Universal Service Meets the Internet: A National Policy of Universal Access Through Libraries and Schools
Robert CANNON <firstname.lastname@example.org>
In 1996, the year of the Telecommunications Act, President Clinton set the goal of wiring all United States schools and libraries to the Internet by the year 2000. This is a compelling policy goal. Universal Internet access benefits a democratic society by providing an equity of opportunity to the nation. It invigorates democratic discourse and allows virtual access to resources not available physically. It will also result in a work force able to meet the demands of the modern market.
In order to achieve the goal of universal Internet access, the federal government reinvented the Federal Communications Commission's Universal Service Program. It extended subsidies to all schools and libraries so that they could acquire Internet access. While schools and libraries, according to the program, had essentially unlimited access to funds, what those funds could be used for was highly restricted. Modems are not covered. LANs are covered; WANs are not (therefore wireless LANs are covered, but wireless WANs are not covered even if the only difference is the direction you point the transmitter). Connections to separate buildings on the same campus on the same side of the street are covered; connections which cross a street are presumed not to be covered; connections which cross campuses, even if on the same side of the street and right next to each other, are not covered. The schools and libraries program has led to an extensive administrative and procedural bureaucracy which biases network elements and favors some providers over others. It "fetters" the Internet. While this was a first try at a very important program, the US universal Internet access programs could be better. This paper will look at problems the US program has had and possible solutions.
Our . . . challenge is to provide Americans with the educational opportunities we'll all need for [the 21st] century. In our schools, every classroom in America must be connected to the information superhighway with computers and good software and well-trained teachers. We are working with the telecommunications industry, educators, and parents to connect . . . every classroom and every library in the entire United States by the year 2000.
President Clinton articulated this policy in his State of the Union Address, January 23, 1996, just weeks prior to the signing of the Telecommunications Act of 1996 into law. President Clinton and the United States Congress sought to "reinvent" universal service, expanding it beyond telephones, to provide universal Internet access to the nation's schools and libraries.
Two things are at the heart of this policy. First, the Internet has created an information revolution. More people have more access to more information. That information is exposed to more debate, deliberation, and debunking. Information concerning health care can be provided virtually where it could not have gone physically. Remote educational institutions have increased access to educational resources. The place where an individual works is no longer tied to the physical location of the business. And political process is invigorated through increased discourse, opportunities to express one's views, and accountability.
But with this new promise of a "great society" comes a new danger -- a danger that we will become stratified between information rich and information poor. As a recent law journal articles states, "[a]s the networks and equipment attached to them become the preferred mode of political participation, lifelong learning, employment and commerce, as well as personal expression, nonaccess and nonconnection could become tantamount to nonexistence." Disparities of access between the wealthy and the poor, between the rural and the suburban, and between the races threaten not merely to tarnish the information revolution but to undermine it.
The second factor pushing the federal policy of universal service is the need for an educated and trained work force. Computer literacy is now a fundamental aspect of education, along with reading, writing, and arithmetic. Individuals who are not computer literate will be at a disadvantage in the work force, and a work force which is not computer literate will see job losses to foreign markets.
Reports which came out just as the Schools and Libraries Program was set to go online indicate that there is a substantial shortage of computer-literate workers in the United States. According to a report conducted by Virginia Polytechnic Institute and State University and released in January 1998, 1 in 10 high-tech jobs is vacant in the United States. The report "estimated that 346,000 computer programmers and systems analyst jobs in U.S. companies with more than 100 employees are vacant." The Washington Post reported that "[a]ccording to the Labor Department, from now to 2005 an average of 95,000 new computer scientists, systems analysts and programmers will be needed every year."
Other information points to the clear advantage of being computer literate. According to the FCC, the three fastest growing areas of employment in the United States are computer scientists, computer engineers, and systems analysts -- all high-tech jobs. High-tech jobs are said to pay 73% more than non-high-tech jobs. There is a correlation between salary paid and the percentage of workers in that salary bracket who use computers in the work place; the higher the salary, the higher the percentage of workers using computers.
The federal government designed the universal service program to ensure that the nation's work force would be able to meet the new demands of the marketplace and to ensure that the opportunities of the Information Revolution are equitably available to all citizens.
The task of wiring all of the nation's schools and libraries to the Internet is no small undertaking. The Department of Education reviewed several reports on how much such an endeavor would cost.
The FCC conceded that it lacked sufficient information for an accurate estimate of the cost of funding the support program. The FCC examined the figures above, made modifications, and estimated that the total cost of the program "would be approximately $3.1 to $3.4 billion annually during an initial four-year deployment period and approximately $2.4 to $2.7 billion annually during subsequent years."
This project is like no other before it. This is not a matter of providing pencils and paper to children so that they can learn math. This new education fundamental comes at a tremendous price, one which individual, cash-strapped school districts find tremendously difficult to address on their own. It may be that without the nation pulling its resources together as a whole, we cannot meet this challenge equitably for all parts of our country.
In order to achieve the goal of universal Internet access for schools and libraries, Congress and the Clinton Administration turned to the FCC's universal service program. Whether this was a good decision is wrapped up, in part, in the history of universal service itself. The concept of universal service has been around since the turn of the century. The first true articulation of the concept is attributed to Theodore Vail, President of AT&T. The turn of the century was a time of competition in the United States phone market, with several companies vying for any one market. One network could call Joe, another network could call Mary, and a third network was necessary to call Jane, but none of these networks could talk to each other. As a result, in order to reach everyone, offices were required to have five incompatible phones from five incompatible and not connected telephone companies.
It was in this context that Vail came up with his vision of "one system, one policy, universal service." This vision is different from the concept of universal service which we have today. Vail's vision was premised on the idea that the way to get all of the telephones to talk with each other was to get rid of all of the competing telephone networks. In order to achieve this, AT&T was more than glad to step in as the monopoly. AT&T realized its dream of becoming the official blessed monopoly by the 1930s.
