying the Bell's applications, while others praised the FCC.