BEFORE THE
STATE OF NEW JERSEY
BOARD OF PUBLIC UTILITIES

__________________________________________

DIRECT TESTIMONY OF
MARK N. COOPER
Filed on Behalf of
THE NEW JERSEY DIVISION OF THE RATEPAYER ADVOCATE
Before the
State of New Jersey
Board of Public Utilities
BPU Docket No. TX95120631
AUGUST 19, 1997


TABLE OF CONTENTS

PART I INTRODUCTION

I. STATEMENT OF QUALIFICATIONS

II. EXECUTIVE SUMMARY

A. OVERVIEW OF THE ANALYSIS

B. RECOMMENDATIONS

PART II. UNIVERSAL SERVICE

III. UNIVERSAL ACCESS TO ADVANCED SERVICES FOR SCHOOLS AND LIBRARIES IN NEW JERSEY

A. THE IMPORTANCE OF UNIVERSAL ACCESS TO ADVANCED TELECOMMUNICATIONS SERVICES

B. THE PROBLEM OF THE UNEVEN DISTRIBUTION OF INFORMATION OPPORTUNITIES

IV. REGULATORY RESPONSIBILITY

A. STATE REGULATION

B. FEDERAL PROGRAMS

V. A UNIVERSAL SERVICE PROGRAM

A. ENSURING UNIVERSAL ACCESS TO THE INFORMATION AGE

PART I

INTRODUCTION

I. STATEMENT OF QUALIFICATIONS

Q. PLEASE STATE YOUR NAME, ADDRESS AND OCCUPATION.

A. Dr. Mark N. Cooper, President, Citizens Research, 504 Highgate Terrace, Silver Spring, Maryland 20904. I am also Director of Research of the Consumer Federation of America (CFA). My testimony reflects my personal views and not those of CFA.

Q. PLEASE BRIEFLY SUMMARIZE YOUR RELEVANT EMPLOYMENT EXPERIENCE AND RESEARCH INTERESTS.

A. Prior to founding Citizens Research, a consulting firm specializing in economic, regulatory and policy analysis, I spent four years as Director of Research at the Consumer Energy Council of America. Prior to that I was an Assistant Professor at Northeastern University teaching courses in Business and Society in the College of Arts and Sciences and the School of Business. I have also been a Lecturer at the Washington College of Law of the American University co-teaching a course in Public Utility Regulation.

Q. HAVE YOU PREVIOUSLY TESTIFIED ON TELECOMMUNICATIONS ISSUES?

A. I have testified on various aspects of telephone rate making before the Public Service Commissions of Arkansas, California, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, Kentucky, Manitoba, Maryland, Missouri, New Jersey, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Vermont, Virginia, and Washington, as well as the Federal Communications Commission (FCC), the Canadian Radio-Television, Telephone Commission (CRTC) and a number of state legislatures.

For a decade and a half I have specialized in analyzing regulatory reform and market structure issues in a variety of industries including railroads, airlines, natural gas, electricity, medical services and cable television, in addition to telecommunications. This includes approximately 125 pieces of testimony split fairly evenly among state regulatory bodies, federal legislative bodies, and federal administrative bodies.

Q. ON WHOSE BEHALF ARE YOU TESTIFYING?

A. On behalf of the Division of the Ratepayer Advocate of New Jersey ("Ratepayer Advocate" or "Advocate"), I have developed a comprehensive analysis to support the fundamental public policy proposals made earlier by the Ratepayer Advocate. With respect to universal service, I urge full participation in Federal Universal Service Proposals and additional steps to put New Jersey in the forefront of the provision of information age opportunities for its residents and programs for institutions of learning.

A. OVERVIEW OF THE ANALYSIS

Q. PLEASE DESCRIBE THE CONTENTS OF YOUR DISCUSSION OF THE NEED FOR PROGRAMS TO PROMOTE UNIVERSAL ACCESS TO INFORMATION SERVICES IN EDUCATIONAL INSTITUTIONS SUCH AS SCHOOLS AND LIBRARIES.

