In the Matter of ) ) Federal-State Joint Board on ) CC Docket No. 96-45 Universal Service ) )
AMERITECH'S REPLY COMMENTS
Michael J. Karson
Attorney for Ameritech
Room 4H88
2000 West Ameritech Center Drive
Hoffman Estates, IL. 60196-1025
847-248-6082
May 7, 1996
TABLE OF CONTENTS
Page
I. INTRODUCTION AND GENERAL SUMMARY........................... 2
II. IMPLICIT SUBSIDIES MUST BE ELIMINATED AND
RATES MUST BE REBALANCED TO REFLECT THE
ACTUAL COST OF PROVIDING SERVICE........................... 5
III. ALL TELECOMMUNICATIONS PROVIDERS MUST
CONTRIBUTE TO UNIVERSAL SERVICE, BUT MAY
RECEIVE UNIVERSAL SERVICE SUPPORT ONLY IF
THEY BEAR THE SAME OBLIGATIONS AS THE
INCUMBENT LOCAL EXCHANGE CARRIER........................... 9
IV. THE COMMISSION SHOULD LIMIT UNIVERSAL SERVICE SUPPORT TO THE "CORE"
SERVICES PROPOSED IN THE NPRM................ 13
V. UNIVERSAL SERVICE SUPPORT FOR "CORE" SERVICES
IN HIGH-COST AREAS SHOULD BE BASED ON A
BENCHMARK AFFORDABILITY MECHANISM.......................... 15
VI. UNIVERSAL SERVICE SUPPORT FOR "CORE" SERVICES
FOR LOW-INCOME CUSTOMERS SHOULD BE SPECIFICALLY
TARGETED TO ASSIST ONLY THOSE WHO NEED A SUBSIDY
TO OBTAIN REASONABLE ACCESS TO "CORE" SERVICES.......... 17
VII. EDUCATIONAL PROVIDERS AND LIBRARIES SHOULD BE
ELIGIBLE UNDER SECTION 254 OF THE ACT TO DISCOUNTS
ON THEIR "CORE" SERVICES, BUT NOTHING MORE.............. 18
VIII. THE URBAN/RURAL RATE DIFFERENTIAL FOR RURAL
HEALTH CARE PROVIDERS SHOULD BE DETERMINED
IN REFERENCE TO THE CLOSEST URBAN AREA.................. 20
IX. UNIVERSAL SERVICE SUPPORT SHOULD BE ADMINISTERED
ON A COMPETITIVELY NEUTRAL BASIS........................ 21
X. CONCLUSION.............................................. 22
Before the
FEDERAL COMMUNICATIONS COMMISSION
Washington, D.C. 20554
In the Matter of ) ) Federal-State Joint Board on ) CC Docket No. 96-45 Universal Service ) )
AMERITECH'S REPLY COMMENTS
Ameritech respectfully offers the following reply to the initial comments filed on the Notice of Proposed Rulemaking ("NPRM") released in this docket on March 8, 1996. In the NPRM, the Commission solicits views on a variety of proposals to implement the universal service directives of the Telecommunications Act of 1996 (sometimes referred to hereinafter as the "Act").[1] The Commission also established a Federal-State Joint Board to make recommendations with respect to the issues raised in the NPRM.
I. INTRODUCTION AND GENERAL SUMMARY
Although the 200+ parties filing initial comments on the NPRM ask the Commission to adopt many different (and very often conflicting) rules in this docket, there does seem to be at least one point on which there is general consensus: the Telecommunications Act of 1996 requires the Commission to radically change its traditional approach to promoting universal service. This requires, according to some filing comments, that the Commission greatly expand the type of telecommunications services which receive universal service support, including, for example, high-capacity digital services. Others would make universal service funds available to support non-telecommunications services, such as computers or inside wire. Those carriers which have historically provided most of the financial support for universal service ask the Commission to adopt rules to ensure that all telecommunications service providers carry their fair share of the burden and contribute to universal service support on a competitively neutral basis as required by the Act. Other carriers currently benefiting from the implicit subsidies, designed and promoted in the name of universal service, ask the Commission to continue those subsidies (or even expand them), as long as it is not at their expense. Ameritech believes the best way for the Commission to sort out the conflicting views in the voluminous comments filed in this docket is to focus on the plain language of the Act and adopt rules which carry out the will of Congress as reflected in that language -- no more and no less.
As it discharges that Congressional mandate, the Commission must embrace an approach to universal service that is sustainable over the long-term in a competitive telecommunications environment. After all, the goal of a competitive marketplace for telecommunications is the cornerstone of the Telecommunications Act of 1996. Rules to promote universal service will constitute a government intervention that, by definition, will have certain economic effects on this marketplace.[2] Likewise, the dynamics of a competitive telecommunications marketplace invariably will affect the Commission's efforts to promote universal service. If that interplay is not properly balanced, it will be exceedingly difficult to sustain either robust competition or universal service.
In order for universal service to be sustainable in a competitive telecommunications marketplace, two things -- at a minimum -- must occur. First, implicit subsidies must be eliminated and rates (especially for local exchange service) must be rebalanced to reflect the actual cost of providing service. If this rebalancing makes "core" services unaffordable for some customers, then those customers should be eligible for targeted, explicit subsidies which are supported by all telecommunications service providers. That will help ensure universal service. The Joint Board, the Commission and the industry simply cannot afford to miss the opportunity this docket presents to address the serious issues associated with the current system of implicit subsidies which historically have supported universal service but are no longer sustainable.
There are serious universal service implications also associated with the implicit subsidies reflected in the residence/business rate differential. The standards in the Act for wholesale/resale pricing and the rules for network elements may create arbitrage opportunities which undermine the sustainability of these kinds of implicit subsidies. If a carrier can purchase a business loop at a substantial discount to a business line, then the ability to sustain differential business line rates is in doubt.[3] In addition, many lines are priced below cost, but nevertheless may be required for resale. Stimulating demand for services priced below cost will subsidize competitors, but will not promote universal service. The universal service goals in the Act can be achieved only by providing the tools for all carriers to compete fairly, including the rational pricing of services. Local exchange carriers simply must have the pricing flexibility to rebalance rates to eliminate these implicit subsidies and price their services to reflect the underlying costs.
