STEVENS DOUBTS FCC CAN APPLY UNIVERSAL SERVICE TO CABLE, SATELLITE
Senate Appropriations Committee Chmn. Stevens (R-Alaska) told the National Telecom Coop Assn. (NTCA) Tues. he didn’t believe the FCC had the legal authority to assess universal service fees on cable modem and satellite Internet providers. Stevens said the Universal Service Fund (USF) eventually could become insolvent unless more funds were put in the system or unless spending became more targeted. “The end of this fund is coming unless we find a way to get funds into it,” Stevens said: “Long distance is the primary contributor to the fund. It’s also the industry that’s in the most trouble.”
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Stevens said many Internet access services aren’t subject to USF fees, including cable and satellite service. He said some wireless services weren’t subject to USF contributions and should be, although he acknowledged the wireless industry was a contributor. He admitted applying USF contribution requirements to Internet access services would be controversial because of efforts to prevent the Internet from being taxed. “We face the slogan ‘Don’t Tax the Internet,'” Stevens said. “But you must pay into the fund if you're to take out of the fund.”
Stevens said the E-rate provisions in the Telecom Act were draining the fund and many E-rate funds were going to urban locations, even though universal service originally was intended for rural telecom deployment. The E-rate augments telecom and Internet service for schools and libraries, many of which are in urban areas, Stevens said. “It used to be a rural fund, it no longer is,” he said, and the E-rate is “an unexpected expansion for uses that weren’t originally intended.”
NTCA Govt. Affairs Dir. Thomas Walker said he never had heard Stevens express concern about the FCC’s ability to assess USF fees on cable and satellite providers. Stevens, asked whether he thought there was fraud in the E-rate program, replied: “I've never used those words.” He focused his response on the fact that E-rate funds often went to urban projects, which he stressed was beyond the scope of the Telecom Act. House Commerce Committee Chmn. Tauzin (R-La.) has written to FCC Chmn. Powell expressing concerns about E- rate fraud. Tauzin has questioned whether there was enough FCC oversight of the E-rate program.