The next step in the evolution of universal service was the Communications
Act of 1934. The Act, in its preamble, stated that the Federal Communications Commission
for the purpose of regulating interstate and foreign commerce in communication by wire and radio so as to make available, so far as possible, to all the people of the United States, a rapid, efficient, Nation-wide, and world-wide wire and radio communication service with adequate facilities at reasonable charges.
Since this was merely a policy statement in the preamble, not specifically calling for any program or action, it could easily have amounted to nothing more than a happy thought. However, this small reference became the regulatory authority for universal service as we know it today. There was no further legislative mandate for universal service for sixty years.
The mechanism of universal service was developed in the environment of the telephone monopoly. One company was mandated with the goal of providing telephone service to all customers in a geographic region. But the cost of providing telephone service to certain customers far exceeded the cost of providing service to others. Therefore, a series of subsidies was designed whereby the more lucrative parts of the telephone network supported the more expensive parts.
One such mechanism was geographic averaging. The cost of providing service to everyone in a telephone service area was determined and then the average rate per customer was calculated. Generally, the cost of providing service to the rural customer would be greater than the cost of providing service to urban customers where the customer base is denser and the customers are closer to the physical plant. By charging the average rate, the telephone companies are utilizing an implicit subsidy. The urban customers are subsidizing the rural customers, but the actual subsidy is not calculated. There was no universal service fund and no universal service tax. All costs were simply averaged.
A second way in which telephone service is subsidized is access charges. For example, the lucrative long distance networks pay a metered access charge which goes to support the more expensive local network. This is the access charge from which ISPs are exempt.
The result of universal service has been both good and bad. During the era of universal service, we have seen telephone penetration rates increase from 5 percent of the population having access to phone lines at the turn of the century to 94 percent having access in 1996, the year of the Telecommunications Act. There are segments of our country today where, but for universal service, it would cost those individuals several hundred dollars a month to have a phone line.
But universal service has resulted in a complex, implicit set of subsidies that distorted the true costs of the network elements. These price distortions became more and more removed from true costs over time and became the source of strong tension as the telephone network monopolies have slowly been broken into pieces. The artificial costs in the network have been obstacles to true competition and have led to network design advancements based on artificial assumptions.
The Telecommunications Act of 1996 reinvented universal service. It called for the provision of discounted services to all schools and libraries everywhere. It was left up to the FCC, however, to determine the rate "appropriate and necessary to ensure affordable access to and use of such services by such entities." The only other guidance Congress gave to the FCC as it handed down its mandate was that "[t]he Commission shall establish competitively neutral rules to enhance, to the extent technically feasible and economically reasonable, access to advanced telecommunications and information services for all public and nonprofit elementary and secondary school classrooms, health care providers, and libraries." The FCC was tasked with the creation of the new Schools and Libraries Program with little more guidance or scope than this.
On May 8, 1997, the FCC released its Universal Service Order implementing the Act. This order created the $2.25 billion Schools and Libraries Fund. It also set forth how schools and libraries should go about applying for the funding and acquiring telecommunication services.
Schools must (1) meet the statutory definition of an elementary or secondary school found in the Elementary and Secondary Education Act of 1965, (2) not operate as a for-profit business, (3) have an endowment under $50 million, and (4) use service for "educational purposes." This generally means that all public schools are eligible. Nonpublic schools that meet these criteria are also eligible.
Libraries must (1) be eligible for assistance from a state library administrative agency under the Library Services and Technology Act (LSTA) and (2) not operate as a for-profit business. Eligible libraries include public elementary or secondary school libraries, academic libraries, research libraries, and private libraries subject to state determination. Libraries must be either associated with an elementary or secondary school or independent of any institution of higher education. Libraries which are a part of an eligible school will generally participate in the program as a part of that school.
Schools and libraries can (and are encouraged to) aggregate their demand by forming consortia with both eligible and ineligible entities. By pooling resources and demand, a consortium may be able to formulate more attractive arrangements. However, the benefits received from the Fund must be provided to the eligible entities in accordance with their level of eligibility.
In the past, only telephone carriers had to pay for and only telephone carriers received the financial benefit of universal service. In the new world, "[a]ll telecommunications carriers that provide interstate telecommunications services are required to contribute to universal service support mechanisms." As a corollary, generally, only telecommunications carriers are eligible to take out of the fund.
But Internet service providers are not telecommunications carriers. From a regulatory history dating back to 1970, the FCC determined that Internet service providers are "Enhanced Service Providers." Since they are Enhanced Service Providers and not common carriers, they are not obligated to pay into the universal service fund. This also generally means that they are not eligible to receive support from the Universal Service Fund.
There is, of course, an exception to the general rule. Section 254(h)(2)(A) of the Telecommunications Act directs the FCC to "enhance, to the extent technically feasible and economically reasonable, access to advanced telecommunications and information services for all public and nonprofit elementary and secondary school classrooms . . . and libraries." The FCC interpreted information services to include Internet access. Section 254(h)(2) also called for the Universal Service program to be competitively neutral; the subsidies should not favor one segment of the industry at the expense of the other. If the Schools and Libraries Fund only supported Internet access from telephone carriers, then the telephone carriers would have a significant advantage over independent ISPs in a competitive market. In order to ensure that the universal service fund is competitively neutral, the FCC sought to make all ISPs eligible.
Nevertheless, the FCC could not just decide to pay subsidies to non-telecommunications carriers which do not pay into the Universal Service Fund. In order to get around the general rule that only telecommunications carriers are eligible to receive from the fund, the FCC concluded that "the language of Section 254(h)(2) grants the Commission broad authority to enhance access to advanced telecommunications and information services, constrained only by the concepts of competitive neutrality, technical feasibility, and economical reasonableness." Unlike the general rule, Section 254(h)(2) does not limit the Schools and Libraries Fund to the support of only telecommunications carriers. Since support of independent ISPs enhances access to information services and is competitively neutral, technically feasible, and economically reasonable, then, in the opinion of the FCC, it is permissible under Section 254(h)(2). As a result, all ISPs, whether associated with a telecommunications carrier or not, are eligible to receive support from the Universal Service Fund.