A. Section III presents a discussion of the vital role that information resources will play in the lives of children and the importance of ensuring information literacy. I show that educational, employment, social and civic opportunities will be deeply affected by the availability of access to the information superhighway. Children in low-income households presently have little access to this emerging technology. They risk being cut off from technologies that will not only enrich their lives, but determine their fundamental ability to earn a living and participate in the economic, social and political life of our nation in the 21st century.

In my testimony I make the case that New Jersey, which has broad flexibility under the federal Telecommunications Act of 1996 ("1996 Telco Act"), should exercise its discretion to establish a state-based universal service fund to ensure that all New Jersey children have access to the information superhighway.

Q. PLEASE SUMMARIZE YOUR RECOMMENDATIONS FOR PROGRAMS TO ACHIEVE UNIVERSAL ACCESS TO ADVANCED SERVICES FOR EDUCATIONAL INSTITUTIONS?

A. The New Jersey Board of Public Utilities should require the establishment of a state universal service fund to provide discounts for telecommunications services for schools and libraries. The state fund would be consistent with the Federal universal service fund by providing discounts for telecommunications services based on the discount matrix established by the FCC, but would be aimed at addressing specific barriers faced by the New Jersey schools and libraries in attempting to provide adequate connections to the information superhighway for all New Jersey students.

These barriers include the fact that the FCC cap on total annual spending means that some New Jersey schools may not receive any discount from the Federal universal service fund. Unlike a block grant, the federal fund does not guarantee that any single state will receive a sum certain. Instead, the fund will be allocated to schools on a "first-come, first served" basis, and will be subject to a cap of $2.25 billion/year. Consequently, some New Jersey schools that file their technology plan and request for discounts late, may receive no discount if the fund's $2.25 billion cap has been reached. In this instance, the state fund could provide assistance to schools and libraries that find the federal fund has been depleted before they have had a chance to receive any federal discount or to provide additional support for schools that have a greater need.

It should also be noted that the federal universal service fund takes little note of the particular needs of any individual school or library. Instead, assistance will be allocated on the basis of economic disadvantage of students. While that disadvantage will likely correlate with the needs of schools to some extent, it is also possible that older New Jersey schools will require a greater than average level of assistance because of the additional expense of retrofitting old buildings in order to install inside wiring to provide adequate access to telecommunications services within the classroom. If inside wiring costs prove too prohibitive for schools, a state-based fund can assist schools in removing such barriers, and help to provide access to telecommunications services in the classroom for all New Jersey students.

Under the Ratepayer Advocate's proposal, some level of discounts will be available to benefit all schools and libraries, even though federal funds may not be available to supplement assistance provided by the New Jersey universal service fund. Additionally, the Board can authorize the Fund Administrator to provide assistance first and foremost to those schools and libraries that did not receive any federal funding, or that require funding to address unaffordable inside wiring costs.

In addition, the Ratepayer Advocate urges the Board to require telecommunications providers to offer schools and libraries the opportunity to purchase local exchange service and all other tariffed services at rates comparable to residential rates. New Jersey schools and libraries are currently required to purchase these services at a higher, business rate, which is prohibitive for many of these institutions¹. However, recognizing that some schools and libraries have already found it advantageous to rely on business network services such as Centrex and PBX, these institutions should be permitted to obtain the 20 - 90% discounts off of the business tariffed rates. The Ratepayer Advocate believes that this choice should be offered to provide much needed relief to schools and libraries, and to end the inequity of incorrectly equating these institutions with businesses. The provision of affordable access to telecommunications services for schools and libraries in the new era of the competitive local exchange telecommunications market will be forever hampered if schools and libraries continue to be burdened with purchasing services at business rates. Furthermore, the Ratepayer Advocate recommends that the Board not consider the provision of these services at rates comparable to residential rates to be a discount, and therefore, carriers should not be eligible for funding from the state universal service fund for the provision of these services at rates comparable to residential rates².

Finally, the Ratepayer Advocate proposes that Internet access should be a local call everywhere in the state for institutions eligible for universal service support.

