Page 171 - Information and American Democracy Technology in the Evolution of Political Power

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Political Organizations
educationaltechnologyadvocatedsuccessfullyforthepolicyinCongress,
withlittlemembershipinvolvementormediaattention.Itdidnotinvolve
a large-scale mobilization of groups or publicly visible battles involving
grassroots action.
OnceE-Ratebecameeffective,however,itspoliticschanged.Thepossi-
bility of cost savings immediately appealed to a large number of potential
beneficiaries. Applications to the FCC for discounts came in the tens of
thousands from public and private schools as well as libraries. Opposi-
tion to discounts emerged no less rapidly from the telecommunications
industry. The firms had not opposed the SREK amendment when it was
inserted into the bill and passed, in part because of the complexity of the
bill and in part because some firms underestimated how large the dis-
countssetbytheFCCwouldactuallybe.Astheagencyprocessedtheflood
of applications for discounts, AT&T, MCI, BellSouth, GTE, SBC Com-
munications, and other telecommunications firms organized resistance
directed at both the FCC and Congress. They argued that the agency had
exceeded its congressional mandate by setting deep discounts that would
apply to so many of their institutional customers. Southwestern Bell and
Pacific Bell/Nevada Bell filed a petition on July 3, 1997, requesting that
the commission stay its order for the program pending judicial review.
When the FCC did not respond, the firms pressed the issue with Congress
and filed suit to block the program. In their lawsuit, they took the even-
tually unsuccessful position that the program’s requirements amounted
to a tax on firms, and the FCC lacks the statutory authority to tax. 107
The intention of bill sponsors had been that the telecommunications
firms would absorb the basic cost of the discounts. However, as it became
clear that E-Rate would be a substantial program, firms announced that
they would pass on their costs to rate-paying customers in the form of
an extra charge on telephone bills. This proved to be a shrewd maneuver.
Allies of the firms in Congress, especially among Republicans, labeled the
surcharges a “tax” imposed by the Clinton administration. Some blamed
the surcharges directly on Vice President Gore because he had endorsed
the SREK amendment and the FCC rules. In the mass media, E-Rate
sometimes was called “the Gore tax.”
Framing the new service in tax terms was enormously successful po-
litically. Rush Limbaugh lampooned the administration’snew “tax,” and
in May, the Wall Street Journal ran an editorial slamming the program.
107
The federal courts eventually ruled against the firms in July of 1999, ruling that the
program involved imposition of a “fee” rather than a “tax,” and therefore fell within
the authority of the FCC.

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