April 9, 1998
The Honorable William E. Kennard
Federal Communications Commission
1919 M Street, N.W.
Washington, D.C. 20554
Re: Report to Congress on Universal Service under the Telecommunications
Act of 1996 -- CC Docket No. 96-45
Dear Chairman Kennard:
The convergence of computing and communications raises a host of difficult legal and policy issues that must be addressed if the nation is "to secure lower prices and higher quality services for American telecommunications consumers and encourage the rapid deployment of new telecommunications technologies."(1) I understand that a number of these questions will be discussed in the above-captioned Report on Universal Service that is due to Congress on April 10. The Administration would like to highlight two areas of concern -- universal service and regulatory treatment of Internet telephony.
With respect to universal service, the Commission has accomplished much
already. After working closely with a Federal-State Joint Board, the Commission
in May 1997 made substantial progress in implementing the framework established
by Congress in the Telecommunications Act of 1996. Most notably, the Commission
strengthened existing programs to provide universal service support to
low-income households and created new mechanisms to ensure that schools,
libraries, and rural health centers will have affordable access to advanced
telecommunications services and facilities.
On the other hand, however, the Commission is still struggling with
the difficult task of developing adequate mechanisms to provide universal
service support to rural, insular, and high cost areas. The Administration
believes that the Commission should make the resolution of this issue a
high priority in the coming months. In so doing, the Commission need not
and should not be wedded to the funding mechanism initially proposed, under
which the Federal universal service program would cover only 25 percent
of the costs of providing affordable service to high cost areas. We are
simply not convinced that this approach will provide funding sufficient
to achieve the desired result.
You recently articulated a number of principles that have stimulated
productive dialogue with the States and industry concerning how this inquiry
should proceed.(2) In addition, the States
have been working diligently to identify alternative mechanisms that will
result in sufficient funding for all parts of the country. The Administration
therefore urges the Commission to confer expeditiously with the States,
either through the Joint Board process already established or through less
formal processes, to develop a funding mechanism that better serves the
goals of the 1996 Act.
With respect to Internet telephony, the Administration wishes to reiterate
the position stated in my letter to Chairman Hundt dated May 8, 1996: The
Commission should do nothing that would thwart the growth and vibrancy
of the Internet. While legitimate issues have been raised regarding the
obligations of new players to contribute to universal service, any proposal
to regulate Internet telephony as a "telecommunication service" would raise
contentious issues, resolution of which would have international, as well
as domestic, repercussions. Thus, the Administration urges the Commission
not to change its current approach. The Administration is prepared to work
with Congress, the Commission, industry, and all other stakeholders to
ensure that universal service goals are met. However, we must be careful
not to thwart the development of an innovation that
promises consumers the very kind of competitive alternative that the 1996 Act was intended to encourage.
Thank you for considering these views.
cc: Honorable Susan Ness
Honorable Harold W. Furchtgott-Roth
Honorable Michael K. Powell
Honorable Gloria Tristani
2. Remarks by FCC Chairman William Kennard to the National Association of State Utility Consumer Advocates (Feb. 9, 1998) <http://www.fcc.gov/Speeches/Kennard/spwek803.html>.