By David Rohde
Network World Fusion, 6/3/98

A member of the Federal Communications Commission on Monday issued an extraordinary public rebuke to FCC Chairman William Kennard after Kennard criticized an AT&T pricing move.

Republican Commissioner Harold Furchtgott-Roth said AT&T made the right call last week when the company decided to impose a 5% surcharge on residential phone calls to pay for expanded universal service programs.

Kennard last week had issued a statement saying AT&T should not have imposed the surcharge. Kennard complained that AT&T's new universal service costs are offset by newly lowered fees it must pay local carriers to complete phone calls.

Furchtgott-Roth, who joined the FCC late last year, said AT&T's new surcharge is justified because AT&T and other carriers must fund an FCC-mandated program subsidizing Internet access and inside wiring at schools and libraries. He said AT&T's action - which extends to home users a charge levied against business users earlier this year - had the praiseworthy effect of informing consumers of a "hidden tax."

Furchtgott-Roth also attacked the school program itself, known as E-rate, as an overly broad federal subsidy.

In his statement, Furchtgott-Roth did not mention Kennard by name. But he clearly was referring to Kennard when he said: "Some in Washington will attack AT&T. They will say that AT&T is not playing by the rules, that AT&T is not siding with special interests against mere citizens. On the issue of informing the public, AT&T is on the right side. I salute them."

The public spat comes at a time when the FCC must decide what to do with E-rate. Barely five months old, it has come under attack from some members of Congress as well as government auditors as an out-of-control federal contracting program. E-rate supporters defend the program as necessary to ensure that students in lower-income areas do not fall behind in computer skills and access to online resources.

Under former chairman Reed Hundt, the five individual members of the FCC often tussled over broadcasting -related issues, such as whether or not the government should ban liquor ads or force stations to run children's educational programming. But they hardly ever argued publicly over telecommunications issues, as Republican members at the time tended to defer to Democrat Hundt on key telecom matters. Like Hundt, fellow Democrat Kennard continues to hold a 3-2 party majority on the commission today.