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*****************************************************                            Before the
                Federal Communications Commission
                      Washington, D.C. 20554



In the Matters of                  )
                              )
Changes to the Board of            )
Directors of the National Exchange           )    CC Docket No. 97-21
Carrier Association, Inc.               )
                              )  
Federal-State Joint Board on            )    CC Docket No. 96-45
Universal Service                  )
                                
         SECOND REPORT and ORDER in CC Docket No. 97-21
     THIRD ORDER on RECONSIDERATION in CC Docket No. 97-21
     SIXTH ORDER ON RECONSIDERATION in CC Docket No. 96-45
                                
Adopted:  November 4, 1998         Released: November 17, 1998  
By the Commission:  Commissioner Furchtgott-Roth issuing a separate statement.

I.   Introduction

     1.   In this Order, we reconsider the Commission's July 18, 1997 order to the extent
that the Universal Service Worksheet attached as an appendix to that order required universal
service contributors to report as end-user telecommunications revenues those revenues derived
from the provision of inside wiring maintenance.  We also adopt amendments to the
Commission's Part 54 and Part 64 rules to permit the Administrator of the federal universal
service support mechanisms to utilize Telecommunications Relay Services (TRS) Fund data to
verify the accuracy of revenue information provided on the Universal Service Worksheet by
contributors to the universal service support mechanisms.  In addition, we amend section 54.515
of our rules to clarify that a telecommunications carrier seeking reimbursement from the
Administrator for the provision of services to a school or library may request that the amount of
the discount afforded to that school or library be applied either as an offset to the carrier's
universal service contribution obligation or reimbursed to the carrier from the universal service
support mechanisms.  We find, however, that a carrier that fails to remit its monthly universal
service obligation is not entitled to choose direct reimbursement under the universal service
support mechanism for schools and libraries.  Rather, any support amounts owed to such a carrier
under the support mechanism for schools and libraries must first be applied as an offset to the
carrier's contribution obligation.
     
II.  Inside Wiring Maintenance

     A.   Background

     2.   In the Universal Service Order, the Commission concluded that contributions to
the universal service support mechanisms will be based on end-user telecommunications
revenues.  Universal service contributors must report semi-annually their end-user
telecommunications revenues on the Worksheet.  Line 34 of the current Worksheet requires
contributors to include as end-user telecommunications revenues, among other things, revenues
derived from the provision of inside wiring maintenance.

     3.   Under the Communications Act of 1934, as amended (the Act), the term
"telecommunications" is defined as "the transmission, between or among points specified by the
user, of information of the user's choosing, without change in the form or content of the
information as sent and received."  The Act defines "telecommunications service" as "the offering
of telecommunications for a fee directly to the public, or to such classes of users as to be
effectively available directly to the public, regardless of the facilities used."  

     B.   Discussion   

     4.    We reconsider the NECA Order to the extent that the Worksheet attached as an
appendix to that order required universal service contributors to include as end-user
telecommunications revenues those revenues derived from the provision of inside wiring
maintenance.  We are persuaded by petitioners that the provision of inside wiring maintenance
does not constitute "telecommunications" or a "telecommunications service" and we therefore
conclude that revenues derived from this activity should not be included as end-user
telecommunications revenues on the Worksheet.  As the Commission stated in the Inside Wiring
Order, inside wiring is severable from underlying common carrier transmission services and
includes all telephone plant located on the customer's side of the demarcation point marking the
end of the telephone network.  

     5.   We conclude that inside wiring maintenance -- the maintenance of telephone plant
-- does not constitute telecommunications or a telecommunications service because it does not
involve the "transmission" of information.  MCI, the only party asking us to include in the
universal service contribution base revenues derived from the provision of inside wiring
maintenance, correctly points out that internal connections make possible the transmission of
information.  Consistent with the rationale set forth in the Inside Wiring Order, however, we
note that inside wiring maintenance does not itself constitute "telecommunications" as that term is
statutorily defined.  MCI references language in paragraph 451 of the Universal Service Order as
support for its proposition that the Commission has concluded, in the context of defining eligible
services for schools and libraries, that the installation and maintenance of internal connections
constitute telecommunications services.  Paragraph 451 and the surrounding discussion make
clear, however, that the Commission determined only that the installation and maintenance of
internal connections are among the additional non-telecommunications services for which eligible
schools and libraries may receive discounts under section 254 of the Act.  Neither this paragraph,
nor the surrounding discussion, support MCI's assertion that the provision of inside wire
maintenance constitutes telecommunications as that term is defined by the statute.