The FCC's Universal Service Order set forth the discounts for which schools and libraries are eligible in its discount matrix table. Two factors are used to determine eligibility. First, the universal service program will consider the percentage of students which are eligible to participate in the national school lunch program. Libraries will determine their eligibility based on the level of participation of schools in the national school lunch program in the area where the library is situated. Second, the program will consider whether the school or library is in an urban or rural environment. Using these two factors, the discount matrix reveals the discount available for the school or library, which ranges between twenty and ninety percent. According to the discount matrix, every eligible school or library is qualified for at least a twenty percent discount.
School and Library Discount Matrix
The funds from the School & Library Universal Service Program will be distributed on a first-come, first-served basis. Since there is $2.25 billion in the Fund, the FCC believes that there is little chance that the Fund will be exhausted. On the other hand, there are rumors of states planning to put the Fund to good use, setting up citywide or statewide networks. The FCC has set up the following procedures in the event that the Fund begins to be depleted:
When there is only $250 million dollars left in the Fund (10 percent of the Fund), a system of priorities will be initiated. The Fund Administrator will give notice that the $250 million trigger has been reached. For the next 30 days (or until the end of the year, whichever is shorter), the most disadvantaged schools and libraries will receive priority for funding commitments. If sufficient funds remain, institutions in other brackets will also receive funding commitments. This system of priority will continue until the Fund is exhausted.
When the Fund first goes online, there will be a one-time, 75-day application window. During this time, all applications will receive the exact same priority. Instead of first-come, first-serve during this window, it will be as if they were filed simultaneously. Since there is this 75-day window, the School & Library Corporation encourages entities not to rush but to take the time necessary to correctly prepare and file applications.
The Universal Service Fund can be used by the school or library to acquire any telecommunication service (i.e., telephones, beepers, cellular phones) and information services (i.e., Internet access). The FCC created a flexible fund so that schools and libraries can model technology plans according to their unique needs.
Recognizing that the expense of Internet access involves more
than the mere cost of the service, the FCC determined that the
Fund could be used to acquire all equipment that "is necessary
to transport information all the way to individual classrooms."
This includes wiring, routers, hubs, network file servers (including
the necessary software), installation and maintenance of internal
connections, and wireless local area networks (LANs). Universal
service funds cannot be used for
equipment such as computers (with the exception of network file servers) and other hardware, software (with the exception of the software required for the operation of network file servers), fax machines, modems, teacher training, upgrades to the electrical system, and asbestos removal.
Also not eligible for discounts are subscriptions for content, "training, non-network software, voice mail or information services in general, electrical connections, and security."
Another restriction is that schools and libraries are not permitted to resell the services acquired through universal service funds.
Funding for the Schools and Libraries Program started January 1, 1998. However, due to delay, the Schools and Libraries Corporation did not start accepting applications for funding until the end of January. This means that most schools going through the standard application process will not receive funding in the first quarter of the program. The reason is that the schools and libraries must first complete the application process. In brief, the process is as follows:
Service providers will bill schools and libraries directly. The school or library will pay their portion of the bill. The service provider will then receive the subsidy from the Schools and Libraries Corporation. If the service provider is not a common carrier, then the service provider will receive a reimbursement from the Schools and Libraries Corporation. If the service provider is a common carrier, then the common carrier can offset the amount of money it has to pay into the Universal Service Fund with the amount of money it should receive from the Schools and Libraries Corporation. Although the contracts between the schools and libraries can be for any length of time, funding commitments from the Schools and Libraries Corporation must be renewed annually.
4. Critique of the federal universal service program for schools and libraries (or why I hate universal service)
The Telecommunications Act of 1996 stated that it shall be the policy of the Federal Government to keep the Internet "unfettered from state and federal regulation." Whatever it might mean to fetter, there is a good argument that this Universal Service program is doing it.
Simply because there is a great need out there does not mean that there needs to be big spending by the federal government. The resource necessary to wire all of our schools to the Internet is a tremendous amount of money. Nevertheless, the statistics made available from the Department of Education and other sources indicate that our nation's schools and libraries are being connected to the Internet without the need for FCC universal service subsidies.
The good news is that we have seen explosive growth in the Internet industry leading to creative marketing strategies. Many browsers can be acquired for free, particularly for educational purposes. Other companies provide free e-mail service (if you sign up with their company and inflict yourself with a bombardment of advertising). In other areas, Netday and the FreeNet movement have made tremendous inroads in providing Internet access to the community. Recently passed legislation gives corporations strong incentives to donate their "used" computer equipment to educational institutions. The result of these efforts is very optimistic. In 1994 only 35 percent of all public schools were wired for the Internet. By 1996 that level had doubled, with 65 percent of schools connected to the Internet. Department of Education statistics indicate that the rate of wiring schools to the Internet could close in on 100% by the year 2000. This projection, however, is questionable. It is relatively easy to wire schools in middle-class and wealthy neighborhoods where there is a good population, money, and infrastructure. It is not so easy where there is not the money or the infrastructure. It is in the periphery areas that universal service needs to focus its attention.
The bad news is connections to individual classrooms. In 1994, only 3 percent of classrooms had been wired for the Internet. By 1996, this level had only risen to 14 percent. Unfortunately the Department of Education does not have more up-to-date statistics for after 1996; two years in Internet terms is an eternity. This factor points to one of the more central issues for universal service, which is getting technology truly integrated into the curriculum. The rate of connection of schools to the Internet is exciting, but it is also only superficial if the connection is only to a computer lab, a library, or a central administrative office. It is not enough to string wire to the outside of a brick schoolhouse. When the Department of Education statistics show that 65% of schools are wired, this statistic does not reflect the fact that many of these connections are to but a handful of computers. Technology must be truly integrated into the curriculum. If universal service is truly necessary, it is because of the substantial cost of true integration.