Second, all carriers receiving universal service support for the benefit of their customers must bear the same obligations for which the support was intended. Given that many of those obligations currently apply only to incumbent local exchange carriers, this means that new entrants must bear the same obligations as the incumbent providers in order to be eligible for universal service support. Thus, for example, if the new entrant does not have carrier of last resort obligations,[4] or limits on exiting the market in high-cost areas, then it should not be eligible for universal service support. Unless there is a proper matching between obligations and compensation for such obligations, and thereby symmetry in effect among telecommunications providers in the marketplace, competition between the incumbent and new carrier cannot be sustained over the long term and that ultimately will undermine the Commission's universal service goals and pro-competition policies.
II. IMPLICIT SUBSIDIES MUST BE ELIMINATED AND
RATES MUST BE REBALANCED TO REFLECT
THE ACTUAL COST OF PROVIDING SERVICE.
Many agreed with Ameritech[[Otilde]]s conclusion[5] that implicit subsidies must be eliminated and rates must be rebalanced to reflect the actual cost of providing service.[6] Some, for example, state that the current system of support flows must be replaced by explicit and targeted subsidy systems at the state and federal levels.[7] Others note that subsidies are inefficient, unfair and can actually harm competition.[8] One party is more blunt: Òa universal service policy built on the practice of overcharging some customers to help others will quickly collapse ... ."[9]
Of the few parties who filed contrary views, most do not really take issue with the need to eliminate implicit subsidies; instead, they simply argue that implicit subsidies do not exist.[10] These parties are in denial. The existence of substantial implicit subsidies has been well documented; in fact, the total amount of the implicit subsidy problem has been estimated to range from $3.9[11] billion to $20 billion.[12] This problem can be ignored no longer.
Dial equipment minutes ("DEM") weighting constitutes one of the more egregious examples of this implicit subsidy problem and one that must be corrected immediately by eliminating DEM weighting altogether. Many commenters agreed with Ameritech on this point.[13] Those that continue to support DEM weighting[14] do not dispute that it constitutes an implicit subsidy. Instead, they argue that DEM weighting should be continued because it has positive financial impacts on their business operations and helps keep their rates low. This is hardly an adequate reason for maintaining DEM weighting, particularly given the fact that DEM weighting generates the very kind of implicit subsidy disfavored in the Act.[15] Competition requires that rates be rebalanced to properly reflect underlying costs. If that puts the price of "core" services beyond the financial reach of some customers, those customer should receive targeted, explicit support. But continuation of the implicit subsidy occasioned by DEM weighting is not tenable in a competitive environment and is contrary to Congress' intent that any subsidies be explicit.
In addition, the Commission must eliminate the implicit subsidies associated with those portions of the carrier common line ("CCL") charge which recoup (a) long-term support and (b) interstate loop costs in excess of the subscriber line charge ("SLC").[16] Those implicit subsidies do not comport with economic efficiency or the specific mandates of the Act. Many parties filing initial comments agreed.[17]
However, some parties argue that the CCL charge does not represent a subsidy.[18] Others say that not all of the CCL charge represents a subsidy and if eliminated in its entirety, then IXCs would get "free" use of the loop.[19] Some suggest that an increase in the SLC charge might have a negative impact on subscribership.[20] Some just want to defer the entire problem altogether.[21]
Yet, the CCL charge is a mechanism that transfers costs associated with the local loop from the local ratepayer to the IXCs in order to keep local rates low. For that reason, the CCL charge constitutes a subsidy, and an implicit one at that. The Act says that subsidies, if any, should be explicit. Therefore, carriers should have the option to increase SLCs for appropriate classes of service[22] and thereby encourage end users to directly bear the full costs of the local loop which they cause the local exchange carrier to incur.[23] There was no negative impact on subscribership when SLCs were first introduced and there will not necessarily be any such negative impact if SLCs are increased, particularly if accompanied by a corresponding decrease in long distance rates. To the extent an increase in SLCs puts the price of "core" services beyond the financial reach of some customers, they should receive targeted, explicit support.
III. ALL TELECOMMUNICATION PROVIDERS MUST CONTRIBUTE TO UNIVERSAL SERVICE, BUT MAY RECEIVE UNIVERSAL SERVICE SUPPORT ONLY IF THEY BEAR THE SAME OBLIGATIONS AS THE INCUMBENT LOCAL EXCHANGE CARRIER.
In its initial comments, Ameritech said that universal service support (a) should be funded, if not by general tax revenues, then by all telecommunications service providers, (b) should be based on a uniform percentage surcharge applied to net retail revenues with a pass-through to customers permitted in order to maintain competitive neutrality and (c) should be administered by a neutral third party that is not part of the government.[24]
Numerous parties agreed that all providers of telecommunications services should support universal service.[25] The few taking a different view obviously are trying to carve out an exception that would serve their commercial self-interest without regard for the public interest or the Act. For example, MFS asserts that only common carriers with more than 1% market share should be required to support universal service.[26] Others say that CMRS providers should be exempt at this time.[27] However, one of the principles underlying the Act specifically provides that "[a]ll providers of telecommunications services should make an equitable and nondiscriminatory contribution" to support universal service.[28] More specifically, the Act provides that "[e]very telecommunications carrier that provides interstate telecommunications services shall contribute, on an equitable and nondiscriminatory basis, to [universal service support]."[29] Likewise, on the intrastate side, the Act specifically provides that "[e]very telecommunications carrier that provides intrastate telecommunications services shall contribute, on an equitable and nondiscriminatory basis ... [to universal service support]."[30] In other words, the Act specifically provides that all telecommunications service providers must contribute to universal service support.[31] That should be the requirement in the Commission's rule.
Ameritech believes that universal service support should be based on a uniform percentage surcharge applied to net retail revenues because, next to direct support through general tax revenues, that represents the broadest, most nondiscriminatory base. Many agree.[32] Support based on gross revenue[33] would result in multiple assessment where, for example, access charge revenue is assessed when received by the local exchange carrier and then assessed again when recovered by the IXC from the charge billed to the end user. That would not be equitable. An assessment based on the number of presubscribed lines[34] would be discriminatory and not competitively neutral because it would not reach certain carriers at all, such as resellers. An assessment based on minutes of use[35] would be discriminatory because not all minutes are priced on the same basis.
As for disbursing universal service support, Ameritech said in its initial comments that all carriers that bear the same regulatory obligations, for which the support is compensation, should be eligible.[36] The first part of this position (i.e. "all carriers") was supported by several other parties filing comments.[37] The second part of Ameritech's position (i.e. all carriers "that bear the same regulatory obligations") also received support,[38] although many commenting parties did not focus specifically on this caveat thereby, perhaps, leaving some element of doubt.
