Today, the Commission celebrates the reductions in access charges that it touts are "likely to lower prices, further stimulate long-distance calling, and boost the economy it general." The story that will not be told today is what could have been. How much lower might long distance rates have been but for the Commission's recent decision to increase the e-rate tax by another $1 billion. While the Commission extols the anticipated reduction in access charges after funding its excessive and illegal schools and libraries program, it overlooks the additional $1 billion, or roughly $10 per household per year, that the program will cost consumers.
Sure enough, local exchange carriers will reduce access charges, effective July 1, 1999. We must not forget, however, that these very reductions are the result of a 1997 Commission decision that was recently reversed and remanded by the D.C. Circuit. Not only does the Commission ignore the uncertain nature of the legality of these reductions in today's pronouncement, it overlooks the real savings interexchange carriers might have been able to pass on to end users but for a schools and libraries program that exceeds the high-cost program support. This is not what Congress intended or what the law requires.
I continue to oppose using 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, not all of the e-rate contributors benefit from access charge reductions. For example, there will be no offsetting reduction in access charges whatsoever for wireless customers who will simply have to pay higher rates. Similarly, 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 would be better off. The answer is an unequivocal yes.
I have repeatedly voiced my concern that rates for many Americans would one day rise, ironically, all in the name of universal service. I can only imagine what effect an addition $1 billion in cost reductions might have had on "lowering prices, further stimulating long-distance calling, and boosting the economy in general."