[ Text Version | WordPerfect Version ]

July 15, 1998


Re: Proposal to Revise Administrative Structure for Federal Universal Service Support Mechanisms; (CC Docket No 96-45) .

Today the Common Carrier Bureau releases a Public Notice seeking comment on the Universal Service Administrative Company's (USAC) proposed plan for reorganization of the universal service administrative structures. The proposal for consolidating the three corporations is a good first step in reaching a more rational and efficient structure to administer universal service. I also appreciate that the Bureau is following up on the Commission's commitment in its May 8, 1998 report to Congress to "establish a procedure under which administrative decisions made by USAC would be reviewable by the Commission." I have reservations, however, about the details of these proposals, including the specific functions of the consolidated entity and the Bureau's proposed procedures for Commission oversight.

Section 2005(b)(2)(A) of Senate Bill 1768, which prompted these revisions, provides for an extremely limited administrative entity:

[T]he entity proposed by the Commission to administer the programs -- (i) is limited to implementation of the FCC rules for applications for discounts and processing the applications necessary to determine eligibility for discounts under section 254(h) of the Communications ct of 1934 (47 U.S.C. 254(h)) as determined by the Commission; (ii) may not administer the program in any manner that requires that entity to interpret the intent of Congress in establishing the programs or interpret any rule promulgated by the Commission in carrying out the programs, without appropriate consultation and guidance from the Commission.

In light of such limited administrative functions, I fail to see the need for such bureaucratic corporations with formal multiple committees. If the overall entity is prohibited from setting policy and limited to the function of processing applications, then any subcommittee must be similarly constrained. But what kinds of decisions will any subcommittee be making that would be of such paramount interest to the program that it would be necessary to bind the full USAC board absent a supermajority? In establishing an entity to review and process the applications, the Commission is merely contracting out administrative functions. All decisions regarding where the money should be going and how it should be distributed should -- indeed must -- be made by the Commission.

I am also concerned that the Commission itself is insufficiently involved in the decision-making process under the Bureau's proposal. For example, an affected party would file a petition for review first with the Common Carrier Bureau, who would have specific delegated authority to rule on the petitions with possible appeal to the full Commission. I would prefer that the full Commission be more actively involved in overseeing the administration of these new programs. For example, unless amended, this process would allow for Bureau approval of USAC decisions without an order explaining their reasoning. My concerns regarding sufficient Commission involvement earlier in the process are only exacerbated by the Bureau's proposal to allow applicants to receive discounted services and carriers to be reimbursed during the pendency of such an appeal. Thus, if the Bureau failed to act for any number of reasons, public funds would still be disbursed while a potentially valid challenge remained. What assurances are there for taxpayers that erroneous payments will be returned?

I also fail to see the need for any party to be required to appeal a USAC staff decision first to the USAC Board, and possibly even to the relevant committee of the Board, as proposed. USAC has no policy-making or adjudicative authority. As such, an affected party should be able to seek relief directly from the full Commission, or the Bureau if appropriate under delegated authority.

Moreover, my concerns regarding appropriate Commission oversight are heightened by the fact that the proposed committees of USAC would have the power to bind the USAC Board regarding matters within their expertise, absent a supermajority of the full USAC Board voting to override the committee's actions. Matters within the Schools and Libraries Committee's expertise, for example, include "developing and implementing other distinctive program functions." I am concerned with such open-ended authority, especially in light of the protracted procedure for Commission review. I encourage parties to take these issues into account when commenting on the proposed structure.

I believe that the full Commission must take a more active role in the direct oversight of these quasi-public companies. Congress clearly favors a more efficient organization of only limited administrative functions, without the ability to "interpret the intent of Congress" or "any rule promulgated by the Commission."(1) While a good start, this public notice fails to ensure meaningful and early Commission involvement in budgetary decisions and the policy-making process.(2)

Finally, I remain concerned that the report fails to address fully the issues raised by the GAO report regarding the legality of the Commission creating any new corporations without specific statutory authority. I fail to see how the Commission can direct that these corporations continue to act without first receiving the requisite authorization from Congress, and urge others to comment on this aspect of the revised organization.

1. Section 2005(b) of Senate Bill 1768.

2. For example, I am concerned about the degree of oversight that is being exercised regarding administrative and start-up costs. In their latest filing, the Schools and Libraries Corporation indicates that it paid NECA $1.86 million in start-up costs, more than three times the original estimate, and it is still not able to provide an accurate estimate of all its administrative costs for the first quarter. Third Quarter 1998 Fund Size Requirements for the Schools and Libraries universal Service Program, dated May 1, 1998.