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SEPARATE STATEMENT OF COMMISSIONER MICHAEL K. POWELL, DISSENTING
Re: Report in Response to Senate Bill 1768 and Conference Report on H.R. 3579.
I write separately to explain why I am dissenting from this Report to Congress. The Common Carrier
Bureau has done an admirable job of drafting the text of this Report over the last several weeks despite
uncertainties regarding whether Congress would ultimately request the Report and what that request would entail.
As a result of poor internal Commission processing, however, I have not been given a full opportunity to consider
and influence the content of this Report. Because I do have some concerns with the content of the Report, I feel I
have no choice but to dissent.
In the interest of being responsive to Congress, however, I briefly describe below some of my concerns
regarding the Report and our universal service programs generally:
- I am increasingly troubled by the suggestion, evidenced in the Report, that carriers should
conceal their universal service contributions or not allow carriers to recover such contributions
from consumers. Section 254(e) of the Act expressly mandates that universal service support be
"explicit." 47 U.S.C. § 254(e). Further, as the Report recognizes, carriers have the flexibility to
decide how they will recover their universal service contributions, and I doubt the Commission
has authority to prevent carriers from recovering from their customers. My fear is that, rather
than accept our apparent lack of authority to prevent carriers from passing their contributions on
to their customers, the Commission will continue down the road, as evidenced in the Report, of
suggesting that politically-unpopular methods of recovering such contributions (i.e., line items on
consumer telephone bills) somehow amount to fraud or misrepresentation. Clearly, carriers
should not be allowed to commit fraud or misrepresentation. Yet I am hesitant to suggest that
carriers are guilty of these offenses simply because they inform their customers that a component
of their bills will be used to recover contributions mandated by the government. To the extent we
are, as a practical matter, scrutinizing statements and line items on bills to pressure carriers into
hiding from the customer support mechanisms that the Act requires be made explicit, I must
respectfully object. I also must object to the notion, implicit in some calls for scrutiny of carriers'
bills, that carriers commit misrepresentation if they do not indicate that they have benefited from
access reductions at the same time they make their recovery of universal service contributions
explicit on customer bills.
- I seriously question the Report's suggestion that the starting point for determining the appropriate
level of funding for the Schools and Libraries program should be an assumption that all
reductions in access charges be used to fund that program. The Commission should acknowledge
that the Act's addition of various universal service programs to the traditional high cost, low
income and other programs will require the overall amount of universal service subsidies to rise
relative to the sum of implicit and other subsidies that existed prior to the Act's passage. At the
very least, we should expect that carriers will seek to recover their contributions to these
additional, new programs from their customers. Indeed, I believe it would be inconsistent with
the statutory mandate that universal service support be made explicit if the Commission were to -- formally or informally -- attempt to force carriers to conceal from customers the recovery of
costs attributable to government-mandated programs. The Act mandates that we compensate for
reductions in implicit access charges by adding explicit universal service subsidies.
Consequently, "access charge reductions" cannot be viewed as a quid pro quo for lowering or
eliminating the amounts carriers recover as explicit line items on customers bills. Moreover, I
seriously question the validity of tying the funding level of any of our universal service programs
to reductions in access charges.
- I also am concerned that a sizeable portion of demand for the Schools and Libraries program is
attributable to discounts for internal connections and Internet access, which the Commission is
not required to fund as advanced services pursuant to section 254(h); rather, the Commission
could decide to postpone funding internal connection and Internet access discounts temporarily
or indefinitely. (It is noteworthy that, had the Commission decided not to fund internal
connections and Internet access at this time, funds collected for the first 6 months of 1998 would
likely cover the demand by schools and libraries for discounted telecommunications services.)
- I would support limiting the revenue base of the Schools and Libraries program to interstate
revenues. I remain unconvinced that there is a principled basis for assessing contributions based
on both intrastate and interstate revenues for that program, while limiting assessment of
contributions for other universal service programs to interstate revenues.
- I am not yet persuaded that, contrary to the analysis of the General Accounting Office, the
Commission acted lawfully in directing that NECA establish the Schools and Libraries
Corporation and the Rural Health Care Corporation as a condition of its appointment as
temporary administrator. Under the Government Corporation Control Act, "[a]n agency may
establish or acquire a corporation to act as an agency only by or under a law of the United States
specifically authorizing the action." 31 U.S.C. § 9102. To my knowledge, no law specifically
authorizes the Commission to establish corporations, and I find arguments that the Commission
merely directed the establishment of the corporations as a condition of appointment unavailing.
If there is a distinction between directing the establishment of the corporations as a condition of
appointment and establishing the corporations outright, it appears to be a distinction without a
I also note that Commissioner Furchtgott-Roth raises additional, serious concerns in his statement dissenting from
this Report. Had the Commission's internal processes afforded me more of an opportunity to engage with my
colleagues regarding the contents of this Report, I might have been persuaded that there are equally valid
arguments in opposition to the criticisms I highlight above. Regrettably, that opportunity was never presented.
As I stated in my statement for the April 10, 1998 Report to Congress, I fear that support for these
beneficial programs will erode among both legislators and the general public if we cannot find a way to make
critics in Congress and elsewhere believe that we are working to preserve and advance universal service in a
prudent and responsible manner. With the issuance of this Report, I regret that we pass up yet another opportunity
to foster such belief, in part, because we failed to allow for full consideration of this matter by the entire