     6.   This change relieving contributors of their obligation to report as end-user
telecommunications revenues those revenues derived from the provision of inside wiring
maintenance will become effective 30 days after publication of this Order in the Federal Register. 
We note, however, that contributors are not required to file another Worksheet until March 31,
1999.  Accordingly, we direct carriers to adjust the 1998 full-year data that they will report on the
March 31, 1999 Worksheet to reflect this change starting from the effective date of this Order.  
     
III. The Use of TRS Data by the Universal Service Administrator

     A.   Background

     7.    In the NECA II Further Notice, the Commission proposed to amend section
64.604(c)(4)(iii)(I) of the Commission's rules to permit the TRS administrator to provide TRS
data to the universal service Administrator for purposes of verifying revenue information provided
by contributors to the universal service fund.  In the NECA II Further Notice, the Commission
also proposed to amend section 54.711(b) of the Commission's rules to clarify that the
Administrator's confidentiality obligations extend to data obtained from the TRS Fund.  The
Commission tentatively concluded that these proposed amendments would be sufficient to
maintain the confidentiality of the TRS Fund revenue data disclosed to the Administrator.  On
March 20, 1998, the Common Carrier Bureau (Bureau) waived, on a temporary basis, section
64.604(c)(4)(iii)(I) to the extent necessary to permit the TRS administrator to make available to
the universal service Administrator certain TRS data for purposes of comparing revenue
information provided by contributors on the Universal Service Worksheet.

     B.   Discussion

     8.   We amend section 64.604(c)(4)(iii)(I) as proposed in the NECA II Further Notice
to permit the use of TRS data by the Administrator for purposes of verifying the accuracy of
information reported by contributors on the Universal Service Worksheet.  We conclude that
authorizing the Administrator to use TRS data for this purpose may assist the Administrator in
monitoring contributors' compliance with the universal service contribution requirements by
revealing potential inconsistencies between revenue data reported on the TRS Fund Worksheet
and revenue data reported on the Universal Service Worksheet.  As noted by NECA, the use of
TRS data for this purpose will provide a more efficient method of monitoring contributors'
compliance with the contribution requirements than if the universal service Administrator were
forced to rely on audits alone.  MCI, BellSouth, and NECA support the Commission's proposal
to authorize the use of TRS data for this purpose.  No parties filed comments opposing the
Commission's proposal.  We also amend section 54.711(a) to direct the TRS administrator to
provide to the Administrator TRS data so that the Administrator may verify the accuracy of
information reported by contributors on the Universal Service Worksheet.  As an outgrowth of
our decision to authorize the Administrator to use TRS data, we also amend section 69.616 to
ensure that the Administrator exercises this authority in an equitable and non-discriminatory
manner.  We direct the Administrator, in comparing the revenue data filed by universal service
contributors with that filed by TRS Fund contributors, to undertake company-by-company
comparisons for all entities filing Universal Service Worksheets and TRS Fund Worksheets. 

     9.   We also amend section 54.711(b) as proposed in the NECA II Further Notice to
require the Administrator to keep confidential all TRS data obtained from the Administrator of
the TRS Fund, prohibit the Administrator from using TRS data for purposes other than the
administration of federal universal service support mechanisms, and prohibit the disclosure of
TRS data in company-specific form unless directed to do so by the Commission.  We direct the
Bureau to make decisions regarding disclosure of company-specific information.
       
     10.       We agree with NECA that section 54.711(b)'s prohibition on the disclosure of
company-specific information does not prohibit the Administrator from releasing aggregate, non-
company specific data.  In order to ensure that any report or document containing aggregate,
non-company-specific data does not, by virtue of the manner in which particular data are
organized, inadvertently reveal company-specific information, we require the Administrator to
obtain the approval of the Bureau prior to release of such a report or document to persons outside
of the Commission.