There can be no doubt on this vitally important point. Portability of support among providers, as espoused by some parties, would permit them to receive compensation without fulfilling the obligations for which the support was intended. This is a problem particularly for support intended for high-cost areas, where incumbent providers still have the obligation to serve the entire high-cost area, together with exit barriers. Unless all carriers receiving support bear the same obligations, there will be asymmetry in the effect of regulation and a governmentally created competitive advantage to the providers with lesser obligations. Such asymmetry between the incumbent carrier and new carriers cannot be sustained over the long term and that ultimately will undermine the Commission's universal service goals and pro-competition policies.
Besides being good public policy, regulatory symmetry as a precondition for eligibility to universal service funds is expressly required, in large measure, by new Section 214(e).[39] That section imposes various service related obligations as preconditions for receiving universal service support, including standard common carrier obligations.[40] Thus, if the Commission wants to adopt universal service rules which are in conformance with the Act and sustainable in the future, the Commission should require regulatory symmetry as a precondition to receiving universal service support.
IV. THE COMMISSION SHOULD LIMIT UNIVERSAL SERVICE
SUPPORT TO THE "CORE" SERVICES PROPOSED IN THE NPRM.
Ameritech agrees with the Commission's tentative conclusion that universal service support should be provided to the following set of "core" services: single party, voice-grade basic telephone service, touch-tone, access to emergency service (911 and E-911) and access to operator services. Many others agree, as well.[41]
A few parties say that the Commission's proposal does not go far enough. Some of these parties argue that the Commission should include not simply "core" services, but also usage (including flat rate pricing)[42] with expanded local exchange areas. Some say that more advanced telecommunications services, including DS-1 and ISDN service,[43] and non-telecommunications services, such as computers and inside wire, should receive universal service support. Others say that various miscellaneous services should be supported, including toll restrictions and toll free Internet access. A few parties, incredibly enough, go so far as to say that businesses should be eligible for universal service support.[44]
Ameritech believes that the Commission should rely on the language of the Act and adopt the definition of "core" services it proposed in the NPRM. Those are the telecommunications services which meet the criteria set out in the Act.[45]
Moreover, only "telecommunications services" are eligible for universal service support.[46] That term is defined in the Act by reference to the term "telecommunications" which means "the transmission" of end-user information.[47] Equipment, such as computers and inside wire, and information services do not fall within this definition. The "core" services proposed in the NPRM, which will receive universal service support, will provide access to a variety of advanced services, including access to the Internet. The Commission should rely on the marketplace to promote the availability of advanced and information services, and to provide telecommunications equipment.[48]
As for businesses being made eligible for universal service support, that would be contrary to the language of the Act which speaks of universal service support in the context of residential subscribers.[49] Businesses are for-profit entities. As such, they must regard the cost of telecommunications as a cost of doing business. That particular cost may be relatively higher in high-cost, rural areas than it is in lower-cost, urban areas. Other costs of doing business, e.g. taxes, may be lower in rural areas. But the idea that a rural ski resort should be eligible for a telephone subsidy is completely contrary to the public interest reasons which underlie the universal service provisions of the Act. Indeed, business rates historically have supported residential rates and therefore must be rebalanced as part of the larger effort to eliminate implicit subsidies which are not favored in the Act. Subsidizing business rates would be a move in the wrong direction.
V. UNIVERSAL SERVICE SUPPORT FOR "CORE" SERVICES
IN HIGH COST AREAS SHOULD BE BASED ON A
BENCHMARK AFFORDABILITY MECHANISM.
In its initial comments, Ameritech argued that the Commission should adopt a minimum rate -- an affordability benchmark rate -- which costs must exceed in order for a provider to be eligible for high-cost assistance.[50] Under this approach, an eligible local exchange carrier[51] would get universal service support, when its costs for "core" services exceed the affordability benchmark rate, and the amount of the support would be the difference between: (a) the benchmark rate and the carrier's actual cost for "core" services, or (b) its actual rate and its actual cost for "core" service, whichever is less. This basic approach received considerable support from others filing comments, although many parties offered their own particular nuance on how the benchmark rate should be established.[52]
Various other parties continue to advocate a proxy model as the preferred mechanism for providing universal service support in high-cost areas.[53] Some, for example, say that a model will replicate economic costs but will not be expensive or time-consuming to produce. It is on the basis of that hope and promise that Ameritech believes the public record may ultimately support the use of a benchmark costing model for establishing those economic costs -- but that factual showing has not yet been made. Most other parties filing comments agree.[54] In the meantime, Ameritech believes that it is not unreasonable to require a carrier asking for a subsidy to justify that request by producing a cost study that can receive public scrutiny, even though that may require the carrier to incur some expense. If the affordability benchmark rate Ameritech advocates is set sufficiently high enough, support is based on actual wire center costs (the basis on which costs are incurred), and the requesting carrier's administrative costs are capped at the national or statewide average, then no subsidy will be provided for the carrier's revenue shortfall which is attributable to an unreasonably low rate for "core" services, and no subsidy will be provided when "core" rates are compensatory. That result, in Ameritech's view, represents a reasonable balance until the factual merits of a proxy model are scrutinized by the Commission and proven on the public record.
VI. UNIVERSAL SERVICE SUPPORT FOR "CORE" SERVICES
FOR LOW-INCOME CUSTOMERS SHOULD BE SPECIFICALLY
TARGETED TO ASSIST ONLY THOSE WHO NEED A SUBSIDY
TO OBTAIN REASONABLE ACCESS TO "CORE" SERVICES.
Ameritech believes that universal service subsidies for "core" services should be specifically targeted for the benefit of[55]only those customers who in fact need assistance to obtain those "core" services. This way, assistance for low income customers can work in tandem with the affordability benchmark rate for high-cost areas discussed earlier; the higher benchmark rate provides an incentive for carriers to be efficient, while targeted assistance for those truly in need helps to ensure that universal "core" service is reasonably available to low income customers. Thus, the Commission should continue the current Link Up and Lifeline assistance programs, and should continue to study why people eligible for those programs do not subscribe so that it can properly evaluate its efforts to promote subscribership. But, the most reasonable action the Commission can take now to ensure that subscribers have reasonable access to "core" services is to ensure that assistance is specifically targeted to those in need. Numerous parties agree.[56]
VII. EDUCATIONAL PROVIDERS AND LIBRARIES SHOULD BE
ELIGIBLE UNDER SECTION 254 OF THE ACT TO DISCOUNTS
ON THEIR "CORE" SERVICES, BUT NOTHING MORE.