The Schools and Libraries Program can be seen as a tremendous advance of "regulatory creep." It is a part of a multitude of proceedings at the FCC that are slowly expanding the FCC's jurisdiction over Internet issues. These proceedings include
The Schools and Libraries Fund is a regulatorily created program with the Internet at the center. This program has a regulatory agency deciding who is eligible, what is covered, and for how much. Particularly in light of how large this program is, this can have a substantial effect on the Internet market.
If you are one of the few in the Internet industry who appeared in Washington, DC and participated in the universal service proceedings, you are probably faced with a very large bill from a Washington communications law firm. The major proceedings for the Schools and Libraries Program included
The end result of the FCC's universal service proceedings is the creation of XXX pages of Orders, the creation of three universal service corporations where there used to be only one, and the creation of the Schools and Libraries Corporation with an administrative budget of $25 million.
The good news is that the regulatory process is an open process where everyone gets to participate and everyone must be heard. The bad news is that the regulatory process is an open process where everyone gets to participate and everyone must be heard. The more involved a federal agency is, the more democratic participation is required. Unfortunately, situations quickly become ones where the primary beneficiaries are lawyers and lobbyists and result in policy slugfests creating compromises that frequently miss the original well-intentioned policy goals.
The Schools and Libraries Program has become one of those bureaucratic nightmares. The money expended deliberating in these proceedings would have been far better spent providing Internet access to schools and libraries. The expense of participation in these proceedings is prohibitive to many Internet service providers. The Internet was based on the paradigm of small, independent, and decentralized service providers. They operate on small margins. To them, participation in endless Washington, DC deliberations cannot be afforded (they also frequently come from a computer culture with high disdain for the Washington regulatory environment). The end result has been, as a generalization, that the independent Internet providers have not appeared in force in these proceedings. Who has appeared? Those with a long experience with regulatory bodies who know how to work the system -- the traditional communications corporations who are either interested in expanding into the "new" medium or who feel threatened by the new universal service obligations. When democratic participation is dominated by a particular viewpoint, for whatever reason, the end product will be predestined. The creation of a complex regulatory universal system systemically favored large Internet providers such as the Bell Operating Companies. This is a move away from the traditional structure of the Internet and ultimately discriminates in favor of one class of Internet access over others.
One of the greatest struggles in the program has been to determine what is and what is not covered. Network elements have been dissected, inspected, poked, and prodded. This has led to strange decisions.
This arbitrage has been caused, probably in part, because Congress and the FCC seem to have had a weak comprehension of the definition of the Internet. Many make the mistake of considering the Internet a thing. After all, the phone network is a thing which can be pointed at and you can say, "yes, there it is." But this is not true of the Internet. The Internet is a protocol utilized in an open environment. Anything using this protocol is "a part of the Internet" (a toaster oven can be connected to the Internet -- is a toaster oven covered under the Schools and Libraries Program?). Unless this definition is grasped, the true flexibility of the Internet and its ability to adapt are not appreciated. The failure to comprehend this definition means that the regulators have struggled to determine what is and is not covered without committing the Universal Service Fund to subsidizing every device and toaster oven that utilizes TCP/IP.
The FCC attempted to set forth relatively straightforward criteria to be applied. The fund will be used to subsidize (1) information services (access to the Internet) and (2) the infrastructure necessary to complete the transmission on campus all the way to the classroom (without including the appliance -- the computer -- on which the transmission is received). The purchase of anything off campus (such as WANs) is not covered. The subscription to any content or the purchase of any network elements used to support content is not covered. Apply these criteria and you should in theory be able to determine whether a network element is covered.
The problem is that this favors one technological view of the Internet. It favors LANs connected to an access provider over infrastructure leased from telcos. The FCC determined that modems will not be covered -- a decision which can only be understood in the context of an FCC assumption that access would be provided over LANs. Also not covered are wireless WANs, even where a wireless WAN is clearly a superior choice over wireline connections. This means the FCC plan is not technology neutral as required by law. It means that it may frustrate technology plans which may be cheaper or more logical given the various situations that schools and libraries across the United States find themselves in, but not subsidized under the plan.
This is another area that also systemically favors large providers. The proceedings have become so complex and the eligibility analysis has become so detailed that many small ISPs are giving up not only on participating in the process but also on participating in the program. They do not have the staff or resources to wade through the depths of the FCC orders and determine what parts of their service are and are not covered. There are no national associations representing ISPs that can do this work although there are such large national associations for the telcos and the educational institutions. Lacking the resources to comprehend the program, small and medium-sized ISPs are giving up, thereby biasing the market in favor of those providers with sufficient resources to keep up with what has become a very complex situation.
Regulation can have a significant influence on the development of a medium. Universal service regulations have traditionally resulted in distortions and artificial pricing. As the network develops, these distortions are made into assumptions that influence design and development. One product of these distortions has been Internet telephony. It is said that one of the reasons why Internet telephony is currently cheaper than long distance on the public switched telephone network is that it bypasses significant artificial pricing structures in the public switched telephone network.
There is a danger that the Schools and Libraries Fund will pull the Internet down into the price distortions of the public switched telephone network. Many telcos argue that if ISPs can take from the Schools and Libraries Fund, they should be required to support the fund just like everyone else. Bell South initiated a lawsuit in federal district court to address this apparent inequity. This inequity also gave rise this fall to Sen. Ted Stevens (R-Alaska) requiring the attachment of a rider to the FCC's appropriations which required the FCC to file with Congress a report explaining why ISPs could take from the fund but were not required to pay into the fund. All of these pressures increased anxiety in the Internet industry that the burdens of telcos, including access charges and required contributions to the Universal Service Fund, will be extended to ISPs. Preliminary murmurs indicate that the FCC will remain steadfast in exempting ISPs from these burdens. But the strength of telcos' arguments to bring ISPs into the FCC-regulated industry family grows as appearances that the Internet is not pulling its own weight increase.