PART II

III. UNIVERSAL ACCESS TO ADVANCED SERVICES FOR SCHOOLS AND LIBRARIES IN NEW JERSEY

Q. WHY IS PROMOTING INFORMATION AGE LITERACY AN IMPORTANT ELEMENT OF UNIVERSAL SERVICE?

A. The most important aspect of universal service involves ensuring that all members of society have access to the vast potential for economic and social activity that the information superhighway holds.

The 1996 Telco Act is based on the fundamental observation that telecommunications services have evolved far beyond simple voice communications. It declares a national policy goal of providing access to a wide range of advanced voice, video, data and information services, at just, reasonable and affordable rates. The 1996 Telco Act identified a set of institutions through which the promise of information age connectivity would be furthered (schools, libraries and health care facilities).Ultimately, we share the hope that all individuals have access to the information superhighway from their homes, just as we have been expanding access to the telephone network to the home over the course of the past century. That ultimate goal will require substantial family enrichment and can only be accomplished over the long term. However, one of the most important keys to creating access to the information superhighway can be accomplished in the near term. It is absolutely crucial to ensure that all citizens have the skills to use the information age resources that are continually becoming available. If we fail to build the human capital in our young people today, they will be cut off permanently from the information society.

Young people increasingly spend time out of the home in institutional settings where access to the information superhighway can be provided relatively easily. If they know how to access information and use computer applications, and apply this in their lives on a daily basis, they will gain both the skill and desire to be participants in the information society.

A. THE IMPORTANCE OF UNIVERSAL ACCESS TO ADVANCED TELECOMMUNICATIONS SERVICES

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Q. WHY IS ACCESS TO ADVANCED TELECOMMUNICATIONS SERVICES SO IMPORTANT TO CHILDREN, PARTICULARLY THOSE IN LOW INCOME FAMILIES?

A. Today's children are the first generation of the Digital Age. They are growing up in a world where computer technologies are producing sweeping changes in every aspect of society. The Internet and its exploding multi-media sector, the World Wide Web, are rapidly becoming vital links to the world's commerce, communication, and culture.

We can already see the influences of digital technologies in the daily lives of many children. More and more children are cruising down the Information Superhighway. Children are chatting and sending E-mail, playing games, making friends, doing research, and being entertained.

The explosion of new digital technologies and the rapid growth of the Internet are restructuring our communications system and transforming education and the economy. These dramatic changes hold great promise for children -- bringing them a new world of learning and equipping them for the most desirable new jobs. But the enormous potential of the Information Superhighway will only be realized if critical policy choices are made during the next few years. While major policy activity is taking place at the federal level, many important decisions will be made at the state level. These decisions will profoundly affect the lives of children for decades to come. Policies adopted by state public utilities commissions will determine:

Whether all students will have equal access to the Internet and the vast educational resources it provides, or whether only students in the most affluent schools will reap those benefits;

Whether basic telephone service will be affordable to poor families or whether they will find themselves cut off from the communications system;

Whether libraries will be equipped to serve all citizens in the Digital Age, or whether some communities will be woefully unprepared to meet the challenges of this new era.

Our children's lives will be shaped by this new telecommunications system. Every child's education, employment prospects, and cultural opportunities will be molded by digital technologies. If access to the information superhighway is not ensured for all, many of America's children will be worse off than they are now. Confronted with insurmountable barriers to the Information Superhighway, these children could be consigned to the ranks of the technologically illiterate--second-class citizens with declining job prospects.

Q. PLEASE DESCRIBE THE IMPACT OF ADVANCED TELECOMMUNICATIONS SERVICES ON EDUCATION.

A. Educational opportunity and economic opportunity are closely linked. Integrating computers into the curriculum will be essential in order to equip students for the new world of work. Students without the chance to acquire such fundamental technological skills will be left behind.

The growing use of computers and digital networks is transforming education. The benefits of these technologies have been well documented. They: 1) excite and engage students; 2) enhance their ability to think critically; and 3) motivate them to stay in school. Computers are particularly effective with low achieving and remedial students. Online computer networks and distance-learning video networks can link students to invaluable new resources not available in their schools. They can give students access to a wealth of text and multi-media materials and a host of outstanding teachers, scholars, and other students across the country and around the world.

