WASHINGTON -- Officials at the Federal Communications Commission spent Friday negotiating to salvage funding for a multibillion-dollar subsidy program that helps schools and libraries connect to the Internet.
On Thursday, top lawmakers demanded the FCC halt the program, funded mostly by charges on long-distance companies, which they said was driving up consumers' phone bills.
Under the program, more than 30,000 schools and libraries have applied for US$2 billion this year in discounts for Internet connections.
"Ending the effort is not in the best interest of the American public," FCC Chairman William Kennard said. "We need to find a way to ensure that this effort continues."
Options under consideration by the FCC included having local phone companies collect part of the money and collecting less than the $2 billion requested, FCC officials said.
But a report that the agency was on the verge of halting collections entirely for the program was "not in the cards," one official said.
Earlier Friday, the program got a boost from President Clinton. Speaking at the Massachusetts Institute of Technology, he said the program was crucial to closing the gap between rich and poor over access to the Internet.
Lawmakers objected to the FCC's handling of the program after AT&T and MCI said they would add surcharges of at least 5 percent to long-distance bills starting in July to pay for their share of the program and other long-standing subsidies that support basic phone service in low-income and rural areas.
But supporters of the program said the companies were to blame for adding surcharges at the same time the FCC had lowered by billions of dollars the charges the companies must pay to local phone carriers for beginning and ending long-distance calls.
FCC officials also argued that about three-fourths of the long-distance carrier's new charges related to the older subsidy programs and had nothing to do with the schools and libraries fund.
The FCC collected $625 million in the first half of the year for schools and libraries and has said long-distance carriers could collect about $1 billion in the second half without raising rates because of further expected reductions in access charges.
The carriers said they cut long-distance rates after the FCC lowered access charges, so to cover increased costs from subsidy programs they had to add the surcharges.