If the price distortions of universal service are imposed on the Internet, assumptions used for further development which are false will result in bad decisions. Network elements will be designed to take into account artificial costs instead of the true costs of network operations. The result will be network inefficiencies. In addition, biases will be built into the network. As noted above, the Schools and Libraries Fund favors Internet access based on wired LANs connected via telcos. This is a handicap to the development of wireless Internet, for example, which may be more efficient and more reasonable, but not supported by the fund. The result is that wireless technology, for example, which has the potential for increasing universal access to the Internet is in fact hampered by biases in the market created by universal service. In order to ensure that the Internet is kept unfettered of these FCC-induced distortions, many advocate that it would be better if the Internet was not brought into the universal service program at all.
Everyone gets to take advantage of the Schools and Libraries Fund's discounts. Even the richest of the rich get a 20 percent discount on their telecommunications needs. It could be argued that Congress required that these discounts be provided to everyone. But Congress also clearly stated that "[t]he discount shall be an amount that the Commission . . . determine[s] is appropriate and necessary to ensure affordable access to and use of such services by" schools and libraries. When schools and libraries can clearly afford and are using information services, why do they nonetheless get at least a 20 percent discount? Schools with as low as one percent of its student population participating in the national school lunch program can receive up to a 50 percent discount on the services they acquire. There are no findings or evidence in the FCC's May 8 Order that these segments of the population cannot, on their own, afford Internet access. Nevertheless, since these schools may have some of the largest budgets available, their requests for funding may be substantial. This is wholly unnecessary. The goal of universal access is to ensure that all Americans have access to the Information Revolution, not to subsidize the rich.
Part of the explanation for this phenomenon is that the FCC was mandated to implement the universal service program with virtually no empirical evidence. The end result is that the Schools and Libraries Fund is not narrowly focused on how to respond to that problem because there is insufficient information on how to do that.
In the 1980s, the United States generously responded to the African famine by shipping millions of dollars' worth of food and grain over to Africa. Unfortunately, we did not ship over the means for delivering this food to the starving people, and a significant portion of the food sat on the docks rotting. The Schools and Libraries Program does something very similar. It provides billions for the provision of technology and telecommunications to schools. It does not provide the means for delivering this technology to the students. There is no money for teacher training. Whether or not technology is incorporated into the curriculum will ultimately be determined by teachers. If a teacher does not know how to operate a computer or surf the Internet, technology will not be a part of that teacher's curriculum. This is a tremendous need which the program has overlooked. Without it, the technology will rot on the docks of schools, becoming obsolete before being utilized.
As if all of this were not sufficient, Senator McCain, an opponent of the Universal Service Fund, made things worse. On February 9, 1998, Sen. McCain introduced a censorship bill in Congress that would block universal service funding for those schools or libraries that fail to implement a filtering or software system for computers with Internet access. Sen. McCain, standing side-by-side with Sen. Dan Coats, one of the original authors of the Communications Decency Act, infused the Internet censorship controversy into the universal service debate.
This is a tale of two cities. It is a tale of information haves and information have-nots. But it is also a tale of the city which chants the mantra "an Internet unfettered by federal regulation" and the city that believes that universal Internet access is necessary in order to make computer literacy as fundamental to education as reading, writing, and arithmetic. As with many a conflict, both cities' beliefs are compelling. So how is this conflict resolved?
Universal service subsidies distorted the telephone network and created a myriad of telephone regulations so complex and concocted that the United States is having a horrific time moving from the age of communications monopolies to an age of communications competition. Wise individuals in the Internet community have fought at the gates of their city, defending the Internet from the disaster of those regulations.
But if we fight this battle too vigilantly, we will lose the war. If we defend the Internet from regulation overzealously, we may be left with an Internet available only to the elite, leaving whole classes of our society to virtual banishment. At the core of democratic idealism is the concept that we as a society are strengthened when we are all a part of society. Only when all parts of society have opportunity, have the ability to speak and to be heard, and have the ability to gain access to the wealth of our nation are we coming close to the ideals of this democratic experiment.
I support the policy goals of universal Internet access. I worry greatly that while the private sector is making great inroads in wiring schools and libraries, they are focusing only on areas where the market will give them the best return for their investment. I am worried that there is a periphery in our society that will be left behind, widening the gap between information haves and have-nots, at least for that small minority. I have seen the difference between Netday in a wealthy suburb of Washington, DC, supported by corporate assistance and achieved in a single day, and a Netday in the inner city, conducted almost entirely of inexperienced volunteers without corporate support, where, one year later, the school had still not managed to get online.
In order to move forward, the Internet community and industry must appear in regulatory proceedings. Despite the systemic and cultural factors weighing against computer industry involvement in regulatory process, without it, the regulatory process will continue to be misguided. In addition, better empirical information must be acquired, particularly with regard to the needs of schools and libraries. Finally, the Clinton administration must be pressed to stick to its articulated Internet principles. The White House repeatedly states that federal involvement in the Internet must be minimalist. The production of repeated hundred-page orders which are beyond comprehension is not minimalist. It is instead layering the old universal service paradigm on the Internet. The Schools and Libraries Program was a first attempt at an important program. The Internet community needs to ensure that the future is better.
 The Internet Telecommunications Project is dedicated to the dissemination of accurate telecommunications information to the Internet Community. The Project is not involved in advocacy, lobbying, or representation. It receives no funding and consists entirely of the voluntary efforts of its participants.
 U.S. Department of Education, Investing in school technology: Strategies to meet the funding challenge (November 1997) (quoting President Clinton's State of the Union Address, January 23, 1996).
 As the District Court stated in ACLU v. Reno,
It is no exaggeration to conclude that the Internet has achieved, and continues to achieve, the most participatory marketplace of mass speech that this country and indeed the world has yet seen. The plaintiffs in these actions correctly describe the "democratizing" effects of Internet communication: individual citizens of limited means can speak to a worldwide audience on issues of concern to them. Federalists and Anti-Federalists may debate the structure of their government nightly, but these debates occur in newsgroups or chat rooms rather than in pamphlets. Modern-day Luthers still post their theses, but to electronic bulletin boards rather than the door of the Wittenberg Schlosskirche. More mundane (but from a constitutional perspective, equally important) dialogue occurs between aspiring artists, or French cooks, or dog lovers, or fly fisherman . . . [T]he Internet may fairly be regarded as a never-ending worldwide conversation. The Government may not, through the CDA, interrupt that conversation. As the most participatory form of mass speech yet developed, the Internet deserves the highest protection from governmental intrusion.