     11.  BellSouth requests that the Commission declare all commercial mobile radio
service (CMRS) subscriber and financial data reported on TRS and Universal Service Worksheets
confidential data subject to Exemption 4 of the Freedom of Information Act (FOIA).  BellSouth
asserts that requiring each CMRS provider to request confidential treatment for such data creates
unnecessary paperwork for contributors and the Commission.  On March 4, 1998 and July 31,
1998, the Bureau announced revisions to the Universal Service Worksheet.  The revised
Worksheet provides a space for contributors to indicate that they wish to request confidential
treatment of the data contained on the Worksheet.  Contributors making such an election must
certify that the information contained on the Worksheet is privileged or confidential commercial
or financial information and that disclosure of such information would likely cause substantial
harm to the competitive position of the company filing the Worksheet.  If the Commission
receives a request for, or proposes disclosure of, the information contained on the Worksheet, the
carrier will be required to make the full showing required by our rules.  We anticipate that this
revision will ease significantly the paperwork burden on all contributors, not just CMRS
providers.  Contributors to the TRS Fund shall continue to comply with sections 0.459 and 0.461
of the Commission's rules in order to request confidential treatment of the revenue data reported
on the TRS Worksheet.  We do not believe that this poses a substantial burden on TRS
contributors, because the TRS Worksheet, unlike the Universal Service Worksheet, is filed only
annually, rather than semi-annually.  

     12.  The Bureau will make the initial decision regarding disclosure of company-specific
information derived from the Universal Service Worksheet or from the TRS Administrator.  In
the event that it directs disclosure of data for which confidential treatment was requested by the
contributor, the Bureau will follow the procedures specified in sections 0.459 and 0.461 of the
Commission's rules.  Accordingly, the company will be given an opportunity to file an
application for review by the Commission of any decision to release assertedly confidential data
and, if it is denied, to seek a judicial stay before any assertedly confidential information is
released.  Consequently, we do not find it necessary to conclude that all CMRS subscriber and
financial data reported on the Worksheets is confidential.
     
     13.  BellSouth also asserts that the release of company-specific CMRS subscriber and
revenue data should be prohibited under any circumstances and maintains that the Commission
should be precluded from releasing such information.  Although we recognize the competitively
sensitive nature of the CMRS data in question, we decline to foreclose altogether the
Commission's or the Bureau's ability to disclose or direct the disclosure of company-specific
subscriber or revenue data reported for purposes of determining TRS or universal service
contributions.  The Commission has no present intention to disclose company-specific subscriber
or revenue data and, absent substantial justification, does not anticipate disclosing or directing the
disclosure of such data.  In view of the possibility, however, that an occasion may arise in which
the Commission or the Bureau determines that disclosure would be in the public interest (e.g., in
the context of an action brought against a contributor to enforce the contribution requirements, or
after a long delay so that financial information would no longer be competitively sensitive), and
the safeguards provided by sections 0.459 and 0.461 of our rules, we decline to amend our rules
to preclude the disclosure of company-specific subscriber or revenue data under any
circumstances.

IV.  Offset Versus Reimbursement

     A.   Background

     14.  Section 254(h)(1)(B) of the Act states that a telecommunications carrier applying
for support for the provision of services to an eligible school or library shall apply the amount of
the discount afforded to the school or library as an offset to its universal service contribution
obligation or shall be reimbursed for that amount from the universal service support
mechanisms.  In paragraph 586 of the Universal Service Order, the Commission concluded that
section 254(h)(1)(B) requires that telecommunications carriers be permitted to choose either
reimbursement or offset.  Section 54.515(a) of our rules, however, provides that:  "[a]
telecommunications carrier providing services eligible for support . . . to eligible schools and
libraries shall treat the amount eligible for support . . . as an offset against the carrier's universal
service support obligation for the year in which the costs for providing eligible services were
incurred."  Section 54.515(b) states:  "[i]f the total amount of support owed to a carrier . . .
exceeds its universal service obligation, calculated on an annual basis, the carrier may receive a
direct reimbursement in the amount of the difference."  Finally, section 54.515(c) states that: 
"[a]ny reimbursement due a carrier shall be made after the offset is credited against that carrier's
universal service obligation."

