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Federal Communications Commission
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This is an unofficial announcement of Commission action. Release of the full text of a Commission order constitutes official action. See MCI v. FCC. 515 F 2d 385 (D.C. Circ 1974).

Report No. CC 98-43 COMMON CARRIER ACTION November 19, 1998

FCC Adopts Plan to Restructure Administration of Universal Service Mechanisms
(CC Docket Nos. 97-21 and 96-45)

The Commission today appointed the Universal Service Administrative Corp. (USAC) permanent administrator of all forms of federal universal service support as of January 1, 1999. Today's action responds to Congress's directive that a single entity administer universal service support for rural health care providers and schools and libraries.

In a May 1998 Report to Congress, the Commission concluded that Congress's directive would be best met by USAC serving as the sole, permanent universal service administrator. Accordingly, the Report requested that USAC and the current administrators of support for schools and libraries and rural health care providers jointly prepare and submit a plan of reorganization for approval by the Commission. The plan was submitted to the FCC in July and subsequently put out for public comment.

The Commission today appointed USAC as universal service administrator on a permanent basis, subject to the Commission's determination after one year that USAC is administering support in an efficient, effective, and competitively neutral manner. As proposed by the reorganization plan, the Commission ruled that the USAC Chief Executive Officer will have overall management responsibility for all of the universal service support mechanisms. USAC's operations will have three divisions: the Schools and Libraries Division, the Rural Health Care Division, and the High Cost and Low Income Division. In addition, three committees of the USAC Board of Directors will oversee the operations of the three divisions. Any action taken by a committee with regard to its respective support mechanism will be binding on the Board, unless the USAC Board disapproves of the action by a two-thirds vote. The budgets prepared by each committee will be subject to review by the full USAC Board.

Today's order adopts three modifications to the reorganization plan. First, in order to provide adequate representation of rural health care providers, the Commission added one rural health care representative to the USAC Board and to the Board's Rural Health Care Committee. Second, to more fully reflect both rural and non-rural local telephone company interests, the Commission added one incumbent local telephone company representative to the High Cost and Low Income Committee. Third, the Commission declined to adopt the plan's recommendation to divest USAC from the National Exchange Carrier Association (NECA) at this time. Rather, consistent with the May 1998 Report to Congress, the Commission said it will review after one year whether USAC should be divested from NECA.

USAC currently administers the high cost and low income support mechanisms, and it performs the billing, collection, and disbursement functions for all of the universal service support mechanisms. The Commission noted that the reorganization adopted today should eliminate duplicative functions while appropriately maintaining separate operations for those functions that are unique to a particular support mechanism.

Action by the Commission November 19, 1998, by Third Report and Order, Fourth Order on Reconsideration, and Eighth Order on Reconsideration (FCC 98-306). Chairman Kennard, Commissioners Ness, Powell, and Tristani, with Commissioner Furchtgott-Roth dissenting and issuing a separate statement.


News media contact: Rochelle Cohen at (202) 418-0253.
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