A substantial body of research has documented how computers and computer networks can enhance and enrich the learning experience.

Computer-aided instruction is more individualized than conventional classroom instruction, adjusting the pace and difficulty of material to a student's knowledge and abilities, and providing instant feedback and reinforcement. This approach enables students to learn as much as 30-50% faster with a corresponding reduction in instructional time and costs (J.D. Flethcer, "Effectiveness and Cost of Interactive Videodisc Instruction," Machine Mediated Learning, 3:1991, pp. 361-385, cited in Center for Media Education, Connecting Children to the Future (Washington, D.C, November 1996), p. 5).

Computers are helping students improve their writing skills by enabling them to write more quickly and revise more easily. Computers improve student performance in language arts, social studies, science, and especially math (where they help students visualize concepts) and foster critical thinking, problem solving, and organizational abilities.

Exceptional multimedia materials (online, disk, and CD-ROM) are fostering new kinds of learning. Multimedia not only increases student recall of basic facts, but also can increase their understanding of challenging material. Simulation software enables students to immerse themselves in complex, three-dimensional systems and test dynamic solutions in real time. Computers also foster more collaborative approaches to learning. Students can work together in teams, researching reports and preparing presentations.

Used effectively, computers can boost student motivation and attendance. Multimedia software, online resources, and collaborative projects can create more exciting and engaging learning environments, resulting in greater attendance and lower dropout rates. Networks connecting homes and schools can "make parents partners in their children's education." Not only does it give parents greater access to teachers and administrators through E-mail, but it also links parents directly into the child's learning process.

Q. PLEASE DESCRIBE THE IMPORTANCE OF COMPUTER AND INFORMATION SKILLS TO EMPLOYMENT OPPORTUNITIES.

A. As the computerization of the workplace continues, computer literacy is now required for more than half of newly created jobs. While only 25% of workers used computers in 1984, 47% did in 1993, and this percentage continues to rise (Secretary of Labor, Robert Reich, USA Today, September 2, 1994, based on U.S. Department of Labor, Census Computer User Supplemental Data, cited in Center for Media Education, Connecting Children to the Future (Washington, D.C., November, 1996), p. 3).

Employees with greater computer skills will also be paid 10-15% more than those without such skills. (Connecting K-12 Schools to the Information Superhighway (McKinsey & Co., 1995)). There is a growing gap between an elite class of "symbolic analysts" -- whose work of processing information utilizes sophisticated computer technologies -- and an underclass of workers relegated to service and manufacturing jobs -- which require little or no computer expertise. Without basic computer skills, members of this technological underclass may have no way to improve their bleak prospects.

Much of the training now available for a wide range of jobs utilizes computer-aided instruction, and some of the best information about new jobs is available on line.

Q. PLEASE DESCRIBE THE IMPORTANCE OF ADVANCED TELECOMMUNICATIONS SERVICES FOR SOCIAL AND CIVIC PARTICIPATION.

A. The Internet has enabled citizens to come together around key concerns and build vibrant communities online. In some cases these communities are locally based, allowing members to also work together face-to-face. In other cases they are national or international, enabling people to share information and ideas regardless of geographic proximity. They provide new opportunities for civic participation that should be available to every American citizen.

Young people will soon need the ability to use online networks to fully participate in the democratic process. On the federal, state, and local levels, more and more information about issues and candidates is being provided online. There is extensive reporting, analysis, and commentary on many of the key choices facing policy makers. Citizens can find the information they need, query government officials, express their points of view, and work with others to advocate policy changes. Individuals without computer skills or access to online networks may become second-class citizens.

Families will need to use online networks to gain easy access to the latest medical and social service information. Health care providers are beginning to use digital networks to centralize and simplify their record keeping, provide services more efficiently, become more accessible to patients via E-mail, and expand preventive care. There will be increasing amounts of information available online concerning housing, welfare, and other social services.

As public libraries have incorporated new communications technologies, their potential role in children's lives has expanded. For young people with outdated computers at school and no computers at home, libraries are especially important, giving them access to equipment, software, and online networks. When students use digital resources at their local library to prepare reports for school, they will be able to learn new research techniques and gain additional computer skills.

