FCC Hikes Phone Fees to Give Students Faster Internet

Democrats say the plan will give millions of students a better education, but Republicans worry about a rising phone "tax."

The Federal Communications Commission voted Thursday to spend an additional $1.5 billion every year to pay for high-speed Internet in schools and libraries.

The commission's three Democrats argued that the step will ensure that students have access to the online tools they need to prepare for the jobs of the future. According to the FCC, two-thirds of U.S. schools, serving 40 million students, don't have adequate Internet connections.

"We are talking about a moral issue," FCC Chairman Tom Wheeler said. "The greatest moral responsibility that any generation has is the preparation of the next generation."

But the additional funding has to come from somewhere. The FCC's vote means that government fees on consumers' phone bills will go up. The commission's two Republicans vehemently dissented, warning that the action will waste consumers' money.

"That's a 17.2 percent telephone-tax increase for American families that are still struggling to make ends meet in this lackluster economy," Republican FCC Commissioner Ajit Pai said. "And while those who can afford to live in Georgetown, Manhattan's Upper East Side, or Malibu might scoff at the increased taxes, families in middle America are sick of being nickeled and dimed by Washington politicians."

Wheeler said he is "aghast at the hostility" of the Republicans to giving students a "21st-century education."

The FCC chief claimed that the increase in phone fees will amount to only about 16 cents per month, or less than the price of a soda over the course of an entire year. That's a "small price to pay for the responsibility that we all have," he said.

The action is a dramatic expansion of E-Rate, the FCC's education-technology program created by Congress in 1996. The program is just one piece of the Universal Service Fund, which also subsidizes phone service for poor consumers, and phone and Internet service for rural consumers. All of the Universal Service Fund programs draw their money from fees on monthly phone bills.

Last year, President Obama announced an initiative to ensure that virtually all U.S. students have access to high-speed broadband by 2017. In July, the FCC took the first step toward achieving the president's goal by revamping its E-Rate program. The agency slashed funding for old technologies such as pagers and telephones, while funneling money toward Wi-Fi networks.

But at the time, the FCC dodged the controversial question of whether to increase the overall size of E-Rate. Teacher and library advocacy groups argued that the only way to actually address their need for faster Internet service would be to spend more money. The FCC answered that call Thursday, increasing the annual funding cap on E-Rate from the current $2.4 billion to $3.9 billion.

Democratic Sens. Edward Markey and Jay Rockefeller, who helped create E-Rate, praised the FCC's action.

The two FCC Republicans don't oppose E-Rate in principle, but they argued that the FCC should have rooted out wasteful spending to pay for any increase in the program.

The FCC Democrats, however, are already eyeing another expansion of agency's Universal Service Fund.

Democratic Commissioner Jessica Rosenworcel noted that many poor students still lack Internet access when they go home and try to do their homework.

"Not only are students who lack access at home struggling to keep up, their lack of access is holding our education system back," she said. "It means too many young people will go through school without fully developing the skills that give them a fair shot in the digital age."

She argued that the FCC should now consider expanding its Lifeline program to cover Internet access. Lifeline currently subsidizes only phone service for poor consumers. Wheeler suggested that all three Democrats are on board with updating Lifeline.

But expanding that program—which Republicans derisively refer to as the "Obamaphone" program (despite the fact that it was created in 1985)—would be sure to spark another partisan battle.