FCC and CATO Debate Universal Service to the
Internet and the Schools & Libraries Corp.
|(May 13, 1998) FCC Chief of Staff John Nakahata and CATO Institute
VP David Boaz presented sharply contrasting visions of the government's role in providing
universal service and Internet access for schools and libraries at the Policy 98
Conference in Washington on Tuesday.
The discussion took place at a three day conference
hosted by the Association for Computing Machinery,
which brought together academics, IT professionals, government officials, and elected
representatives to discuss electronic commerce, intellectual property, Y2K conversion,
online learning, universal service, and other policies affecting the computer and Internet
Nakahata and Boaz were members of a panel discussing universal service, the e-rate, and
access to information technology. The other panelists were Tora Bikson (RAND
behavioral scientist), Dave Farber (U. Penn. Telecom Professor), and David Ellis
Boaz and Nakahata presented opposite opinions about how to make information technology
widely available. John Nakahata, who is Chief of Staff at the Federal Communications Commission, wants the government to
subsidize it. Boaz wants the free market to provide it. Nakahata would graft a
vast new program for subsidized information technology at schools and libraries onto the
ancient FCC universal service program for subsidizing voice telephone services in rural
and poor areas.
||I think we want a universal access
information system, and a universal access Internet. John
We'll see technology revolutionizing the
delivery of education. But when that happens, it will be delivered by free
enterprise, not politics. David Boaz, CATO
Section 254 of the Telecommunications Act of 1996 instructs the
FCC to add to its universal service program "telecommunications services" for
"schools and libraries." For decades the FCC and Courts have ruled that
"telecommunications" services are different from "information"
services, and the FCC only has authority over the former. Yet, the FCC and Nakahata
would have the FCC subsidize both. The FCC is currently in the process of
implementing such a program through its Schools and
In contrast, Boaz alluded to the statute as an "unwise
policy", and apparently would have the FCC subsidize neither telecommunications, nor
information services. The statute is "probably unconstitutional," and the
creation of the SLC may be "illegal," said Boaz.
Nakahata explained that universal service started long ago as the notion that people
should have access to a voice phone. It was important in the early days of
telephones and universal service that every town or neighborhood have "a phone in the
corner drugstore in town" that people could use.
However, Nakahata believes that with the development of new information technologies,
the concept of universal service ought to be expanded. The FCC has created the
Schools and Libraies Corporation for this purpose, according to Nakahata, to provide
"community access points" where anyone can go to use the Internet; it is the
modern equivalent of the old drug store telephone.
Chairman William Kennard named John Nakahata to be his Chief of Staff on November 3,
1997. Nakahata had been Acting Deputy Chief of the FCC's Common Carrier Bureau since
September 1997. He came to the Commission in April 1995 to serve as Special Assistant to
then Chairman Reed Hundt. In May 1996 he was named Hundt's Senior Legal Advisor. From
January to September 1997 he was Associate General Counsel, heading the Competition
Division. Before coming to the FCC he was staff director of the Subcommittee on Regulation
and Government Information, Senate Committee on Government Affairs. Senator Joseph
Lieberman (D-CT) chaired the subcommittee. In that position the issues he worked on
included labeling of violent content in video games, liability reform and investigation of
government waste. He also advised Senator Lieberman, who was an original cosponsor of the
Cable Television Consumer Protection Act of 1992, on telecommunications issues. Prior to
his position with Senator Lieberman, Nakahata was with the law firm of Jenner & Block
in Washington, DC. He was also a law clerk for the late Judge John Pratt, U.S. District
Court for the District of Columbia. Nakahata holds a B.A. from Wesleyan University and a
J.D., cum laude, from Harvard Law School. (Source: ACM.)
Nakahata repeatedly stressed this notion of "community access points."
"What Congress put in the law was the idea of 'community access points,'" says
Nakahata. And, "What we are now talking about as 'community access points' is
high speed Internet access." Finally, "the schools and libraries are our
community access points."
But universal service is important for education also,
said Nakahata. Electronic technology captures the imagination of kids, so it is
very important to education. "If you really want to improve education, you
should turn education over to the people at Nintendo."
In contrast, Boaz argued that the value of computers to schools is overrated.
"Schools need to teach children to read and write -- they don't need Internet
access for that -- they'd be better off if we bought McGuffey's Readers for every
school. Internet access won't help children who can't read and calculate. But
the Education Establishment is short-sighted and overly responsive to fads and politics,
so this is the latest demand: how can you expect us to teach kids if we don't have the
||If you really want to improve
education, you should turn education over to the people at Nintendo.
Schools need to teach children to read and
write. David Boaz
Moreover, subsidizing schools is not the answer, said Boaz. It is patronizing.
"Why not just give them money and let them decide how to spend it? It's
awfully paternalistic to say 'we don't trust you to spend your money wisely.'"
Boaz also argued that money is not the problem. "Inner-city schools in poor
neighborhoods already spend lots of money; money isn't their problem." He
cited as an example the District of Columbia schools, which spend 10 to 12 thousand
dollars per student per year. He blamed poor schools on other social policies, such
as those that encourage fatherless children, and the war on drugs.
Boaz also argued that subsidies are unnecessary. Internet access will become
widely available without government intervention:
"The newer the technology, the more rapidly it spreads. It took 46 years for
a quarter of the population to get electricity, 35 a telephone; but only 16 years for a
quarter to get a PC, and only 7 for Internet access. People competing to make money
in a market economy is the most effective system for spreading technology in a useful and
Executive Vice President David Boaz has played a key role at the Cato Institute since
the days when the organization was getting its start in San Francisco. He moved east with
the Institute when Cato took up residence in the nation's capital in 1981 and has
subsequently helped to guide the Institute's development into one of the nation's leading
public policy research organizations. Boaz is the author of Libertarianism: A Primer and
editor of The Libertarian Reader, both published by the Free Press in 1997. He is
an articulate and provocative commentator on a broad range of political and cultural
issues. He has spoken widely throughout the United States and around the world on
baby-boom politics, the failure of drug prohibition, the benefits of educational choice,
the problems of the inner city, the record of the Clinton administration, the costs of
government regulation, and the growth of big government. His articles on these and other
topics appear frequently in major U.S. newspapers and journals--including the Wall
Street Journal, the New York Times, and the Washington Post.
"The education establishment is short-sighted and overly responsive to fads and
politics," Boaz continued. "Congress has already
created a big politicized pork barrel. We're already getting gold-plated requests
for ineligible products and services from schools."
Moreover, according to
Boaz, government subsidies and regulation create economic problems. They
"discourage investment and impede the development and expansion of
technology." Also, they favor certain technologies.
"Subsidies inherently go to existing technologies, not to the next generation of
technology; and the subsidies give the existing technology a financial advantage over new
technologies seeking investment; new technologies tend to be cheaper and better, but
subsidies may encourage development of earlier and less efficient technologies"
Of course, Nakahata conveyed a much rosier view of the benefits of universal service
subsides. It goes to America's world leadership in technology.
"It was in the United States that the computer was invented, and it was this
county that pioneered the Internet. We have led the information revolution around
the world. We will continue to lead the information revolution around the
world. And this universal service is about continuing to lead that revolution to
distribute those benefits widely across our country so that all Americans have
||Congress has already created a big
politicized pork barrel. We're already getting gold-plated requests for ineligible
products and services from schools. David Boaz
We will continue to lead the information
revolution around the world. And this universal service is about continuing to lead
that revolution. John Nakahata