Of course, the provision of these technologies in libraries helps other population segments that would not otherwise have access to computers. Elderly and low income adults or unemployed individuals can gain access to information resources on-line at libraries in a setting where knowledgeable staff is available to assist them.

The cultural opportunities for children are being steadily expanded by computers, CD ROMs, and online networks. There are now rich resources in literature, photography, and painting. As computers and the Web gain improved multi-media capabilities, additional music, video, and film will become available.

B. THE PROBLEM OF THE UNEVEN DISTRIBUTION OF INFORMATION OPPORTUNITIES

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Q. IS THERE A PROBLEM IN THE CURRENT AVAILABILITY OF ADVANCED TELECOMMUNICATIONS SERVICES?

A. Yes. Equality of opportunity is a fundamental American ideal. Unfortunately if current trends continue, the Information Superhighway will not foster equality of opportunity for children throughout the United States, but will instead create an electronic caste system. Already children can be divided into three categories, based on their access to the computer technologies needed for survival in the Digital Age:

the privileged -- those with full access to the Superhighway at school and at home

the underprivileged -- those with limited access at school or home

the excluded -- those with no access

Q. DO PEOPLE PERCEIVE THE IMPORTANCE OF COMPUTER SKILLS?

A. Public opinion polls have demonstrated a widespread belief that computer skills are valuable and good, especially for children (Center for Media Education, National Public Opinion Poll, September 3-5, 1995, as reported in Attachments MNC-1 and MNC-2). In order to ascertain a better gauge on the perceived importance of becoming an effective user of the PC, I recently conducted a national public opinion poll which included the following question.

For children growing up today, how important do you think having good computer skills will be to getting ahead in the world? Would you say very important, somewhat important, not very important, not at all important, or don't know.

The acquisition of good computer skills is seen as very important by 88 percent of all respondents. Interestingly, as Attachment MNC-1 shows, lower income respondents with children are more likely than lower income respondents without children and lower middle income respondents (incomes $15,000 to $35,000) with or without children to see good computer skills as very important in getting ahead.

We observe a similar pattern in response to a question about the educational value of PCS for children.

In general, do you think computers do more to help children learn and make education more fun, or do more to hurt children's education by distracting them from learning?

A high percentage (83 percent) of respondents say computers help (see Attachment MNC-2). Low income respondents are more likely to say they help than respondents without children at any level of income and more likely to say they help than respondents with children in several higher income categories.

The results to these two questions establish what we believe is the central fact defining the access of children of low income families to the information age. They are at a severe disadvantage with respect to access to the central skill and platform for entry into the information age. Low income respondents clearly perceive the importance of obtaining these skills.

Q. PLEASE DESCRIBE HOW UNEVEN DISTRIBUTION OF INFORMATION OPPORTUNITIES AFFECTS THE ABILITY OF STUDENTS TO ACCESS THE INFORMATION SUPERHIGHWAY.

A. Public schools and libraries have been central to our efforts to provide equality of opportunity to children. The educational opportunities of students in the poorest school districts would be dramatically enhanced if they were given access to the wealth of resources available online and via distance learning networks. However, thus far computers have increased rather than reduced the inequities that already existed in our educational system.

There is a huge gap between the best computer-equipped schools and the worst-equipped. Those with the most computer resources have numerous multi-media computers, Internet access in classrooms, and teachers with the training and commitment to fully integrate computers into the curriculum. At the other end of the spectrum are schools without computers, Internet access, and teachers unable to use them effectively.

New Jersey is lagging behind in the deployment and use of computers. While New Jersey ranks second best among states in household income and eighth best in the percentage of households below the poverty level (Statistical Abstract of the United States, Tables 716 and 735, respectively), it ranks eighteenth in computers in the home (according to the 1994 Current Population Survey, cited earlier) and 15th in computer use for homework (National Center for Education Statistics, Education in States and Nations, Table 17).