     15.  On March 5, 1998, USAC filed a letter with the Commission identifying an
apparent inconsistency between paragraph 586 of the Universal Service Order and section 54.515
of our rules.  USAC notes that paragraph 586 appears to give a carrier the choice of applying
the amount of a discount afforded to a school or library as an offset to its universal service
contribution obligation or receiving direct reimbursement for that amount from the
Administrator.  By contrast, USAC notes, section 54.515 appears to permit direct
reimbursement only if the amount owed the carrier exceeds the amount of the carrier's universal
service obligation and only for the difference that is owed the carrier after any offset has been
credited against the carrier's universal service obligation.  Thus, USAC asks the Commission to
reconcile section 54.515 with paragraph 586 of the Universal Service Order by providing carriers
a choice between reimbursement or offset.

     16.  On March 20, 1998, the Common Carrier Bureau issued an order in response to
USAC's March 5 letter.  In that order, the Bureau waived section 54.515 "to the extent
necessary to permit telecommunications carriers a choice, consistent with section 254(h)(1)(B), of
applying the amount of a discount afforded to a school or library as an offset to their contribution
obligation or receiving direct reimbursement for that amount from the Administrator."  The
Bureau took this action pending final action by the Commission reconciling any inconsistency
between section 54.515 and paragraph 586 of the Universal Service Order. 

     17.  On July 31, 1998, USAC filed a letter with the Commission seeking clarification
regarding USAC's ability to withhold payment of support amounts from carriers that have failed
to make their required monthly contribution to universal service.  In that letter USAC
recommended that carriers that fail to remit their monthly universal service obligation should not
be permitted to receive direct reimbursement from the federal universal service support
mechanisms, but instead should receive reimbursement pursuant only to the offset option for an
ensuing three-month period.  Adoption of such a policy, USAC reasoned, would reduce the
potential of a funding shortfall resulting from contributors' failure to pay in a timely fashion.  On
September 16, 1998, USAC filed another letter with the Commission revising its earlier
recommendation that carriers be subject to a reimbursement methodology for three months based
on information it had collected subsequent to its July 31 letter.  USAC now recommends that
carriers be required to elect on an annual basis either the offset or direct reimbursement method. 
Additionally, USAC recommends that carriers that fail to pay their universal service contributions
should receive any support amounts owed to them under the schools and libraries support
mechanism pursuant to the offset option for the remainder of the year in which the carriers failed
to pay.  Those carriers with an outstanding balance at the end of the year would be required to
continue receiving support under the offset option for the next year.  

     B.   Discussion

     18.  In light of the inconsistency that USAC has brought to our attention between
paragraph 586 of the Universal Service Order and section 54.515 of the Commission's rules, we
conform section 54.515 to the text of paragraph 586 of the Universal Service Order by adopting
the amendments reflected in Appendix A attached hereto.  As amended, a telecommunications
carrier applying for support under section 54.515 for services provided to an eligible school or
library either may apply the amount of the discount afforded to a school or library as an offset to
its universal service contribution obligation or be reimbursed for that amount from the universal
service support mechanisms.  We further find, however, that the statute does not provide carriers
participating in the support mechanism for schools and libraries with an unconditional right to
select between offset and direct reimbursement.  As USAC explains in its September 16, 1998
letter, it may be costly and administratively burdensome if USAC is asked to alter on a frequent
basis the method by which a carrier is reimbursed.  We therefore require carriers that are owed
support under the universal service support mechanism for schools and libraries to elect on an
annual basis the method by which they will receive payment.  Such carriers shall elect a payment
method in January of each year and shall remain subject to that method for the duration of the
calendar year. 
     
     19.  Additionally, consistent with USAC's July 31, 1998 letter, we find that any support
amount that is owed to a carrier participating in the support mechanism for schools and libraries
that fails to remit its monthly universal service obligation must first be applied as an offset to that
carrier's contribution obligation.  Thus, a carrier participating in the support mechanism for
schools and libraries that has failed to make its required contribution to universal service in a
given month is entitled to receive direct reimbursement from the universal service support
mechanisms only to the extent that the amount owed the carrier under the schools and libraries
support mechanism exceeds the amount of the carrier's total universal service obligation.  We
find that this decision is reasonable because, to the extent that a carrier is in arrears on its
universal service obligations, it has already effectively chosen an offset method of compensation. 
We are persuaded that requiring the use of an offsetting procedure as described above for a
carrier that fails to make timely contributions serves the public interest by ensuring an appropriate
universal service fund and minimizing the need for costly and time-consuming enforcement
actions.  Consistent with USAC's recommendation in its September 16, 1998 letter, carriers that
are in arrears on their universal service contribution obligations will remain subject to the
offsetting method for the remainder of the calendar year in which they failed to remit their
monthly universal service obligation.  A carrier with an outstanding balance at the end of a
calendar year shall remain subject to the offsetting method for the next calendar year.  A carrier
that has been subject to this mandatory offsetting procedure by USAC but that disputes its
contribution obligation may bring this matter to the attention of the Commission through a
request for declaratory ruling.  

