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FCC to scale back Internet-hookup funds for schools, libraries

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Federal regulators decided Friday to scale back rather than eliminate money for a politically charged program to provide cheap Internet hookups for schools and libraries.

The Federal Communications Commission, in a 3-2 vote, agreed to provide $650 million in subsidies for the connections in the second half of the program's first year. That would bring the total for 1998 to $1.275 billion, a 43 percent cut from the $2.25 billion the FCC originally sought."Many children and communities will be left unconnected," said Michelle Richards of the National School Boards Association.

The Internet program is paid for by fees that the FCC imposes on telecommunications companies, which pass them on to customers. As new fees pop up on bills to pay for that program and other subsidies, the FCC has faced pressure from some lawmakers and consumer groups to cut or halt funding.

The FCC has already collected, but not disbursed, $625 million in subsidies for the first half of this year.

FCC Chairman Bill Kennard said the action would not increase phone bills. The charges, he said, would be more than offset by additional reductions - starting July 1 - in other fees that phone companies pay.

But Gene Kimmelman, co-director of the Consumers Union's Washington office, said those reductions have already been factored into phone companies' pricing. "Phone bills are going up by more than $1 billion as a result of this ill-conceived regulatory plan," he said.

Consumer groups, Republican chairmen and ranking Democrats on Congress' telecommunications committees wanted the commission to stop financing the program. The White House, educators and librarians pushed for continued funding at a level higher than what the commission agreed to Friday.

"The FCC blew it," said House Commerce Committee chairman Thomas Bliley, R-Va.. "Thanks to that agency and Vice President Al Gore, the American people, including less-fortunate Americans, are stuck with higher phone rates."

Opponents call the fees collected for the program the Gore tax.

But President Clinton vowed to protect the program, a centerpiece of his second-term goal of wiring the nation's schools to the Internet by 2000. "I will steadfastly oppose any effort to pull the plug on the e-rate and our children's future," Clinton said.

Added Kennard: "You're never going to satisfy everyone. . . . What I'm trying to find is a reasonable middle ground so that people can put the politics aside and make sure that the kids don't have to wait any longer."

Senate Commerce Committee Chairman John McCain, R-Ariz., who wanted funding suspended, said he would offer legislation to alter the program.

Gore said he would fight legislative efforts to suspend or kill the program. "It's time to put more of our children online, and that means taking politics off-line," Gore said.

The two members of the commission who voted against the plan are Republicans, and the three who voted for it are Democrats.

The FCC also agreed to provide $650 million in subsidies for the first six months of 1999.