A. STATE REGULATION

Q. DO THE STATES HAVE A ROLE TO PLAY IN DEFINING AND DELIVERING UNIVERSAL SERVICE UNDER THE ACT?

A. Yes, a major role. The Federal Communications Commission will establish a baseline for universal service, but states are free to set a higher standard, as long it is consistent with the federal principles and guidelines. Thus, state regulatory commissions will play a central role in implementing the FCC's expanded definition of universal service.

Each state Commission must now:

1) determine whether it will establish a state universal service fund to supplement FCC funds;

2) establish an equitable method for requiring all telecommunications companies to contribute to the state's Universal Service Fund;

3) determine which advanced communications features could be included in basic residential service; and

4) ensure that schools, libraries, and rural health facilities benefit to the greatest degree from Federal discounts and through additional BPU policies designed to promote educational infrastructure.

Q. PLEASE SUMMARIZE THE UNIVERSAL SERVICE POLICY RECENTLY ENACTED BY THE U.S. CONGRESS.

A. The 1996 Telco Act demonstrates an important new emphasis on universal service policies. The Communications Act of 1934 had one sentence dealing with universal service, while the 1996 Telco Act has fifteen paragraphs. The key language in section 254 of the 1996 Telco Act is to require that rates be just, reasonable and affordable for all Americans. Congress had never used the word "affordable" before, nor had it identified specific groups of people (low income), geographic areas (high cost and insular areas), or institutions (schools, libraries and rural health care facilities) for specific support in ensuring universal service.

Reflecting this deep concern about universal service in a competitive telecommunications marketplace, Congress created a Federal State Joint Board to recommend universal service policy in a number of areas. By a unanimous vote, the Joint Board proposed a very aggressive public policy to promote universal service. The FCC recently adopted the majority of the Joint Board's Recommendation in its Report and Order: In the Matter of Federal-State Joint Board on Universal Service, CC Docket No. 96-45, May 7, 1997 (hereafter "Universal Service Order"), which provides for programs to address the provision of telecommunications services for low-income people, schools and libraries, and consumers in high cost areas.

Q. PLEASE DESCRIBE THE PROGRAM FOR SCHOOLS AND LIBRARIES.

A. The FCC adopted a needs based approach to providing discounts for interstate services to all schools and libraries (Universal Service Order, paragraph 520). Poor schools in high cost areas will receive a 90 percent discount for the services that they, themselves, define as necessary to meet their needs. More affluent schools in low cost areas will receive a 20 percent discount.

The FCC simply requires the states to adopt a discount schedule that equals or exceeds the discount matrix in the federal rule. The FCC will pay the full amount of the discount up to the federal level. The state can fund any larger discounts or discount for services not covered by the federal program (paragraphs 550-551).

Q. HAVE THE PROGRAMS YOU MENTIONED BEEN IMPLEMENTED IN OTHER STATES AS WELL?

A. Yes, we should be very clear about the origin of public policy with respect to schools and libraries. States led the way in creating these discount programs and the federal program followed. In states around the country, coalitions of citizens groups were able to make significant gains for these types of programs through rate and regulatory reform proceedings.

For example, in Ohio, a diverse Consumer's Coalition participated in a telephone rate case at the Public Utilities Commission (PUC), winning not only lower phone rates, but numerous other benefits, including 14 community computing centers.

In Maine, consumer, education, and library groups convinced the state PUC to create a statewide data network for schools and libraries, and won a reduction in rates, worth $20 million over five years.

In New York state, low-income advocates successfully fought for lower Lifeline rates for telephone service, as well as a new fund to pay for computer-based phone services at schools and libraries.

In other states, like Arkansas and Maryland, excess earnings have been used to fund similar types of institutional programs. In all of these cases, public utility commissions acted on the basis of their existing regulatory authority, without any special legislation and before the passage of federal legislation to create programs to provide advanced telecommunications services at discounted rates for educational institutions.

Subsequently, legislation has been enacted in a number of states, like Texas and Oklahoma to expand these programs.

A more expanded list of programs in other states is also found in the Ratepayer Advocate's funding plan for schools and libraries, "Before 2000: Funding Technology in New Jersey's Schools and Public Libraries By the End of the Century", which is attached to Dr. Lee McKnight's testimony being filed in this proceeding.