VI.  Final Regulatory Flexibility Certification

     20.  The Regulatory Flexibility Act (RFA) requires that a regulatory flexibility analysis
be prepared for notice-and-comment rulemaking proceedings, unless the agency certifies that "the
rule will not, if promulgated, have a significant economic impact on a substantial number of small
entities."  The RFA generally defines "small entity" as having the same meaning as the terms
"small business," "small organization," and "small governmental jurisdiction."  In addition, the
term "small business" has the same meaning as the term "small business concern" under the Small
Business Act.  A small business concern is one which:  (1) is independently owned and operated;
(2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by
the Small Business Administration (SBA).  
     
     21.  In the NECA II Further Notice, the Commission certified, pursuant to section
605(b) of the RFA, that the proposed rule amendments attached thereto, which would permit the
Administrator to use TRS data to verify the accuracy of data provided on the Universal Service
Worksheet, would not have a significant economic impact on a substantial number of small
entities.  The Commission did not receive any comments on this tentative conclusion.  The rules
adopted in this order permit the Administrator to use TRS data to verify the accuracy of data
provided by universal service contributors on the Worksheet.  This Order therefore permits the
transfer of already collected data.  This exchange of information will enable the Administrator to
verify the accuracy of universal service data, thus ensuring the sufficiency of the universal service
support mechanisms.  We conclude that the rules adopted in this order regarding the use of TRS
data will not have a significant economic impact on small entities.

     22.  We find that our amendment to section 54.515, which clarifies that
telecommunications carriers seeking reimbursement for the provision of services to a school or
library may request either that the reimbursement amount be applied as an offset to the carrier's
universal service contribution obligation or that it receive direct reimbursement from the universal
service support mechanisms, will not have a significant economic impact on small entities.  This
amendment will provide telecommunications carriers providing services to schools and libraries
with flexibility in structuring the manner in which they will be reimbursed.  Additionally, we do
not believe that small entities will experience a significant economic impact due to our
determination that any support amount owed to a carrier that fails to remit its monthly universal
service obligation should first be applied as an offset against that carrier's contribution obligation. 
We find that, to the extent that a carrier is in arrears on its universal service obligations, it has
already effectively chosen an offset method of compensation.  We also find that requiring carriers
to select a reimbursement method on an annual basis, or be subject to mandatory offset for the
remainder of the year during which they failed to pay their universal service contribution
obligation, will not have a significant economic impact on small entities.  Rather, we find that
allowing carriers to elect annually the method by which they will be reimbursed provides carriers
with a reasonable degree of flexibility in structuring their operations.  Furthermore, we find that
requiring nonpaying carriers to accept the offsetting procedure for the remainder of the calendar
year in which they failed to pay their universal service contributions is reasonable in light of the
need to establish a reliable payment history on the part of such carriers and to maintain the
certainty and sufficiency of the universal service support mechanisms.

     23.  We also conclude that our determination in this Order to eliminate the requirement
that contributors report as end-user telecommunications revenues those revenues derived from the
provision of inside wiring maintenance will not have a significant economic impact on small
entities.  In fact, this determination will lessen contributors' reporting requirements and may lessen
the contribution amount of some contributors.

VII. ORDERING CLAUSES

     24.  Accordingly, IT IS ORDERED that, pursuant to the authority contained in
sections 1-4, 201-205, 254, and 405 of the Communications Act of 1934, as amended, 47 U.S.C.
 151-154, 201-205, 254, and 405 and section 553 of the Administrative Procedure Act, 5
U.S.C.  553, the adoption of this SECOND REPORT AND ORDER, THIRD ORDER ON
RECONSIDERATION, and SIXTH ORDER ON RECONSIDERATION is effective 30 days
after publication in the Federal Register.

     25.  IT IS FURTHER ORDERED that the amendments to Parts 54 and 64 of the
Commission's rules, 47 C.F.R. Parts 54 and 64, attached in Appendix A hereto, are effective 30
days after publication in the Federal Register.