ACLU v. Reno, 929 F. Supp. 824, 881-83 (E.D. PA 1996), affirmed __ U.S. __, 117 S.Ct. 2329 (1997) (unanimous decision).
 Reuters, Fed Responds to IT shortage, C|NET (January 12, 1998).
 Rajiv Chandrasekaran, U.S. to Train Workers for Tech Jobs, The Washington Post, A01 (January 12, 1998). See also U.S. to train high-tech workers, USA Today (January 13, 1998) ("Commerce Secretary William Daley said the number of new information technology jobs expected to be created over the next decade has jumped from 1 million to 1.3 million.").
 FCC Chairman William Kennard, Keeping America Connected, Remarks to Organization for the Promotion and Advancement of Small Telephone Companies (January 12, 1998).
 Percentage of workers using computers at work; family income, less than $20,000: 25.1, $20,000 to 29,999: 38.4%, $30,000 to 39,999: 45.7%, $40,000 to 49,999: 51.9%, $50,000 to 74,999: 60.6%, $75,000 or more: 65.9%. U.S. Department of Education, National Center for Education Statistics, Digest of Education Statistics 1997, Figure 420 (December 1997).
 U.S. Department of Education, Investing in school technology: Strategies to meet the funding challenge 7 (November 1997).
 Federal-State Joint Board on Universal Service Report and
Order, CC Docket No. 96-45, FCC 97-157, para. 531 (May 8, 1997)
http://www.fcc.gov/ccb/universal _service/fcc97157/ (hereinafter
The Joint Board reached these estimates based on the following assumptions and adjustments. First, the Joint Board adjusted the McKinsey base cost estimates for the full classroom model to account for discounts that McKinsey estimates: 20 percent to 30 percent volume discounts and a 10 percent discount from using volunteers to pull cable. The Joint Board also adjusted McKinsey figures downward to reflect the increased percentage of schools that have already installed internal connections since the McKinsey Report was prepared. The Joint Board increased the McKinsey figures to reflect the coverage of approximately 113,000 public and non-public schools, because McKinsey's estimates were based on only 84,500 public schools. The Joint Board also added the cost of Internet access, assuming that 75 percent of schools and libraries will take at least basic access in the first year of this program, and that all schools and libraries will use at least basic access in subsequent years. Furthermore, the Joint Board's estimates were based on deployment of internal connections and T-1 connections in approximately one quarter of all eligible schools and libraries in each of the initial four years. Finally, the Joint Board estimated the telecommunications-related costs of schools that have not yet fully deployed internal connections or more advanced access based on an estimate that basic usage by schools is approximately $525 million annually today.
Id. fn. 1386.
 Department of Commerce, Inquiry on Universal Service and Open Access Issues, 59 F.R. 48112 para. 1 (1994).
 Milton Mueller, Universal Service and the new Telecommunications Act: Mythology Made Law (March 1997); Fraser, Telecommunications Competition Arrives: Is Universal Service Out of Order, 15 Fall Cal. Reg. L. Rep. 1, 1 (1995); Mark Cooper, Universal Service: A Historical Perspective and Policies for the Twenty-First Century (Dec 9, 1996) (posted at Benton Foundation Universal Service Library www.benton.org).
 Fraser, Telecommunications Competition Arrives: Is Universal Service Out of Order, 15 Fall Cal. Reg. L. Rep. 1, 2-3 (1995).
 Section 151 of the Communications Act of 1934, 47 U.S.C.A. § 151.
 Fraser, Telecommunications Competition Arrives: Is Universal Service Out of Order, 15 Fall Cal. Reg. L. Rep. 1 (1995).
 Not everyone agrees that there is anything good about universal service. See Milton Mueller, "Universal Service" and the New Telecommunications Act: Mythology Made Law (March 1997); Fraser, Telecommunications Competition Arrives: Is Universal Service Out of Order, 15 Fall Cal. Reg. L. Rep. 1 (1995); Mark Cooper, Universal Service: A Historical Perspective and Policies for the Twenty-First Century (Dec 9, 1996) (posted at Benton Foundation Universal Service Library www.benton.org).
 U.S. Department of Commerce, Falling Through the Net: A Survey of the "Have Nots" in Rural and Urban America, fn. 1 (July 1995) http://www.ntia.doc.gov/ntiahome/fallingthru.html. In 1900, the cost of having a telephone was 18 percent of the average income. In 1980, the cost was less than 1 percent of the average income. Id..
 This is true in parts of Sen. Stevens' home state of Alaska. This reflects one reason that Sen. Stevens is so concerned about the Schools and Libraries Program. He is concerned that the Program is so expensive that it will take funds away from the subsidies received by his state. Universal service support for telephones is very important to Alaska and they do not want to see it threatened.
 47 U.S.C. § 254(h)(1)(B).
 47 U.S.C. § 254(h)(2)(A).
 Federal-State Joint Board on Universal Service Report and Order, CC Docket No. 96-45, FCC 97-157 (May 8, 1997) http://www.fcc.gov/ccb/universal _service/fcc97157/ (hereinafter "Order").
 Order para. 552.
 Order para. 558; FCC FAQ, Frequently Asked Questions on Universal Service and the Snowe-Rockefeller Amendment (July 2, 1997); Merit.net, About Universal Service Fund (July 20, 1997).
 FCC FAQ, Frequently Asked Questions on Universal Service and the Snowe-Rockefeller Amendment Q20 (July 2, 1997).
 Order Para 591.
 Order para. 587, et seq.
 Order para. 498.
