Money for the expanded fund will come from new charges that long-distance vendors will have to pay local phone companies--charges that will be passed back to the customers as a percentage of the total usage cost.

"None of this is great news for rates in the future," Kinchla says.

The Bottom Line

Because the subsidy only applies to municipal libraries and schools teaching kindergarten through the 12th grade, Harvard telephone users may have to pay the increased charges without benefiting from the subsidy.

"We think it would be particularly odd for higher education...to underwrite network implementations in education," Kinchla says.

But the implementation of the act is far from final, and Kinchla adds that the FCC seems to be "receptive" to the University's objection that many universities may be forced essentially to subsidize the Universal Service Fund without benefiting from its expansion.

According to Kinchla, it is too early to predict the net impact of the Telecommunications Act on students.

The FCC predicts a reduction in usage costs from the long-distance vendors, according to MCI's Web page, but this may be an overly optimistic prognosis.

Rates may fall when the local phone companies start charging long-distance vendors on a per-line rather than per-minute basis, but the expansion of the Universal Service Fund may more than offset any savings for customers.

"The Universal Service Fund, as advantageous as that is for schools and libraries, is a new financial liability that amounts to additional billions of dollars that must be collected from customers," Kinchla says.

The University is working to make the net result of the Telecommunications Act "revenue-neutral," Kinchla says.

"But with all the uncertainty in the rate structures, anything could happen," she adds.

Long-Distance Changes

This summer's contract renegotiation with MCI--Harvard's long-distance carrier--compounds the confusion surrounding student telephone rates.

Under the current system, Harvard figures its long-distance charges based on two criteria--calling distance and time of day.