The Federal-State Joint Board issued its universal service recommendations on November 8, 1996. For now, the Internet appears to have weathered the potential storm, avoiding classification as a traditional telecom service for universal service purposes. In fact, the Joint Board recognized the risks associated with treating the Internet as "telecommunications" under Section 254 of the 1996 Act, and adopted Netscape's suggestion that it addresses school/library subsidies under a portion of the Act that is not telecom-specific.
The main issue discussed in the Recommended Decision is the treatment of Internet access for schools and libraries. According to the Joint Board:
We recommend that the Commission adopt a rule providing that discounts for Internet access, as defined below, shall be available to schools and libraries pursuant to section 254(h)(2)(A). As explained by Netscape, Internet Service Providers (ISPs) and online service providers that also offer Internet access "rely to a large degree on existing telecommunications carriers for the underlying transport facilities that constitute the Internet's backbone, as well as for local loop connections to individual Internet servers and users." Any attempt to disaggregate the network transmission component of Internet access from the information service component could serve to undermine the competitive forces that currently characterize the Internet access market at this time.
This is a good start at resolving some of the consequences of technological convergence between Internet and PSTN communications. Nonetheless, it does not directly wrestle with the larger policy questions involved, including both the long-term regulatory treatment of the Internet and the need for competitive balance between telecom providers and ISPs in terms of universal service support obligations. The Recommended Decision states that ISPs should pay into the USF "to the extent they provide telecommunications," but also refused to determine to what extent, if any, ISP services -- such as dedicated "pipes" liking computer LANs to the Internet -- qualify as telecommunications services.
The Commission's final decision on universal service is expected by May 1997.