 See Frequently Asked Questions on Universal Service and the Snowe-Rockefeller Amendment, DA 97-1374, Q11 (July 2, 1997).
 The Commission decided that "rural" shall be defined in accordance with the Office of Management and Budget's designation of metropolitan and nonmetropolitan counties. "Information concerning an entity's urban or rural classification can be found at www.neca.org/funds/msa.htm; instructions for using the MSA list can be found at www.neca.org/funds/curl.htm."
 FCC's Frequently Asked Questions on Universal Service and
the Snowe-Rockefeller Amendment Q25 (July 2, 1997). According
to the FAQ,
during the 30-day period applications from schools and libraries will continue to be accepted and processed, but the administrator will only commit funds to support discount requests from schools and libraries that are in the two most-disadvantaged categories of the discount matrix and that did not receive universal service discounts in the previous or current funding years. To avoid discouraging schools and libraries from applying for discounts on basic telephone service, however, schools and libraries that are in the two most-disadvantaged categories will not forfeit their priority status if they have previously applied only for discounted basic telephone service.
There is some talk that, if the Fund is exhausted, the subsidy levels may be reduced in the next calendar year in order to ensure that all institutions can participate.
 School and Libraries Corporation and Health Care Corporation Adopt Length of Filing Windows, Public Notice DA 97-2349 (November 6, 1997); Federal-State Joint Board on Universal Service, CC Docket 96-45, Third Report and Order, FCC 97-380 (October 14, 1997).
 Order para. 459.
 Order paras. 450-60; FCC FAQ, Frequently Asked Questions on Universal Service and the Snowe-Rockefeller Amendment Q8 (July 2, 1997).
 FCC FAQ, Frequently Asked Questions on Universal Service and the Snowe-Rockefeller Amendment Q9 (July 2, 1997).
 NTIA New Universal Service Guide (6-24-97) http://www.ntia.doc.gov/.
 In other words, the school or library must annually submit Form 471 which requests a commitment of funds from the Schools and Libraries Corporation; the school or library does not have to go through the competitive bidding process annually. This means that there is no guarantee that the school or library will receive funds or the same amount of funds from the Schools and Libraries Corporation from one year to the next.
 47 U.S.C. § 230(b) (Section 509 of the Telecommunications Act of 1996).
 Netday, http://www.netday.org/. Netday is currently conducting a survey of the number of schools wired through its efforts. The results of that survey should be available in the spring of 1998.
 U.S. Department of Education, National Center for Education Statistics, Digest of Education Statistics 1997, 458 Figure 33 (December 1997) (these figures are based on estimates which do not take into account universal service funds; when the effect of universal service is accounted for, Internet penetration levels should accelerate).
 U.S. Department of Education, National Center for Education Statistics, Digest of Education Statistics 1997, table 415 (December 1997). See also The Benton Foundation, The Learning Connection: Schools in the Information Age, What's Going on: Efforts to deliver computer networking to schools (updated 10 September 1997) http://www.benton.org/Library/Schools/home.html. The Department of Education has published the following statistics: Percentage of public schools and school classrooms having access to the Internet, by school characteristics: 1994, 1995, and 1996. Percentage of [public] schools having access to the Internet: 1994: 35, 1995: 50, 1996: 65%. Percentage of instructional rooms having access to Internet: 1994: 3%, 1995: 8%, 1996: 14%. Mean number of all computers per school 1995: 72. Percentage of computers with Internet access, 1995: 14. Mean number of computers with Internet access in schools with Internet access, 1995: 12.
 This also begs the question of whether we need 100 percent of classrooms connected to the Internet. Nothing in Section 254 of the Telecommunications Act called for 100 percent of classrooms to be connected. The author found no report or study which suggested that such connection levels are necessary. Probably not all classrooms for kindergartners and young students need computers. Probably most advanced placement science classes for high school students could benefit from connections. Thus the percentage of classrooms that is useful to connect to the Internet is probably somewhere between 1 and 99 percent.
 Access Charge Reform, First Report and Order, FCC 97-158 (May 16, 1997) http://www.fcc.gov/ccb/access/fcc97158.html; Access Charge Reform, NPRM and NOI, CC Docket No. 96-262 (December 24, 1996) http://www.fcc.gov/Bureaus/Common_Carrier/Notices/fcc96488.txt>.
 Technical Requirements to Enable Blocking of Video Programming based on Program Ratings, NPRM, ET Docket No. 97-206, para. 22 (September 26, 1997) http://www.fcc.gov/vchip/.
 The Provision of Interstate and International Interexchange Telecommunications Service via the "Internet" by Non-tariffed, Uncertified Entities, Petition for Declaratory Ruling, RM 8775 (March 1996).
 ALTS Request for Clarification of Commission's Rules Regarding Reciprocal Compensation for ISP Traffic, DA 97-1543 (July 2, 1997) http://www.fcc.gov/Bureaus/Common_Carrier/Public_Notices/1997/da971399.txt>.
 Worldcom, Inc. And MCI Communications Corporation Seek FCC Consent for Proposed Merger, Public Notice, DA 97-2494 (November 25, 1997) http://www.fcc.gov/Bureaus/Common_Carrier/Public_Notices/1997/da972494.txt>.
 Amendment of the Commission's Rules to Provide for Operation of Unlicensed NII Devices in the 5 GHz Frequency Range, Report and Order, RM-8648 (January 9, 1997) http://www.fcc.gov/Bureaus/Engineering_Technology/Orders/1997/fcc97005.txt>.
 Petition for Rulemaking Filed, Press Release, File No. CCB/CPD 97-51 (September 18, 1997) http://www.fcc.gov/Bureaus/Common_Carrier/Public_Notices/1997/da972002.txt .
