Next week a sub-committee of the Senate's Commerce Committee will debate the future of the so-called "e-rate" - which allows educational institutions to use telecommunications services at a discounted rate.

While President Clinton and Vice-President Gore want this scheme to grow, opponents of the way the subsidy is currently operated argue that the cost will force telecommunications companies to increase phone charges for domestic users, making the scheme unacceptable.

FCC's William Kennard wants to defend the subsidy to schools

"The e-rate is critical to our effort to put computers in every classroom," said Al Gore.

"Let me be clear, I strongly oppose any effort to pull the plug on the e-rate and deny our children the full promise of the Information Age. Cutting off the e-rate would close the door to our children's future."

Also in favour of the discount is William Kennard, Chairman of the Federal Communications Commission, which runs the scheme: "America's children, especially low income and rural children, need access to today's technology if they are to compete in tomorrow's workforce," he said.

"To do this, we need discounts to hook up classrooms and libraries to the Internet. We have received hundreds of letters asking us to do just that. Ending this effort is not in the best interest of the American public."

But opponents such as Republican senator John McCain, who chairs the Commerce Committee, want an overhaul of the legislation that created the e-rate, the 1996 Telecommunications Act, criticising the impact of such regulation on the telecommunications industry.

In the first half of this year, telecommunications companies provided $625m in subsidies to schools and libraries, with another $1bn projected to be collected in the second half.

Telecommunications companies, including AT & T, are now saying that they will need to add a 5% surcharge to long-distance bills to cover the cost of the e-rate and other community subsidies required by the legislation.

Senator John McCain is questioning the current e-rate

The act, which specifies that telecommunications companies have to provide "services to elementary schools, secondary schools, and libraries for educational purposes at rates less than the amounts charged for similar services to other parties," was strongly supported by President Clinton as a contribution towards getting schools connected to the Internet.

Although free local calls have already encouraged many schools to use the Internet in the United States, the legislation was intended to reduce other associated connection and line rental costs.

The e-rate offers a reduction on the price of monthly Internet access charges, wiring up classrooms, any special costs attaching to distance learning and basic telephone services. The level of discount is in proportion to need, with schools in very disadvantaged areas being able to apply for as much as a 90% reduction.

In Britain, the example of the United States has often been used to show how free local calls and educational subsidies can encourage schools to connect to the Internet. Although the government in Britain has committed itself to putting every school online by the year 2002, there have been continued anxieties in schools about the running costs and particularly phone bills.

Government-supported initiatives such as UK NetYear and the planned National Grid for Learning have focused on the process of connecting schools to the Internet and providing online materials, rather than on setting lower-rate or free access.