November 16, 1998

Re:	Second Report and Order and third Order on Reconsideration regarding Changes to the Board of Directors of the National Exchange Carrier Association, Inc.; Sixth Order on Reconsideration regarding the Federal-State Joint Board on Universal Service; CC Docket Nos. 97-21, 96-45.

I support today's order clarifying that, while inside wiring and internal connections "make possible the transmission of information," the "provision of inside wiring maintenance does not constitute 'telecommunications' or a 'telecommunications service' and [ ] therefore conclude that revenues derived from this activity should not be included as end-user telecommunications revenues on the Worksheet."⁽¹⁾ I write separately, however, to point out that it is this distinction that the Commission had previously ignored in declaring that universal service support should be available for inside wiring.

Section 254 speaks of discounts for "services." It is difficult to rationalize inclusion of plant and equipment for discounts under this section. As I explained in the April 10th report to Congress, the Commission has no statutory basis to provide direct financial support for non-telecommunications services or other plant and equipment.⁽²⁾ To the contrary, Section 254(h)(1)(B) unambiguously limits recipients to "telecommunications carrier[s] providing service under this paragraph."⁽³⁾ The Commission has long recognized that "inside wiring installation and maintenance are severable from the underlying common carrier transmission services . . ."⁽⁴⁾ Despite this traditional distinction, however, in the context of the schools and libraries program the Commission determined that internal connections were eligible for support to the extent that they were "an essential element in the transmission of information within the schools or library."⁽⁵⁾

Indeed, much of the "inside wiring" turns out not even to be copper wire or coaxial cable; instead, "inside wiring" is predominantly computers to support sophisticated ethernets. For example, the Commission has determined that it will allow universal service "taxes" to support installation and maintenance of high-speed computer networks -- including "routers, hubs, network file servers, and wireless LANS" -- inside schools and libraries.⁽⁶⁾ Such internal networks would rival those of the largest corporations and universities; most small businesses cannot afford the luxury of installing and maintaining expensive equipment like this.

While today's order clarifies that inside wiring is not telecommunications, it perpetuates yet another example of a type of activity that is eligible for universal service support but that does not make its fair share of contributions. I would have preferred that the Commission take this opportunity to clarify that inside wiring does not constitute telecommunications for the purposes of either contributing to or receiving support from universal service. As I have cautioned the network equipment manufacturing industry, many have argued that it is unfair to allow a particular industry activity to take from a public fund without having the corresponding obligation to contribute to it.