By JON HEALEY

Congressional Quarterly

WASHINGTON -- It seems innocuous enough, but a provision in the Senate's draft telecommunications bill requiring telephone companies to provide discounted service to schools, libraries and small-town hospitals is kicking up some dust.

In a way, it's like mandating a chicken in every pot. No lawmaker or industry lobbyist would argue that schools should be left off the ballyhooed ``information superhighway,'' or that doctors should not be linked to patients in remote rural areas.

Nevertheless, the Senate Commerce Committee approved the provision by only 10-8, and it continues to draw protests from some lawmakers.

Hoping to get the telecommunications bill onto the floor quickly, Commerce Committee Chairman Larry Pressler, R-S.D., is trying to resolve this and other disagreements about the draft bill his panel approved March 23 by a vote of 17-2.

Underlying the debate is a question of social policy: Does the federal government need to push new communications technologies into every community to avoid creating information ``haves'' and ``have-nots''?

Supporters argue that the free market would leave rural and low-income areas behind. Said Sen. Olympia Snowe, R-Maine, who sponsored the amendment with Sen. Jay Rockefeller, D-W.Va., said, ``I happen to think that the information superhighway can't just run through the urban areas of America.''

Opponents say the provision in question could open a Pandora's box of hidden taxes and entitlements.

The Snowe-Rockefeller amendment would require telecommunications carriers -- primarily local and long-distance phone companies -- to provide service to rural non-profit health-care centers, public schools and public libraries.

The level of service would be set by the Federal Communications Commission (FCC) in consultation with a joint board of federal and state regulators, and it would evolve to keep pace with technology.

Sen. Bob Kerrey, D-Neb., who pushed the Commerce Committee to require service to schools, said the free market cannot be trusted to do that because schools are not part of the free market system.

``They're going to be left behind because they simply do not have the (resources) to make the kind of investments that are going to be required,'' Kerrey said.

The free market won't work in lightly populated areas either, Snowe said. ``If companies can't make money in rural areas, they essentially wont serve rural areas.''

Indeed, the Bell phone system did not venture into many rural areas; instead, those networks were built by cooperatives financed by the federal government.

The regional Bell telephone companies have reacted warily to the Snowe-Rockefeller amendment, as has the U.S. Telephone Association (USTA), an influential trade organization for the local phone companies.

``If you narrowly tailor a way to assure that all the schools and classrooms are wired, we think that's a good idea,'' said Larry Clinton, a lobbyist for the USTA.

The amendment is not targeted just at institutions that need help, however; as Bill McCloskey of BellSouth, the regional Bell based in Atlanta, put it, ``Just because you're a hospital doesn't mean you're poor.''

Some industry officials say the Snowe-Rockefeller amendment amounts to a hidden tax on phone customers, particularly businesses, which would have to pay rates high enough to fill the subsidy pool. If the phone companies were required to wire every classroom, the cost could be enormous.

Pressler, who voted against the Snowe-Rockefeller amendment, noted that market forces have already brought advancements to rural South Dakota's telecommunications system.

``I'm torn. I tend to err more and more on the side of the market getting it there,'' he said.

But if Pressler wants to move the bill through the Senate quickly, Rockefeller said, he had better leave the amendment alone.

``It will have to stay in,'' Rockefeller said. ``Otherwise there will be a bunch of us talking for a long, long time.''

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