 The GAO has concluded, in a report to Sen. Stevens, that FCC violated the Government Corporation Control Act when it set up the three universal service corporations. According to reports, this Act requires a federal agency to have specific statutory authority before it can establish a corporation. The GAO concluded that the Telecommunications Act of 1996 provided no such authority for the FCC to set up the universal service corporations. GAO Finds FCC Illegally Set up Universal Service Companies, Communications Daily (February 12, 1998); GAO Says FCC Exceeded its Legal Authority on Universal Service, TelecomAM (February 12, 1998); McCain Calls GAO Universal Service Report 'Serious,' TelecomAM (February 13, 1998) .
 See Senate Communications Subcommittee To Examine SLC Administration, Telecom AM (Feb. 11, 1998) (Reporting that Senate Communication Subcommittee will hold hearings on "excessive" administrative overhead of Schools and Libraries Corporation).
 See Administrative Procedures Act.
 For detailed lists of covered elements, see SLC Matrix of Services (February 3, 1998) http://www.neca.org/funds/faslc.htm; Merit.net, Services and Facilities Eligible for USF Discounts (January 31, 1998); Internet Telecommunications Project, What Parts of a Network Are Covered by the School & Library Fund? (January 17, 1998) http://www.cais.net/cannon/usf/slcover.htm.
 This begs the semantic question of, if the cable company called the box a cable "router" instead of a cable "modem," would it be covered?
 The FCC itself is connected to the Internet via a LAN with a single connection to UUNET. It is conceivable that Commission staff have become so accustomed to accessing the Internet over their LAN that the LAN and the Internet have become confused. The Internet to the average Commission staffer is the computer terminal they turn on every morning, connected to the Commission LAN. Just like every other communications medium with which the Commission works, it is a thing that can be pointed at (there is the telephone network, there is a TV station, and there is the Internet).
 David Hughes, a strong proponent of wireless Internet connections, has vigorously brought to light a potential bias of the Schools and Libraries Program against wireless connections. See Gordon Cook, e-mail to Telecomreg, Dave Hughes Threatens Class Action Lawsuit to Overturn Universal Service Fund Ban on Wireless Connectivity for Schools and Libraries (February 3, 1998).
 Responses from the audience at Computers, Freedom, and Privacy, 1998, Austin, Texas (February 20, 1998).
 Discussed at Internet Telephony, 1997 Telecommunications Policy and Research Conference in Washington, DC.
 The truth, of course, is that the Internet contributes to the Universal Service Fund. ISPs lease hundreds of business lines from telcos. Each one of those lines has a flat rate access charge for business lines on it. In addition, users are leasing second phone lines to serve as data lines to connect to the Internet. There is a flat rate access charge on those lines which has gone up recently pursuant to FCC Orders. In annual reports released for telcos for 1996 and 1997, the telcos reported strong profits based, in part, on the high number of secondary phone lines being leased. The access charges go to support universal service. Telco profits can be used to pay for universal service (many telcos are choosing to pay the universal service payments themselves instead of passing them on to customers; given that the reforms of the Telecommunications Act were designed to bring down artificial pricing which results in increased profits for the telcos, it makes sense that the telcos use their windfall in one area to pay off their new burden in another). Where telcos choose not to pay for universal service, they are adding it to the bills of consumers -- the bills which ISPs pay for all those leased lines. In all of these ways, ISPs, as consumers of the public switched telephone network, contribute to universal service.
 "On June 18 Southwestern Bell Telephone Company, Pacific Bell and Nevada Bell (All subsidiaries of SBC communications, Inc.) filed suit against the Federal Communications Commission, claiming that the FCC overstepped its authority and was going to collect funds in an unlawful manner to support the universal service program. On August 15 Bell South also gave notice that it intends to file suit against the FCC. Whatever the outcome of these lawsuits, it is inevitable that there will be litigation by some in the industry to slow or stop this innovative new discount program.
"The SBC lawsuit, currently before the 5th Circuit Court of Appeals in New Orleans, claims that libraries should not receive discounts on Internet service or internal connections, and that libraries should only receive discounts on services from a local telecommunications service provider." American Library Association, SBC BellSouth Lawsuits, Special Report on Library Telecommunications Discounts 2 (August 1997).
 The word is that Sen. Stevens is concerned about two things. As the senator from Alaska, a state which receives a lot of universal service subsidies, Sen. Stevens is apparently concerned that the size of the Schools and Libraries Fund could take money away from the subsidies which his state receives. Second, Sen. Stevens is concerned that long distance telephone companies will switch to TCP/IP protocols for transmissions. Long distance telephone transmissions must contribute to the Universal Service Fund; long distance transmissions over the Internet do not. If long distance companies switch their traffic to the Internet, it could mean a substantial reduction of funds being contributed to the Universal Service Fund as a whole. Therefore, Sen. Stevens insisted on a reevaluation of the apparent inequity that Internet companies could take from the Universal Service Fund but not take from it.
 Common Carrier Bureau Seeks Comment for Report to Congress on Universal Service Under the Telecommunications Act of 1996, Public Notice, CC Docket No. 96-45 (January 5, 1998) http://www.fcc.gov/Bureaus/Common_Carrier/Public_Notices/1998/da980002.html. The FCC was required to consider
 S. 1619, 105th Cong., 2nd Sess. (1998). See also Net smut is focus of Senate hearing, The ZDNET News Channel (February 10, 1998); Bill calls for Net filtering in schools, USA Today Tech Report (February 10, 1998); A Stick for Schools, Libraries That Don't Filter, Wired News (February 10, 1998); Filtering sex off the Net in schools, C|NET (February 10, 1998); Bill On Internet Smut is Introduced, New York Times (CyberTimes) (February 10, 1998).
 According to Sen. Dan Coats' Legislative Assistant David Crane, Sen. Coats is opposed to the universal service program. David Crane, Federal Communications Bar Association Continuing Legal Education: Children and the Internet, Washington, DC. (February 24, 1998).
 McKinley High School, Washington, DC. Installation of coax cable in the school required avoidance of fire- and water-damaged classrooms which had not been repaired due to budget shortages. McKinley High School was closed later in the year, also as a result of budget shortages.
 Brian Kahin, Speaking at Computers, Freedom, and Privacy'98, Austin, TX (February 19, 1998).