In its initial comments, Ameritech recommended that market demand, rather than regulation, should drive service parameters for schools and libraries. Ameritech outlined a bona fide request process that could be used for this purpose and suggested that a discount could be provided to satisfy the requirements of Section 254(h)(1)(B).[57] Many other parties agreed with this basic approach.
Some parties argue that the Commission should adopt rules which include a wide variety of additional, more advanced services in the definition of "core" services which would receive universal service support if provided to schools and libraries.[58] Some others argue that the Commission should adopt rules which specify which telecommunications services must be provided at a discount.[59] Still others argue that the Commission should adopt rules for the provision of universal service support for non-telecommunications services, such as computers and inside wire, for schools and libraries.[60] None of this is necessary.
Instead of adopting a one-size-fits-all set of rules, the Commission simply should establish the bona fide request process discussed in Ameritech's initial comments and let customers and providers decide in the marketplace which telecommunications services should be provided to a particular school or library for educational purposes. This way, each eligible educational institution can gain reasonable access to the mix of telecommunications services which is best suited to its individual needs and budget.[61]
What is not needed at this time are additional federal mandates with respect to which specific services and technologies must be deployed in schools and libraries across the nation. In fact, bold initiatives are already underway in various states to bring telecommunications services and technology into educational institutions in the various states -- including Ameritech's five state midwest region.[62] In addition, Ameritech recently announced a partnership with the Library of Congress to establish a $2 million grant program through which selected libraries across the United States can digitize their unique American collections for incorporation into the Library of Congress' National Digital Library program.[63] Programs of this type have been established without federal prodding. The Commission should at least give these kinds of initiatives a chance to succeed before considering any additional regulatory rules in this area. If additional measures prove necessary, particularly with respect to investment in telecommunications infrastructure, the Commission should consider the matter as part of its mandate under Section 706 of the Act to promote the deployment of advanced telecommunications capabilities to all Americans, including in particular elementary and secondary schools and classrooms.
VIII. THE URBAN/RURAL RATE DIFFERENTIAL FOR RURAL
HEALTH CARE PROVIDERS SHOULD BE DETERMINED
IN REFERENCE TO THE CLOSEST URBAN AREA.
There was not a lot of discussion in the initial comments about the provisions in the Act with respect to telecommunications services for health care providers. One issue that did receive some attention has to do with how to identify the urban rates with which the rates for rural health care providers must be comparable. Some suggest that the rates should be a state-wide average of all urban rates. Others say that the Commission should use an average of the rates charged for the same service in the two urban areas closest to the rural health care provider's location. Ameritech continues to believe that the urban/rural rate differential for rural health care providers should be determined by comparing the rural rates to the rates charged in the closest urban area as defined by the U.S. Department of Commerce (Bureau of the Census).
IX. UNIVERSAL SERVICE SUPPORT SHOULD BE ADMINISTERED
ON A COMPETITIVELY NEUTRAL BASIS.
Ameritech believes that the universal service fund should be administered by a private, neutral party. Several parties agreed.[64]
The contrary arguments of others are not persuasive. For example, those that opt for government administration[65] ignore the preference in the Act for private, market-based alternatives to government involvement. And those who presume that NECA should continue to administer the universal service fund simply because it has done so historically[66] ignore the legitimate concern of others who say that small company advocacy also has been a part of NECA's history and, therefore, NECA cannot reasonably be regarded as a neutral third party. Ameritech thinks the best way for the Commission to resolve this issue is to put the entire project out for competitive bid. That way, the Commission can select a cost-efficient administrator which demonstrates in the bidding process that it not only is proficient in accounting and financial matters, but truly is a neutral third party as well.
X. CONCLUSION
The Telecommunications Act of 1996 requires the Commission to take a radically new approach to promoting universal service, one that is sustainable in the nation's increasingly competitive telecommunications marketplace. Under this new approach, implicit subsidies which historically have been used to fund universal service must be eliminated and rates must be rebalanced to reflect the underlying costs of providing service. Then, the Commission can provide universal service support for "core" services and direct that support to those customers who actually need assistance to obtain those "core" services. That support must be funded by all service providers but the only providers that should be eligible to receive support should be those carriers that bear the same regulatory obligations for which the support was intended. If it crafts these rules so they work in harmony with the competitive marketplace, the Commission can ensure that low-income residential customers, schools, libraries and rural health care providers have reasonable access not only to "core" services, but advanced telecommunications services as well.
Respectfully submitted,
Michael J. Karson Attorney for Ameritech
Room 4H88
2000 West Ameritech Center Drive
Hoffman Estates, IL. 60196-1025
847-248-6082
May 7, 1996
Attachment A
AMERITECH'S INVESTMENT IN
SOLUTIONS FOR EDUCATION
Ameritech's role in education is to improve the effectiveness, efficiency and equity of teaching and learning by providing powerful information linkages among schools and their supporting environments.
To this end, Ameritech is making significant investments in infrastructure, classroom solutions and other educational contributions. The attached paper briefly describes some of these programs.
4/96
1.) Infrastructure Solutions
Ameritech has been the leader among telecommunications companies in investing in educational infrastructure solutions for schools in its territory. Though contributions to educational programs have always been a priority with the company, recent activities have stressed the important role that communications providers must take in upgrading the electronic capabilities of our educational institutions. While pursuing regulatory relief in the five state jurisdictions it serves, Ameritech has made commitments for broadband transport capabilities, financial resources, and turnkey classroom solutions. More importantly, most of its efforts are aimed at the replicability and scalability of the solutions it offers to schools throughout its operating territory.
In Indiana, Ameritech is developing and connecting networks of video telecommunities capable of curriculum sharing, electronic field trips, collaborative learning and school-to-business involvement. Ameritech has committed to invest up to $120 million over the six year period from 1994 to 2000 for broadband infrastructure support. This investment will "provide digital switching and transport facilities including, where appropriate, fiber optic facilities, to every interested school, hospital and major government center in the company's service area on a non-discriminatory basis."