A. ENSURING UNIVERSAL ACCESS TO THE INFORMATION AGE

Q. WHAT ELEMENTS ARE NEEDED TO PROVIDE AN INFORMATION NETWORK FOR THE STATE'S EDUCATIONAL INSTITUTIONS?

A. The state should promote a networking infrastructure that provides interconnectivity between all computing resources in all institutions that serve children. Such network requires interconnectivity between and within schools districts, public libraries and other institutions serving children. All appropriate institutional spaces should be retrofitted with connections adequate to support voice, data and video. These institutional spaces should provide easy access to electronic communications among users and to necessary educationally appropriate information and applications. The development of this network can be divided into three principle components -- customer premise equipment, interconnectivity and human skills. All three are necessary to ensure that the network meets the needs of people in the state. Because they are different in nature, each of the components may have to be funded and provided in different ways.

Customer premise equipment refers to the hardware and software that will be used to run the network and the applications that will be used over the network. Hardware include computers, file servers, CD-ROMs, and other local area network hardware. These are generally located on the institutions' premises. Software refers to the operating systems and applications to be used. While this has not traditionally been considered a telecommunications service, that has changed in the past half decade. Several states (e.g. Ohio and New York) have used telecommunications revenues to fund the purchase of hardware and software. Programs to ensure access for consumers with disabilities have also supported the purchase or subsidized the rental of equipment (e.g. Wisconsin). Thus, the general concept of ensuring access has expanded to include support for customer premise equipment.

Network services refers to the transmission and switching services that move the messages between institutional premises. This has traditionally been referred to as telecommunications services. The wiring within buildings is an in- between type of service. It once was considered a telecommunications service. After divestiture it was considered customer premise equipment (supplied by the customer). However, link-up programs covered inside wire costs. The schools and libraries component of the federal program will also cover inside wire costs.

Human skills refers to the abilities of institutional personnel to use the network to provide services to the target populations. At the outset of the transition to the information age, it is critically important to educate the staffs of institutions in the use of the networks and the applications that their clients must master. Although some states have earmarked certain telecommunications revenues for these purposes, generally resources for this element have come from other sources.

Q. HOW CAN THE AVAILABILITY OF NETWORK SERVICES BE ENSURED?

A. As discussed earlier in my testimony (see pp. 5-8). I recommend a program with a number of elements.

First, the state should fully participate in the federal schools and libraries program.

Second, the state should develop a state universal service fund to fill major gaps left by the federal program. These include:

funding for those schools and libraries which do not receive full federal funding, if the federal fund is not adequate

funding for schools and libraries where federal discounts fail to recognize the unique barriers faced by New Jersey schools.

Third, the Board should require telecommunications providers to offer schools and libraries the choice of purchasing local exchange service and all other tariffed services at rates comparable to residential rates.

Q. HOW CAN THE AVAILABILITY OF CUSTOMER PREMISE EQUIPMENT AND HUMAN SKILL BE ENSURED?

A. Unlike the network services which will be addressed by the federal programs. The other two components, customer premise equipment and human skill may require different approach, because they are not telecommunications services, as traditionally defined. A combination of state regulatory and executive branch policies, as well as private sector funds, may be required to meet the needs for these components.

The Board could encourage the establishment of a program in which New Jersey colleges and universities enter into partnerships with school and libraries that are eligible for support through the universal service program. Institutions of higher learning would provide personnel to conduct educational programs at schools and libraries, or to provide training for school and library personnel. They could also develop or give instruction in software applications.

Compensation for these support services to the institutions of higher education could be either in-kind (a sharing of the network services which are obtained at discounted rates) or in-cash (out of operating budgets).

Q. DOES THIS CONCLUDE YOUR TESTIMONY?

A. Yes.

TOP

^FOOTNOTES

¹ See Direct Testimonies of CONNECT and New Jersey Library Association filed on behalf of the Ratepayer Advocate. _back

² I have been advised that this policy is consistent with the Advocate's Initial Brief on Universal Service filed in December 1996 in this proceeding, excluding an error contained in the Appendix. _back

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