                              FEDERAL COMMUNICATIONS COMMISSION


                              Magalie Roman Salas
                              Secretary

     
                      SEPARATE STATEMENT OF 
              COMMISSIONER HAROLD FURCHTGOTT-ROTH 

     Re:  Second Report and Order and Third Order on Reconsideration regarding Changes to the
     Board of Directors of the National Exchange Carrier Association, Inc.; Sixth Order on
     Reconsideration regarding the Federal-State Joint Board on Universal Service; CC
     Docket Nos. 97-21, 96-45.  

     I support today's order clarifying that, while inside wiring and internal connections "make
possible the transmission of information," the "provision of inside wiring maintenance does not
constitute 'telecommunications' or a 'telecommunications service' and [ ] therefore conclude that
revenues derived from this activity should not be included as end-user telecommunications
revenues on the Worksheet."  I write separately, however, to point out that it is this distinction
that the Commission had previously ignored in declaring that universal service support should be
available for inside wiring.  

     Section 254 speaks of discounts for "services."  It is difficult to rationalize inclusion of
plant and equipment for discounts under this section.   As I explained in the April 10th report to
Congress, the Commission has no statutory basis to provide direct financial support for non-
telecommunications services or other plant and equipment.  To the contrary, Section
254(h)(1)(B) unambiguously limits recipients to "telecommunications carrier[s] providing service
under this paragraph."  The Commission has long recognized that "inside wiring installation and
maintenance are severable from the underlying common carrier transmission services . . ." 
Despite this traditional distinction, however, in the context of the schools and libraries program
the Commission determined that internal connections were eligible for support to the extent that
they were "an essential element in the transmission of information within the schools or library."  

     Indeed, much of the "inside wiring" turns out not even to be copper wire or coaxial cable;
instead, "inside wiring" is predominantly computers to support sophisticated ethernets.  For
example, the Commission has determined that it will allow universal service "taxes" to support
installation and maintenance of high-speed computer networks -- including "routers, hubs,
network file servers, and wireless LANS" -- inside schools and libraries.  Such internal networks
would rival those of the largest corporations and universities; most small businesses cannot afford
the luxury of installing and maintaining expensive equipment like this. 

     While today's order clarifies that inside wiring is not telecommunications, it perpetuates
yet another example of a type of activity that is eligible for universal service support but that does
not make its fair share of contributions.  I would have preferred that the Commission take this
opportunity to clarify that inside wiring does not constitute telecommunications for the purposes
of either contributing to or receiving support from universal service.  As I have cautioned the
network equipment manufacturing industry, many have argued that it is unfair to allow a
particular industry activity to take from a public fund without having the corresponding obligation
to contribute to it.    


                            Appendix A

          Amendments to the Code of Federal Regulations

     Part 54 of Title 47 of the Code of Federal Regulations is amended as follows:
     
                   PART 54 - UNIVERSAL SERVICE

Section 54.515 is amended by revising paragraph (a), deleting paragraphs (b) and (c), relettering
paragraph (d) as paragraph (b), and revising new paragraph (b) as follows:

      54.515  Distributing support.    

     (a)  A telecommunications carrier providing services eligible for support under this subpart
to eligible schools and libraries may, at the election of the carrier, treat the amount eligible for
support under this subpart as an offset against the carrier's universal service contribution
obligation for the year in which the costs for providing eligible services were incurred or receive a
direct reimbursement from the Administrator for that amount.  Carriers shall elect in January of
each year the method by which they will be reimbursed and shall remain subject to that method for
the duration of the calendar year.  Any support amount that is owed a carrier that fails to remit its
monthly universal service contribution obligation, however, shall first be applied as an offset to
that carrier's contribution obligation.  Such a carrier shall remain subject to the offsetting method
for the remainder of the calendar year in which it failed to remit their monthly universal service
obligation.  A carrier that continues to be in arrears on its universal service contribution
obligations at the end of a calendar year shall remain subject to the offsetting method for the next
calendar year.  

     (b)  If a telecommunications carrier elects to treat the amount eligible for support under
this subpart as an offset against the carrier's universal service contribution obligation and the total
amount of support owed to the carrier exceeds its universal service obligation, calculated on an
annual basis, the carrier shall receive a direct reimbursement in the amount of the difference.  Any
such reimbursement due a carrier shall be submitted to that carrier no later than the end of the first
quarter of the calendar year following the year in which the costs were incurred and the offset
against the carrier's universal service obligation was applied.

