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FCC to Revamp School-Wiring Program

Telecom: Costs prompt switch to different firm to handle project. Agency says it can't meet all requests.

May 09, 1998|JUBE SHIVER Jr. | TIMES STAFF WRITER

WASHINGTON — Bowing to congressional pressure, the Federal Communications Commission said Friday it will revamp its $2-billion-a-year program to wire schools and libraries and warned that phone fees that finance the program will increase unless funding requests are slashed.

The agency said it would shut down the Schools & Libraries Corp., a nonprofit company it created last year that has drawn fire for allegedly turning a blind eye to excessive school funding requests.

Critics have also attacked the operation for paying lavish salaries to its employees, including $200,000 annually to its chief executive, Ira Fishman.

The corporation's duties will be assumed by the Universal Service Administrative Co., an existing FCC-chartered company that will also oversee a companion program providing telecommunications subsidies to rural health-care facilities.

The school and library program has proved to be one of the most controversial aspects of telecommunication reform since the initiative was enacted as part of the Telecommunications Act of 1996.

Officials of the Schools & Libraries Corp. last week formally requested the FCC to provide $2.02 billion for networking and telecommunications equipment.

But in a May 4 letter to FCC Chairman William E. Kennard, Senate Commerce Committee Chairman Sen. John McCain (R-Ariz.) and four other senators said the funding request was allegedly inflated by many items that are ineligible, including teacher training, laptop computers, color laser printers, security systems, pay cable services and even carpeting and painting.

What's more, the FCC says it doesn't have enough money to fund the total request.

In a seven-page report to Congress, the agency said it has collected just $619 million for the wiring program for the first half of this year.

The agency told lawmakers that as a result of the potential shortfall, it intends to seek public comment on whether the school and library financial subsidies should "be limited to an amount that does not cause long-distance rates to increase."

The FCC report comes in the wake of a recent announcement by AT&T Corp. that it will place a separate 95-cent charge on its customers' monthly phone bills to reflect part of its contribution to the FCC wiring program.

But some lawmakers have criticized such rate increases as being at odds with the intent of Congress to provide more competition and lower prices when it passed the Telecommunications Act of 1996.

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