December 4, 1998
It is the Commission's responsibility to ensure that all of the universal service support mechanisms are administered as effectively and cost-efficiently as possible. We have done so, and must continue to do so on an ongoing basis. The Commission is working in a variety of ways to ensure that administrative costs for both the Schools and Libraries Corporation (SLC) and Rural Health Care Corporation (RHCC) mechanisms are reasonable and appropriate. Moreover, the administrative entities have internal procedures to ensure that administrative expenses are restrained. For example, the Schools and Libraries Corporation has policies in place to ensure that travel expenses are no greater than necessary.
During the last year, SLC processed over 30,000 applications from schools and libraries across America. Last week, SLC began sending its funding commitment letters to schools and libraries. It was a monumental achievement, but that does not come without some expense. I understand that much of the increase in administrative expenses was due to the cost of processing this impressive number of applications. I do not believe that the expenses for the administration of the SLC are inappropriate. The Commission is committed to ensuring that these expenses are appropriate and reasonable and will continue its oversight of them.
In the Telecommunications Act of 1996, Congress sought to provide rural Americans with affordable access to quality health care by giving rural health care providers discounts on telecommunications services. After public comment and input from all interested parties, the FCC established a mechanism to benefit rural health care providers as Congress intended in section 254.
I am a strong supporter of the rural health care initiative and am committed to its success. I have witnessed first-hand the ways in which telemedicine can ensure that sick or injured residents of a rural Alaska fishing village can be diagnosed by an expert doctor hundreds of miles away. In Alaska and states all over the country, such diagnoses cannot be made without telemedicine, unless the patient incurs the often considerable, and sometimes prohibitive, expense of travelling to the nearest urban health care facility.
Today, therefore, in addition to proposing universal service contribution factors for the first quarter of 1999, we are taking affirmative steps to improve this important aspect of universal service.
In the first application period ending in July, the RHCC received more than 2,000 initial applications from health care providers throughout the Nation. Yet only a small fraction of these applicants have completed the application process and established their eligibility for the discounts.
At the FCC's request, RHCC sought to determine why the number of completed applications was so low and what can be done to stimulate demand. Because there is not conclusive evidence yet about the primary factor or factors that have led to the small number of completed applications, we are directing the Universal Service Administrative Company (USAC) to examine these issues and report back to us after it assumes its new oversight role with respect to the rural health care mechanism on January 1, 1999.
USAC also must find ways to lower the administrative expenses incurred with this mechanism. I recognize that a start-up entity is likely to have relatively high administrative expenses, both as a result of one-time start-up costs and as it determines the most efficient manner in which to carry out its responsibilities over the long term. Nevertheless, USAC should carefully review all of the administrative expenses associated with the rural health care mechanism, determine where reductions can be made, and submit revisions by March 1, 1999.
I am grateful to those who have put so much effort into the implementation of the universal service mechanisms. Schools and libraries, especially those that are the neediest; health care providers in rural areas; low-income consumers; and consumers in high cost areas, all benefit as result of Congress's action. The resulting distribution of support is not a question of picking winners and losers, but of implementing Congress's goal that everyone in the nation has the opportunity to remain connected regardless of income level or location.