In addition to the infrastructure commitment that could reach nearly 2000 schools in Indiana, Ameritech is donating $30 million over that same period to a non-profit organization, the Corporation for Educational Communications (CEC), for services and hardware for video distance learning. The CEC grants will provide classroom workstations and large screen monitors to approximately 550 middle schools, high schools and universities throughout the state. All public, private and parochial schools serving grades 7 through 12, located in the Ameritech Indiana serving areas, and accredited by the State Department of Education are eligible for grants. Not only will CEC provide the extensive VDL hardware, but it is financially supporting the schools through usage and wiring grants and the hiring of regional educational planners and trainers for eligible education service centers. Also, significant resources are invested in the development of cultural and educational interactive content for the video network to support the stated needs of the education community. Already students in Indiana are taking weekly educational visits to the Indianapolis Zoo, the Children's Museum, the Indianapolis Museum of Art; visiting backstage at the "Phantom of the Opera"; joining state legislators in session; or visiting with businesses and industry located across the state. In its first year and a half of operation, 70 different schools/organizations have installed VDL service that can connect to almost 150 educational and cultural institutions within Indiana. Demand for service continues to grow quickly due to the CEC financial support and push for collaborative planning among different school districts.
In Ohio, a similar commitment is underway. By end of year 1999, Ameritech has committed to provide the availability of broadband services to all state chartered high schools, including vocational technical schools, colleges and universities - - over 550 locations in all. Additional commitments to libraries and government locations extend the capability to nearly 1100 sites in Ohio.
Additionally, Ameritech has committed $18 million over six years to fund grants to state-chartered primary and secondary schools for use in applying fully interactive distance learning communications technology to education. Through agreements with the State Superintendent, the deployment of this funding will emulate, to the extent possible, most of the Indiana plans detailed above, including the hardware, wiring, planning, training and administration of the program. Planning for that effort is just underway with the Ohio DOE and the first grants have recently been awarded. Further, $2.2 million will be used to establish fourteen community computer centers in low-income neighborhoods within Ohio's service areas. The centers will bring together hardware, software, network access and training in a tutorial and workshop atmosphere.
In Wisconsin, Ameritech will bring broadband transmission facilities (generally fiber optic cables) to the doorstep of every secondary school (middle and high schools), every college and university and every technical college in Ameritech areas by the end of 1998. With additional commitments to libraries and government centers, some 700 locations will be wired for broadband access. Ameritech also has committed to provide the same facilities for elementary schools on an "as needed" basis. In addition to extending the broadband network, Ameritech also has pledged $13.5 million in contributions over five to seven years to the Wisconsin Advanced Telecommunications Foundation. The purpose of the Foundation is to fund applications of advanced communications technology. The board of the Foundation has recently sent the first application forms to potential grant recipients.
In Michigan, Ameritech has made a $10.6 million grant to provide distance learning systems for Merit Network of Ann Arbor, Michigan Community Colleges, Wayne County, Western Michigan University, Ferris University, Grand Valley University, Upper Great Lakes Educational Technologies, Northeast Exchange and St. Clair College. Monies will be used for Internet connections, compressed interactive video, and development of data and video networks.
An additional $12.5 million matching fund grant for Michigan will provide customer premise equipment, servers, workstations and library automation center support. In a program known as Education Avenue, Ameritech has offered to extend dedicated Internet access to the first 500 schools who choose to use this service. Nearly 200 have signed up so far. Ameritech will provide equipment and routers, connections to an Internet provider, and will heavily discount the use of the service in its first year and a half of operation. A grant to Michigan State University will develop curriculum lesson plans utilizing Internet resources.
These efforts continue to distinguish Ameritech as a proactive leader in contributing to educational reform. Ameritech believes that infrastructure and technology can be meaningful steps for classrooms, but that effectiveness of the solutions must involve much more than these elements.
In pushing for more holistic solutions, Ameritech understands that ownership and planning by educators, curriculum content geared toward local classroom needs, and value-added experiences
and activities are critical to the effectiveness of technology implementation. These agendas will dominate their continued participation with schools, educators and students.
2.) Classroom Solutions
Getting these educational infrastructure commitments and early systems into place represents significant progress. But Ameritech also believes that the content on these information and video networks and their tested applications in real-world settings will distinguish whether this technology can be an effective tool for student learning and classroom reform. Among other efforts, the Ameritech Foundation funded up to $1 million in 1995 and 1996 for unique and innovative programs advancing the use of communications technologies between arts and cultural institutions and education. In order to foster collaboration between arts and cultural institutions and education, grants were made in 1995 to eight midwestern organizations to develop Internet and interactive video applications for use in our schools.
The Ameritech Foundation is making a $2 million gift to establish the Library of Congress/Ameritech National Digital Library Competition. The goal of the Library of Congress' NDL program is to make freely available over the Internet approximately five million items by 2000, in collaboration with other institutions. Ameritech's contribution will help the Library meet that goal by being the first to provide funds to libraries and other institutions to aid them in the critical, yet expensive, task of digitizing their unique collections, so they can be available to anyone with World Wide Web access. The program places rare collections of Americana on-line and available to millions, where previously they were available only by visiting the Library of Congress in Washington.
Another way we're helping teachers learn how to incorporate information technology in the classroom is by funding a new book, Teachers' Guide to Cyberspace -A Handbook for Creating the New Classroom in the Information Age, which was developed through our grant to IMPACT II, a nationwide group that promotes teaching innovations.
The classroom technology available to our schools today takes on many forms - computers, modems, voice mail, Internet access and interactive video, to name but a few. Reaching into our communities, Ameritech is working practical applications designed to create effective learning models in a variety of elementary, secondary and post-secondary settings. In each of the five states in our region, Ameritech has invested millions of dollars in a number of significant pilot projects and programs over the past three years that demonstrate our commitment to educational excellence. A brief description of many of these projects follows this document.
3.) Additional Contributions to Higher Education
Higher education enriches the lives of hundreds of thousands of students each year and Ameritech provides resources to broaden its availability and extend its scope and quality. We support colleges and universities in activities such as research, innovative applications of communications technologies, and programs to help attract and retain qualified teachers and students. Over the past five years, we've committed nearly $40 million in contributions and matching gifts to colleges and universities.
