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Dana Dana Blankenhorn has been a business journalist for over 25 years and has covered the online world professionally since 1985. He founded the "Interactive Age Daily" for CMP Media, and has written for the Chicago Tribune, Advertising Age, and dozens of other publications over the years.
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Moore’s Law defines the history of technology. It held that the number of circuits etched on a given piece of silicon could double every 18 months as far as its author, Intel co-founder Gordon Moore, could see. Moore’s Law has spawned constant revolutions since then, not just in computing but in communications, in science, in a host of areas. Moore’s Law applies to radios, and to optical fiber, but there are some areas where it doesn’t apply. In this blog we’ll take a daily look at new implications of Moore’s Law in real time, as it rolls forward to create our future.
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March 22, 2005

End The Gore Tax

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Posted by Dana Blankenhorn

declan_mccullagh_d2.jpgThat’s what Republicans called it, when they were campaigning for power a few years ago.

The “Gore Tax” was their name for the E-Rate program. Its aim was to help poor schools cross the digital divide by subsidizing their access costs.

It has been a bipartisan disaster. In practice it’s nothing more than a subsidy for the Bells, who had the law written in such a way so that they got the money automatically unless they refused it for some reason.

This means, in practice, that the subsidized rate schools pay may in fact be higher than the alternative market rate. Bells are charging hundreds of dollars per month for T-1 customers who could easily be supplied by WISP DSL service at a fraction of the cost.

It gets worse. The E-Rate was also used for hardware, so schools stuck themselves with obsolete PC technology to boot. You’ve got obsolete PCs held by captive customers who can’t upgrade.

Now Declan McCullagh reports that Rep. Joe Barton wants to put the E-Rate out of its misery and I’ve got to applaud it.

McCullagh’s headline is “cheaper phone bills on the horizon,” but don’t you believe it. I guarantee that any Bell savings from this will not be passed on to you.

But there’s freedom in this for the schools. They can negotiate a better rate with the market than they can get tethered to the government.

And the Bells lose a big fat subsidy.

Sounds like a win-win to me.

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