TECHNOLOGY Telephones, Tax Collectors & the Internet

Which Politicians Oppose Grants for Schools & Libraries? Corporate Greed-Goons Covet Billions in an Age of Prosperity By Patricia Conklin

Few voters realize that major U.S. phone companies sending monthly bills to their individual customers are still quietly collecting a subsidy to pay a hefty 3% World War I excise tax that was originally meant to help finance U.S. military ventures during the earlier part of the 20th Century. This still-operative tax amounts annually to four and a half billion dollars.

Now, these same telephone companies have requested of the FCC and Congress that they be allowed to further tax customers in order to subsidize universal service.

In the meantime President Clinton speaks with enthusiasm about the need for government assistance to help stock schools and libraries with Internet technology, but the Republican-controlled Congress has-contrarily-- pressured the Federal Communications Commission (FCC) to reduce monies spent on school and library hookups.

Approximately 30,000 schools and libraries have submitted applications for Internet-related grants totaling $2.2 billion. If the Republican Congress and the FCC have their way, however, these grants would-after major cuts--total little more than $1.4 billion.

Subsidized long distance telephone companies have contributed the larger share of monies that go into school and library Internet programs. Still collecting (1997 figures) $4.5 billion in the World War I excise tax, the major phone companies are, in fact, simply asking for more out of taxpayers' pockets. Even if the Republican-controlled Congress were to grant educational institutions' requests for only $2.2 billion, the total would be hardly more than half of the amount telephone companies now quietly collect from the on-going World War I excise tax.

"Thousands of poor schools and libraries and rural health centers are in desperate need of discounts," said President Clinton at a Massachusetts Institute of Technology commencement address. "If we really believe that we all belong in the Information Age, then, at this sunlit moment of prosperity, we can't leave anyone behind in the dark."

At least one Republican Senator, Conrad Burns (Montana) seems in some ways to agree with the President. Burns recommends dipping into the little-known World War I telephone excise tax ( which is currently collected and passed to customers by telephone moguls) and-with these proceeds-- thereby wiring the nation's schools by the year 2000. Burns says that it is imperative that "our kids have access to the tools that are crucial to their education."

The longtime reasons given for continuing to collect 1914 excise taxes that are passed to today's telephone customers are that they "help to service the deficit and general government."

The deficit, however, is rapidly declining. Despite Asian stock market jitters, Bruce Steinberg, chief economist at Merrill Lynch, says "The U.S. economy has never performed so well."

In spite of mainstream Republican rhetoric about reducing taxes, no one suggests that the $4.5 billion collected under this World War I tax mandate has outlived its usefulness. Nor, until Senator Burns made his suggestion, had anyone thought how to re-route the telephone excise tax in order to pay for Internet installations in U.S. schools and libraries.

Schools and Libraries, in fact, are required under the Telecommunications Act of 1996, to connect to the Internet. The question of who will be responsible for costs, however, has continued unresolved.

Senator Burns is head of the Senate subcommittee that has jurisdiction over the Federal Communications Commission. Last year he cast a singular vote against the appointment of the FCC's chairman, William Kennard, insisting that Kennard's plans would impact negatively on rural areas such as those in Burns' Montana districts.

Responding to the controversy, ATT and MCI say they're willing to charge residential clients in order to finance service to rural areas and to the poor. These fees, which, according to the FCC would raise telephone bills $12 annually. This week the FCC will vote on issues relating to universal service funding. Both Senator Burns and Senator John McCain (Chair of the Commerce Committee) fear that telephone bills will not reflect the subsidies collected by the giant telephone corporations.

Following the FCC vote, Burns and McCain will swing into action in their official capacities. Whether the nation's schools, libraries, and its poorer or rural areas may then benefit remains to be seen.