Letter to FCC Chairman William Kennard regarding E-Rate

May 26, 1999

The Honorable William Kennard


Federal Communications Commission

445 12th Street, S.W.

Washington, D.C. 20554

Dear Chairman Kennard:

On behalf of our more than 250,000 consumer activists from around the country, I urge you to strongly reject the proposal to increase funding for the E-rate at tomorrow’s open meeting. Anything less would cause direct harm to consumers and is of dubious constitutional merit.

We believe that schoolchildren, libraries and rural healthcare providers across the country should have access to advanced telecommunications services. This is a noble goal of the 1996 Telecommunications Act that the marketplace is achieving with awesome speed and efficiency.

Worthy goals, however, do not justify an attempt by the Commission to assume vast authority over the telecommunications marketplace. Communications services discounted for some at the expense of others is an injustice. To continue and expand this practice through ever more strict controls on the marketplace – from the language on a consumer’s telephone bill to an arbitrary manipulation of private contracts for access – will slow the pace of innovation and increase costs to consumers. Invariably, schemes to reduce prices on one piece of a complex market in attempt to offset an increase in another area will allow some consumers to avoid all price increases and force many to forgo most price decreases.

At Citizens for a Sound Economy we are particularly concerned with the Commission’s attempt to implement the E-Rate or so-called Gore-Tax. In general, any administrative program – let alone a program that the President’s budget expects to top $10 billion next year – should be strictly accountable for results and should receive vigorous oversight from Congress.

The 1996 Telecommunications Act did not give the Commission the power to establish or increase taxes on the American people. If the act attempted to delegate that power, the law is unconstitutional. The Constitution rests the power to tax solely with the Congress.

A fair reading of the recent American Trucking Association v. United States Environmental Protection Agency decision supports the conclusion that the regulations to implement the Gore-Tax is an unconstitutional delegation of power. As such, it would be outrageous for the Commission to attempt to increase funding at this time.

The power to initiate, levy, administer and collect taxes cannot be delegated to the Commission. Actions to the contrary run afoul of the Constitution, and of consumers’ interests. If Congress intended for this to happen, the Commission has been an accomplice. If Congress did not intend to unconstitutionally delegate authority, then the Commission has pursued a path of illegality by hiding the E-Rate program behind schoolchildren to diffuse public scrutiny. Reject an immediate increase in funding and ask Congress for statutory guidance.


Paul Beckner


Cc: The United States House

The United States Senate

Commissioners Furchtgott-Roth, Ness, Powell, and Tristani

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