For example, we provide opportunities for students who would otherwise be unable to afford college. At the University of Illinois-Chicago, we fund 40 inner-city scholarships for students who participate in a mentoring program called the West Side Club. Through the club, undergraduate business students serve as tutors for junior high school students. We also support 20 scholarships for undergraduates in the Minority Engineering program and two research fellowships for women, minorities and persons with disabilities who are working toward doctorates in engineering. We provide support to the National Action Council for Minorities in Engineering Corporate Scholars Program, which provides funding and interaction between employees and engineering students. Students in the program gain academic and career counseling, summer internships and leadership development through mentoring.
We encourage excellence in the use of communications technology to enhance higher education, in collaboration with colleges throughout our five-state region. Each year, for example, the Ameritech Foundation offers a $25,000 and a $15,000 award in each of Ameritech's five states to two independent colleges/universities which can best demonstrate how their technology projects might be enhanced with these funds.
In another effort, previously unrestricted annual gifts given to independent colleges and universities with membership in the Midwest partnership of Independent Colleges were refocused in 1995 into "technology grants" to stimulate thoughtful and creative uses of communications technologies in higher education.
A $1.2 million grant to Purdue University from the Ameritech Foundation has brought together the schools of education, management and engineering and is being utilized to connect Purdue campuses for advanced doctoral programs. Students can reach classmates and teachers outside traditional hours through an electronic network. Ameritech provides funding and training in business planning and information systems technology.
Ameritech Chairs promote basic and applied research at several leading universities in the Midwest. At Northwestern University, a senior scientist-engineer in the electrical engineering/computer science department researches new information technologies through an Ameritech endowment. At Case Western Reserve University and Indiana University, the Ameritech Chairs in Regional Economics enable faculty members to conduct basic research and implement ideas to improve the economy of the Great Lakes region. Ameritech Chairs also are established at the University of Chicago and Michigan State University to address public policy.
RECENT AMERITECH PILOT PROJECTS & PROGRAMS
ILLINOIS
An Ameritech interactive video pilot project ($237,000) connects the Illinois Math and Science Academy in Aurora, Illinois, the nation's only three-year public, residential high school, and Walter H. Dyett Middle School, a Chicago public school utilizing multi-disciplinary studies and team teaching. The network is used for faculty partnering to develop customized curriculum at Dyett and to permit Dyett students to take customized courses from selected teachers at the Academy. A goal of the program is to enable the Academy to expand its recruiting outreach into the Chicago public schools.
EdTech: A $500,000 Ameritech-Governor's EdTech grant was awarded to the College of Education at Western Illinois University to develop a hands-on curriculum model to train current and future teachers in the use of advanced communications, including two-way video distance learning (VDL). Western's main campus is connected to several public schools in the Springfield area.
SkillLink: A $300,000 Ameritech interactive video pilot project connects Lewis & Clark Community College in southwestern Illinois to two nearby manufacturers, Shell Oil and the Olin Corporation, permitting Shell and Olin employees to take college courses or customized worker training classes without leaving the work site.
Over $550,000 in grants have been made to 22 Illinois urban and suburban schools and 32 teachers to incorporate advanced technology into their curriculum. These include computer and modem connections to access on-line educational programs.
TeachLink: A $323,000 two-way video pilot project links Waubonsee and Elgin Community Colleges, McHenry County College and Aurora University in a network to share nearly 100 classes that could not be sustained by enrollment at any one site.
Rural Program: A $300,000 grant made possible an interactive video project in central Illinois that connects Illinois Central College in Peoria with two high schools (Peoria Notre Dame and Delavan, a rural high school about 40 miles from Peoria). Selected high school students take college courses and the two high schools share classes.
INDIANA
Buddy System: In partnership with the Indiana state legislature, Lilly Endowment, the Ameritech Foundation and Ameritech Indiana, the Buddy System provides computers, modems and printers to more than 6,000 fourth, fifth and sixth graders throughout Indiana at over 50 schools. Students can use computers to access on-line services, communicate with each other and with their teachers. A 1994 evaluation showed that 90 percent of educators agreed that student work was more creative and of higher quality because of the computers, and 40 percent of the project's parents increased contact with teachers about their children's education. Since the project was initiated in 1989, nearly 20,000 youngsters have received the benefits of this nationally-acclaimed program.
TeleParent: Voice mail is provided to Marion County (Indianapolis) schools through a partnership with Ameritech, local television station WRTV6, Parent Power, an advocacy group that promotes parental involvement in schools, and other community organizations. The program, called TeleParent, allows daily communication between home and school. Currently, 82 schools participate, involving 4,300 teachers and the parents of 51,000 students.
Indianapolis Public Schools: Indianapolis Public School teachers and students are using a 21st century communications tool in today's classrooms - an interactive distance learning network. The system, designed by Ameritech, uses more than 600 miles of fiber optics to provide interactive distance learning, video-conferencing and television programming to more than 93 locations. The locations include grade schools, junior high schools, high schools and selected administrative buildings in the IPS system.
Ameritech Exploration Network: A contribution of $282,000 from Ameritech, in concert with the Opportunity Indiana program, allows the Indianapolis Zoo to reach as many students in one week as it used to in one year. A two-way interactive fiber optic network traversing the zoo allows students to take an "electronic field trip" and go behind the scenes to see how the zoo operates.
Project Enable: Project Enable is a program funded by the Ameritech Foundation and administered by Ameritech's Indianapolis Partners in Education Team. The program provides take-home computers for both teachers and students at Lew Wallace Elementary School in Indianapolis and exposes students to interactive simulations and other applications. Teachers use the computers to manage their day-to-day, administrative duties, and students can check out portable personal computers through the library lending program.
Buddy Up With Education: Ameritech personnel were key in shaping and passing legislation to establish the Buddy Up With Education computer recycling program with the Indiana General Assembly. The intent of Buddy Up is to provide the process - and incentive - for used PC's to be easily and cost effectively recycled into Indiana's classrooms. Units meeting the minimum criteria for Buddy Up will provide to the donor a $125 per unit state tax credit.
MICHIGAN
Wayne State University Model Middle School: A $400,000 donation to develop a high-tech computer/fiber optic infrastructure, demonstrates the capability of modern technology to enhance the learning process and broaden the educational options for K-12 students.
Kalamazoo Center for Medical Studies (MSU Medical School branch): A $768,000 donation to develop a computer/fiber optic infrastructure enables on-site medical student training to be significantly enhanced. The network also provides improved medical diagnosis and treatment capabilities for patients.
