Telephone tax increase part of FCC chairman's plan for Internet fund

broadband laptop ethernet cable connection
Credit: Flickr/photosteve101

Wheeler's proposal would raise a tax on telephone lines by up to 16 cents a month

A proposed 16-cent fee increase on your telephone bill would go toward improving Internet access for kids in school and libraries.

About two-thirds of U.S. schools don't have the broadband speeds they need to provide digital learning services, Federal Communications Commission Chairman Tom Wheeler said Monday. Wheeler's proposal to revamp the 18-year-old E-Rate program, which helps schools and libraries pay for broadband infrastructure and services, would increase the agency's Universal Service Fund tax on each telephone line by up to 16 cents a month, from the current 99 cents.

With 45 percent of U.S. schools lacking Wi-Fi capacity to deliver service to each student, the U.S. is not meeting its goal of providing adequate broadband to schools, Wheeler said during a press conference. "We must do better," he said. "Investing E-Rate is about our education system, it's about our economy, and it's about our global competitiveness."

While the proposal represents a tax increase, the additional cost for a year would amount to one cup of coffee or a medium soft drink at a fast-food restaurant, Wheeler said.

Wheeler's plan, to be debated during the FCC's Dec. 11 meeting, would increase the annual E-Rate spending cap from about $2.4 billion to $3.9 billion. The E-Rate program has not seen inflationary budget increases in 13 of its 18 years. The program would not reach the spending cap immediately, meaning fee increases may initially be lower than the targeted $0.16 a month, Wheeler said.

Adequate broadband speeds -- which the FCC now defines as 100Mbps per 1,000 students -- enables teachers to tailor lessons to students and gives student access to up-to-date information and multimedia not found in textbooks, Wheeler said.

About 41 percent of rural schools in the U.S. lack access to fiber broadband, while only 31 percent of non-rural schools don't have fiber access, Wheeler said. The broadband gap between rural and other schools is an "unacceptable situation," he said. "Today we're taking steps to ensure that all kids, no matter where they live, have access to high-speed Internet, by closing the rural fiber gap."

Wheeler's plan would phase out E-Rate support for traditional phone service and paging, while establishing a $1 billion-a-year target on spending for Wi-Fi services.

Wheeler's proposal would also allow schools and libraries to seek broadband service from providers other than their local telecom carriers, something E-Rate does not currently allow.

"It's time to give rural American schools an alternative beyond being held hostage by the actions or inactions of a local telecommunications provider," Wheeler said. "It is time to give rural American schools alternatives so they can connect their students to the same educational opportunities as other American students."

Sen. Ed Markey (D-Mass.), the father of the E-Rate program, praised Wheeler's proposal. The plan will "transform the relationship between educational technology and every child in the country, regardless of race, geography or income," he said.

But Ajit Pai, a Republican member of the FCC, criticized the plan, calling it a "massive" tax increase.

"Instead of imposing a greater burden on families struggling to make ends meet in this lackluster economy, the commission should pursue fiscally responsible reforms," Pai said in a statement. "These reforms would cut the bureaucratic red tape and focus resources on the children and library patrons of poor and rural America, where the need is greatest."

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's email address is grant_gross@idg.com.

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