COMMISSIONER FURCHTGOTT-ROTH SAYS INCREASED SCHOOLS AND LIBRARIES TAX WILL HARM CONSUMERS
FCC Overturned on Planned X-Factor Reduction -- Resulting Delay in Further Access Charge Reductions Means that Any Increase in E-Rate Taxes Will Directly Burden Consumers
Today, the D.C. Circuit reversed and remanded the Commission's 1997 decision regarding the decrease in access charges that is scheduled to take place on July 1, 1999. Under the Court's Order today, the Commission must reconsider those reductions or at least provide further explanation before the scheduled reductions can occur.
Some here at the Commission had previously argued that this scheduled decrease in access charges would offset the increase in the schools and libraries program that the Chairman has been urging.
But, the court has reversed and remanded the Commission's productivity factor, delaying these reductions. The net result to consumers will be an increase of $1 billion dollars in e-rate taxes, and without a corresponding decrease in long distance charges. Commissioner Furchtgott-Roth opposes such an increase in taxes paid by telephone consumers to fund programs that are largely unlawful.
In addition, Commissioner Furchtgott-Roth has consistently opposed using such access charge reductions to fund the e-rate program. "The American consumer, not federal bureaucrats, should choose how to spend any reductions in access charges. Moreover, even if access charges could have been reduced," he explains, "not all of the e-rate contributors benefit from such reductions." For example, wireless and paging carriers will be required to pay proportionately higher e-rate taxes, despite the fact that they have received no access charge reduction. Moreover, there is no assurance that the consumers who benefit from access charge reductions will be the same consumers who will bear the new universal service burden. For example, business consumers could disproportionately benefit from the access charge reduction while residential consumers pay for new universal service fees.
"In the end, the issue is not whether, despite massive e-rate tax increases, telecommunications carriers have no net differences in federally-imposed costs. The issue is whether, absent these massive new e-rate taxes, consumers could be better off. under all circumstances, larger e-rate taxes harm American consumers."