Focus: Hope Glazer Elementary School (Detroit): This high-tech computer infrastructure enables inner-city elementary school students to utilize the latest in educational technology and software to enhance their learning environment and learn the skills necessary to succeed in the Information Age.
Plymouth-Canton Schools: A fiber optic, interactive distance learning network, a computerized library retrieval system, and other educational technologies are being used to provide K-12 students with both the tools of the Information Age as well as the content.
Wayne State University: The African-American Archives Project creates a multimedia database of materials on the history of education among African Americans.
Northwestern Michigan College: Ameritech donated $355,000 to create a fiber-optic interactive distance learning network to a consortium of colleges and schools headed by NMC covering a five-county area.
Central Michigan University: Ameritech donated $500,000 to "Education Central" to train over 7, 000 Michigan teachers how to use telecommunications technology in the classroom and how to utilize the Internet in their classrooms.
The Learning Village: Ameritech donated $525,000 (in Michigan) to create an electronic network of 10 Michigan schools and 40 schools from Ohio, Wisconsin, Illinois, and Indiana which enables instantaneous access by students and teachers to a vast array of information.
Jackson Community College: Ameritech donated $400,000 to create an interactive distance learning video network which enables worker retaining at the job site.
Lakeview Schools: (Battle Creek) Ameritech created a high-tech LAN with PC's, fiber cabling, etc. in a model school which allows instantaneous access to information from any classroom.
Detroit Public Schools: Ameritech donated $300,000 to develop an interactive distance learning network to connect various high schools. This grant funds the network connecting the schools and training for the teachers as well as provides advanced classes for the students.
MICHIGAN (continued)
Henry Ford Museum/Greenfield Village; U of M-D; Melvindale Schools: Ameritech donated $652,000 to deploy a distance learning network linking Melvindale schools (with other area schools to be added later) to the Museum/Village and U of M-D to permit virtual field trips to be integrated into the everyday curriculum.
Central Michigan University Internet Training for Teachers: Ameritech Foundation-donated $246,000 to establishe an Internet training center for Detroit-area teachers in Troy. A This is a Detroit-based extension of CMU's Education Central program which is available to any K-12 teacher.
Michigan State University K-12 Internet Curriculum Development Grant (Education Avenue): This $500,000 grant enables MSU School of Education to develop 100 model lesson plans for K-12 teachers to integrate the use of Internet educational resources in the everyday classroom environment. Lesson plans are available to any K-12 teacher.
Awards to Various Michigan Schools and Universities for a Variety of Projects: These 1995 awards have gone to 11 institutions ranging from the University of Michigan, the Urban Education Alliance, the Community College School Program, the Detroit Historical Museum, etc.
ThinkLink: Fourth graders in the Warren Consolidated School District had their homes linked to their schools with a $5 million fiber-optic "home-learning" network. The two-year trial brought educational materials to home television sets. With a remote control and a "mouse", youngsters controlled when and how they used the programs. Teachers assigned homework based on the programming and students' annual MEAP scores were dramatically higher than their counterparts without the service.
Mumford High School Compact Technology Center: This high-technology communications learning facility exposes students to the educational benefits of computers, laser discs, scanners and compact discs. A local area network links the technology center with teachers' offices, classrooms and the library.
Lansing-Jackson Distance Learning Pilot: Michigan's first fully-interactive Distance Learning network links seven high schools and colleges in the Lansing-Jackson area, which enables teachers and students in different locations to interact by audio and video. About 20 activities were conducted on the network each week including specialized courses that otherwise could not be justified for smaller groups of students at individual schools.
Ameritech SuperSchool Contest: This competition is designed to encourage schools to find creative and innovative ways to use electronic communication to improve the quality of education. Both public and private schools were eligible for the awards.
OHIO
University of Findlay & Findlay City School District: A $500,000 Ameritech-Governor's EdTech grant was awarded to The University of Findlay to develop a teacher education curriculum designed to prepare teachers for applying advanced communications technologies in education, including two-way interactive video distance learning (IDL). The University is connected to the Findlay City School District with a fiber optic-based learning network.
Rural Programs: Ameritech's distance learning program in Ohio's Appalachian region demonstrates how distance learning can bring quality education to underprivileged students in under-funded rural school districts. The link between the schools and Ohio University also provides economical, efficient pre-service training for elementary school teachers. The schools have sought additional sources of funding and are in the process of transitioning project from trial status to pay status and expanding to other school sites. The Columbiana County distance learning network includes 11 high schools, the County Career Center and two branches of Kent State University. The network has expanded to include a high school outside the county and has current plans to expand to two more high schools, plus the Juvenile Justice Alternative School and Juvenile Justice Detention Center.
Dawson Bryant Local Schools & Ironton City Schools: (Dawson-Bryant High School, Dawson-Bryant Elementary School, Ironton High School, Ironton Middle School, Kingsbury Elementary School, Whitwell Elementary School) The project involves students attending two districts using telecommunications to learn computer skills. Students will range from developmentally disabled to talented and gifted. Technology will be integrated into the curriculum and will be used for homework, extra credit projects and cooperative learning projects. Use will include electronic mail, bulletin board and Internet resources, full interactive communication and teacher planning and evaluating.
East Cleveland City Schools: Interactive learning environments in the day-to-day curriculum. The project will include community outreach elements involving the public library, the business community and parents. Specifically, the project will focus on the science curriculum at all grade levels and will connect Caledonia Elementary School with the Math/Science Enrichment Center. The school will also be connected to Cleveland FreeNET/Internet and will establish a homework hotline.
Gahanna-Jefferson City Schools: The project calls for providing the communications infrastructure in Gahanna Lincoln High School that will include video, voice and data distribution to and from every classroom. Through this infrastructure, students and teachers will be able to establish links with the world outside the classroom including use of the Internet through their computer A-site. The project establishes linkages with a number of private businesses.
OHIO (continued)
Learning Community Link: Merging two established fiber optic distance learning networks, this project will join sites in the Columbus Public, Dawson-Bryant Local and Ironton School districts by linking the Columbus Educational Satellite Network (CESN) and the Appalachian Distance Learning Project (ADLP). In addition to the schools and the classrooms being linked, a metropolitan library system, a community college, Ohio University and The Ohio State University will be included.
Plain Local Schools, Canton: GlenOak High School plans to encourage all learners, teachers, students and parents to join Communities of the Mind as they are trained on an electronic information access system. All will learn to navigate through the Internet, search with INFOhio, send, receive and store e-mail, as well as use the resources available through StarkNet. Learners will engage in interactive projects from the library resource center, classrooms or their homes. Teachers-learners will guide, facilitate and help students with their projects.