Section 54.711 is amended by revising paragraphs (a) and (b) to read as follows:

Section 54.711      Contributor reporting requirements.
     
     (a)  Contributions shall be calculated and filed in accordance with the Universal Service
Worksheet.  The Universal Service Worksheet sets forth information that the contributor must
submit to the Administrator on a semi-annual basis.  The Commission shall announce by Public
Notice published in the Federal Register and on its website the manner of payment and dates by
which payments must be made.  An officer of the contributor must certify to the truth and
accuracy of the Universal Service Worksheet, and the Commission or the Administrator may
verify any information contained in the Universal Service Worksheet at the discretion of the
Commission.  The administrator of the Telecommunications Relay Service Fund shall provide data
reported on the Telecommunications Relay Service Worksheet to the Administrator so that the
Administrator may verify information contained in the Universal Service Worksheet.  Inaccurate
or untruthful information contained in the Universal Service Worksheet may lead to prosecution
under the criminal provisions of Title 18 of the United States Code.  The Administrator shall
advise the Commission of any enforcement issues that arise and provide any suggested response.
     
     (b)  The Commission shall have access to all data reported to the Administrator, Rural
Health Care Corporation, and Schools and Libraries Corporation.  Contributors may make
requests for Commission nondisclosure of company-specific information by so indicating on the
Universal Service Worksheet.  The Commission shall make all decisions regarding nondisclosure
of company-specific information.  The Administrator, Rural Health Care Corporation, and
Schools and Libraries Corporation shall keep confidential all data obtained from contributors,
including all data obtained from the administrator of the Telecommunications Relay Service Fund,
shall not use such data except for purposes of administering the universal service support
programs, and shall not disclose such data in company-specific form unless directed to do so by
the Commission.  

* * * * *

     Part 64 of Title 47 of the Code of Federal Regulations is amended as follows:

     PART 64 - MISCELLANEOUS RULES RELATING TO COMMON CARRIERS
     
Section 64.604 is amended by revising paragraph (c)(4)(iii)(I) to read as follows:

Section 64.604 Mandatory minimum standards.
     
* * * * *
     (c)  * * *
          (4)  * * *
               
               (iii)  * * *
                    
                    (I)  Information filed with the administrator.  The administrator
shall keep all data obtained from contributors and TRS providers confidential and shall not
disclose such data in company-specific form unless directed to do so by the Commission.  The
administrator shall not use such data except for purposes of administering the TRS Fund, enabling
the universal service Administrator to verify revenue information provided by contributors to the
those mechanisms, calculating the regulatory fees of interstate common carriers, and aggregating
such fee payments for submission to the Commission.  The Commission shall have access to all
data reported to the administrator, and shall have the authority to audit TRS providers.

* * * * *

     Part 69 of Title 47 of the Code of Federal Regulations is amended as follows:

     Part 69 -- ACCESS CHARGES

Section 69.616 is amended by adding paragraph (e) as follows:

Section 69.616 Independent subsidiary functions.

     (a)  * * * * *
     (b)  * * * * *
     (c)  * * * * *
     (d)  * * * * *
     (e)  Pursuant to its responsibility for billing and collecting contributions, the
independent subsidiary shall compare periodically information collected by the Administrator of
the TRS Fund from TRS Fund Worksheets with information submitted by contributors on
Universal Service Worksheets in order to verify the accuracy of information submitted on
Universal Service Worksheets.  When performing a comparison of contributor information as
provided by this subsection, the independent subsidiary must undertake company-by-company
comparisons for all entities filing Universal Service and TRS Fund Worksheets. 
                                 Appendix B
     
     Parties Filing Comments or Petitions for Reconsideration to NECA Order

                                        Abbreviation
AirTouch Communications, Inc.                AirTouch
Ameritech
BellSouth
Bell Atlantic
MCI 
National Exchange Carrier Association, Inc.       NECA
Nevada Bell, Pacific Bell and Southwestern Bell        
United States Telephone Association               USTA

             Parties Filing Comments to NECA II Order
     
BellSouth
MCI
National Exchange Carrier Association, Inc.       NECA