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THE WHITE HOUSE

                     Office of the Press Secretary
                      (East Palo Alto, California)
________________________________________________________________________
For Immediate Release                                     April 17, 2000

                           PRESS BRIEFING BY
                NATIONAL ECONOMIC ADVISOR GENE SPERLING
                                  AND
       SPECIAL ASSISTANT TO THE PRESIDENT FOR TECHNOLOGY MATTERS
                               TOM KALIL
                         ON THE DIGITAL DIVIDE

                               Plugged In
                       East Palo Alto, California

10:00 A.M. PDT

MR. SPERLING: -- virtually all of these companies have all taken leadership roles in the past and this is certainly part of their ongoing effort.

The public service announcement, we first -- we did considerable outreach before doing this. One of the places we went to was actually the NBA technology summit, where Magic Johnson and others spoke in a very compelling way about whether or not young people were seeing the role models and the inspiration to want to be on the Internet and become technologically literate.

As part of that, that led to putting together a new public service announcement, which the Kaiser Foundation is doing. This is a brand new effort. All of the networks have agreed in advance that they will run the public service announcement. And Magic Johnson, who could not get here because of the weather today, but will still be in the public service announcement, as with Rebecca Lobo. Then Black Entertainment Television decided that they actually wanted to produce their own that they would run with different celebrities.

So beyond the motivational message today is a larger campaign. And the reason why is that we've heard repeatedly, so many young people in low income areas have not seen role models, have not seen people they find inspiring, cool, using the Internet; and that it's important that there be not just the verbal message, but the visual message of seeing people like Rebecca Lobo and Magic Johnson on the Internet, explaining why it's been essential for what they're doing now.

There were questions about the Native American initiative. The current public service fund is about $6 billion. This would add to it $17 million, a very tiny, tiny fraction. The FCC is now looking if they can get a more precise number. But one should understand that first the question is whether or not this would be passed on to consumers. Even if it was passed on to consumers, we're talking about something in the neighborhood of a penny a month.

Q A penny a month?

MR. SPERLING: A penny a month. So this is, again, .4 -- less than half of one percent. This is $16 million in a $16 billion fund. Perhaps the question of whether it be passed on to consumers, if it was a penny a month -- considering that we're going to the Navajo Nation today, where only 22.5 percent of residents on the Navajo Nation have telephone service at all. Without that telephone service, they have no opportunity to become part of the information technology era. They have no opportunity to be part of the Internet revolution. They will be left behind.

And so this is a very worthwhile investment, one we strongly support. The President feels that this is absolutely essential effort that we need to do to make sure that Native Americans are not falling further on the wrong side of the digital divide; but by bringing greater access to phone service and access to Internet access in the future, that this can be a step toward speeding the process of bringing equal opportunity, or greater opportunity and greater digital opportunity to Native American reservations.

Q Who is that? Most consumers? Average consumers? A penny a month?

MR. SPERLING: I would hope by the end of the day we could get them to give us a better estimate. I'm trying to give a sense, at this point. But for the average long distance user, if it were passed on, it would be in that range.

Q -- not sure if whether it's going to be passed on yet or not yet decided if it's going to be taken out of some other government funds or it's going to be actually applied like a surcharge to the --

MR. SPERLING: It's something each of the long distance companies would have to decide for themselves.

Q The .4 percent is applied to what, to the --

MR. KALIL: No, the .4 percent -- it's .4 percent of the current size of the universal service fund.

MR. SPERLING: So the .4 percent is just taking what the universal service fund is right now, which is $6 billion -- that seems a little high, actually, but --

Q They said $500 million yesterday, that's what Kennard said.

MR. XX: He was probably just talking about the lifeline program. But overall universal service --

MR. SPERLING: There is already a lifeline program that provides access for $8 a month. This would go for $1 a month. Let's remember that the Pine Ridge Reservation had over 70 percent unemployment, on average over 50 percent unemployment in many of these reservations. So without making a significant effort at making telephone access affordable, we cannot start a positive cycle of greater access to the phone and greater access, hopefully, to the Internet, and then greater access to everything from health information, to e-commerce and further economic development.

Q What about the existing universal service fund? Some of that money was going into infrastructure, in terms of getting schools and libraries hooked up, I think. And some is going to pay for service. At some point, schools and libraries will be hooked up and service, generally, is going down to the point where Internet service can now be obtained for free -- if you're willing to take the advertising. Could that base level of the service fund go down, or how is that going to be --

MR. KALIL: Absolutely. There is no reason why, through increased competition you couldn't see a reduction in the overall cost to universal service.

Q But the FCC wouldn't have to decide that they're going to decrease the size of the program? Or does all the money that's going to infrastructure now move to service, once that's built up?

MR. KALIL: I think what will happen specifically with respect to the e-rate program is that there will be an evaluation of how much progress we're making, both in terms of internal wiring and connectivity to schools. And the program will be evaluated to determine how long we need to make --

MR. SPERLING: Let me stress that our first New Markets trip had a very positive effect, not only in terms of leveraging private sector commitments, but in interesting Speaker Hastert to work with us on a legislative package. We are now in the middle of a very productive negotiation that we believe will be ultimately successful on the New Markets tax incentives and, in fact, the APIC, the American Private Investment Companies, just passed through the House Banking Committee with bipartisan support.

It is also our hope that by focusing this type of attention and having bipartisan participation from Senator Bennett and others that we will be able to have greater support for some of the measures that are now out there in closing the digital divide. There is bipartisan support for the President's initiative for $150 million for training all new teachers. This is the type of community technology center, there was no funding for this initially. The President started this, now there is $32.5 million. There was no technology grant program. We started that, they were a recipient of that.

The Community Technology Center we're now trying to take for $32.5 to $100 million. That would allow for centers like Plugged In to be in a thousand different poor communities around the country. We've also expanded the tax incentives. You've seen the corporate incentives. But right now the incentives are fairly limited -- it's for computer donations to schools, and that is even expiring. We've tried to expand it so that it is donations of computers the schools, to libraries and community technology centers like this. And we also have a generous 50 percent credit that would go for any type of contribution to a community technology center.

So there are over $2 billion of tax incentives that the President has put on the table that would benefit community technology centers, like Plugged In, and would leverage considerable billions of more from the private sector. It is our hope, as well, that as the first two trips helped spur congressional leadership to work with us in a bipartisan way on the equity investments and the New Markets tax credit, that this effort will also spur bipartisan agreement to take effort at closing the digital divide through some of the initiatives the President has put forward, and others, like Senator Mikulski and Republicans, as well.

Q Thank you.

END 10:10 A.M. PDT