Ripley Union Lewis Huntington Local Schools: (Ripley Union Lewis Huntington Jr/Sr High School, Ripley Elementary School) The primary focus of the project is to provide students with the opportunity and tools to acquire the skills necessary to function in the 21st century. A broad-based technology planning committee that includes students, teachers, administrators, parents and community leaders has been established to oversee the long range implementation of technology of which SchoolNet is a part. Goals for the project include: improving student communication skills through improving research skills and access to the Internet and other on-line resources; expanding mathematical and scientific skills and applications; and developing thinking skills and problem solving techniques through technology.
Stark County Schools: (Canton Local Faircrest Middle School, Fairless Jr/Sr High School, Minerva High School, Louisville High School, Osnaburg Middle School, Northwest Local NW Middle School, Marlington High School, Perry Local Pfeiffer Middle School) This project is an initiative targeted to grades 6-12 to increase the ability of students to share ideas, expertise and resources by linking together computer-based stations in schools, colleges and universities, libraries, government agencies, businesses, medical centers and homes throughout the world. Activities will include: sharing of ideas through using electronic mail and conferencing enabling the transfer of text, graphics, sound and video between users; advancing the use of cooperative, discovery-based projects both within Stark County and with learners around the state and world; and encouraging the use of electronic libraries, including specialized resource computers furthering the use of distance learning for our community of leaders.
Toledo City Schools: (Elmhurst Elementary School) This project creates multimedia learning environments for increased student, teacher and parent technology use. Local resources will fund five computers for each classroom with connections to such outside resources as Toledo/Lucas County Public Library, Internet and National Geographic KidsNetwork. The school also will have access to IBM's Eduquest math, science, social studies and language arts instructional software as well as other programming options.
WISCONSIN
SuperSchools: In 1994, Ameritech funded a $2.2 million "SuperSchool" initiative. The project provided grants of $350,000 to $450,000 to each of five schools for advanced technology. Five additional schools were selected as "partner" schools for the purpose of video distance learning. The five SuperSchools are: Washington High School and Hi-Mount Elementary (Milwaukee), Watertown High School, Appleton East High School and Waupaca High School. The partner schools are John Marshall High School and Allen-Fields Elementary (Milwaukee), Fort Atkinson High School, Menasha High School and Appleton East High School. Among the innovative programs implemented with the new technology is an ongoing collaboration between John Marshall High School and Hugh Christie Academy in Great Britain.
Ameritech Homework Helpline: Ameritech contributed $300,000 to fund the Ameritech Homework Helpline in Wisconsin. The Helpline is a statewide "800" number that children may call to receive assistance on homework problems from certified teachers. The Ameritech grant provided start-up funding for the 1994-95 and 1995-96 school years.
Curriculum Development Grants: Ameritech funded the development of curriculum designed to instruct teachers in the use of advanced telecommunication technologies. Grants for new and in-service teacher training totaling $450,000 were awarded to University of Wisconsin branches in River Falls and Whitewater, as well as Alverno and Marian Colleges.
Wisconsin has also been a leader in promoting the use of full-motion two-way video applications in schools. Ameritech has been involved in each of the following projects implemented under the direction of Access Wisconsin:
Northern Wisconsin Educational Communications System (NWECS): Connects 17 sites in northern Wisconsin, including high schools, technical colleges and the University of Wisconsin-Superior. The $3 million DS3 digital network utilizes three video switches and provides additional Tl data transmission.
South Central Instructional Network Group (SCING): Connects 11 schools in south central Wisconsin to a full motion, DS3-based video network. In addition to the video service, this $1.5 million network is preparing to add T1 internet service.
Western Wisconsin Instructional Network Group (WestWING): Connects 15 schools in western Wisconsin to DS3-based video network. This $3 million network utilizes two video switches equipped with quad split units to allow four schools to share video simultaneously.
Wisconsin Overlay Network for Distance Education Resources (WONDER): Ameritech contributed $400,000 to the creation of this $3 million network which links five University of Wisconsin campuses and four Wisconsin Technical Colleges, as well as the NWECS and WestWING networks. This "network of networks" promotes a far greater sharing of curriculum among different levels of education than was possible before.
ATTACHMENT B
THE LIBRARY OF CONGRESS/AMERITECH
NATIONAL DIGITAL LIBRARY COMPETITION
Through a leadership gift to the Library of Congress, Ameritech will provide funding for libraries and other repositories across the nation to digitize rare Americana materials in their collections for incorporation into the National Digital Library. This competition will multiply the educational impact of the National Digital Library by bringing together important historical documents on specific subjects dispersed among institutions across the United States. It will connect libraries of different sizes and scopes, and stimulate the entire library community into moving toward a global, interconnected structure that will better meet the needs of present and future educators, researchers and students.
THE NATIONAL DIGITAL LIBRARY
A major initiative by the Library of Congress is bringing direct and unrestricted access to unique historical collections which document and celebrate the creativity, ingenuity and vibrancy that is America. Through this initiative, the most interesting and important original items of American history and culture -- unique manuscripts photographs, sound recordings, printed matter, maps and motion pictures -- are being brought into schools, libraries and homes everywhere, benefiting people of all educational and economic backgrounds. By the year 2000, in collaboration with other libraries and repositories, the Library will digitize and make universally accessible five million items.
OVERVIEW
* Ameritech program is first to expand the NDL to include collections from outside the Library of Congress.
* Nearly $2 million will be awarded over a three-year period.
* Approximately 10 digitization grants will be awarded each year.
* Competition will be open to all libraries, archives, historical societies and other repositories in the U.S. and its territories -- except federal libraries -- that hold primary source materials.
* All materials chosen for digitization must be primary source materials that document the history of the United States.
* All digitized materials will be available on-line through the Library of Congress' National Digital Library site on the World Wide Web.
* Entries will be reviewed by a distinguished panel of library professionals.
COMPLETE DETAILS
Complete details on the Library of Congress/Ameritech National Digital Library Competition will be announced mid-summer.
PUBLIC RELATIONS CONTACTS
Library of Congress: Guy Lamolinara, 202-707-9217
Ameritech: Rick Aspan, 312-364-3570 or rick.w.aspan@ameritech.com