`SEC. 254. UNIVERSAL SERVICE.
            `(a) PROCEDURES TO REVIEW UNIVERSAL SERVICE REQUIREMENTS- 
                `(1) FEDERAL-STATE JOINT BOARD ON UNIVERSAL SERVICE- Within
              one month after the date of enactment of the Telecommunications
              Act of 1996, the Commission shall institute and refer to a
              Federal-State Joint Board under section 410(c) a proceeding to
              recommend changes to any of its regulations in order to
              implement sections 214(e) and this section, including the
              definition of the services that are supported by Federal
              universal service support mechanisms and a specific timetable
              for completion of such recommendations. In addition to the
              members of the Joint Board required under section 410(c), one
              member of such Joint Board shall be a State-appointed utility
              consumer advocate nominated by a national organization of State
              utility consumer advocates. The Joint Board shall, after notice
              and opportunity for public comment, make its recommendations to
              the Commission 9 months after the date of enactment of the
              Telecommunications Act of 1996.
                `(2) COMMISSION ACTION- The Commission shall initiate a 
              single proceeding to implement the recommendations from the
              Joint Board required by paragraph (1) and shall complete such
              proceeding within 15 months after the date of enactment of the
              Telecommunications Act of 1996. The rules established by such
              proceeding shall include a definition of the services that are
              supported by Federal universal service support mechanisms and a
              specific timetable for implementation. Thereafter, the
              Commission shall complete any proceeding to implement 
              subsequent recommendations from any Joint Board on universal
              service within one year after receiving such recommendations.
            `(b) UNIVERSAL SERVICE PRINCIPLES- The Joint Board and the
          Commission shall base policies for the preservation and advancement
          of universal service on the following principles:
                `(1) QUALITY AND RATES- Quality services should be available
              at just, reasonable, and affordable rates.
                `(2) ACCESS TO ADVANCED SERVICES- Access to advanced
              telecommunications and information services should be provided
              in all regions of the Nation.
                `(3) ACCESS IN RURAL AND HIGH COST AREAS- Consumers in all
              regions of the Nation, including low-income consumers and those
              in rural, insular, and high cost areas, should have access to
              telecommunications and information services, including
              interexchange services and advanced telecommunications and
              information services, that are reasonably comparable to those
              services provided in urban areas and that are available at 
              rates that are reasonably comparable to rates charged for
              similar services in urban areas.
                `(4) EQUITABLE AND NONDISCRIMINATORY CONTRIBUTIONS- All
              providers of telecommunications services should make an
              equitable and nondiscriminatory contribution to the 
              preservation and advancement of universal service.
                `(5) SPECIFIC AND PREDICTABLE SUPPORT MECHANISMS- There 
              should be specific, predictable and sufficient Federal and 
              State mechanisms to preserve and advance universal service.
                `(6) ACCESS TO ADVANCED TELECOMMUNICATIONS SERVICES FOR
              SCHOOLS, HEALTH CARE, AND LIBRARIES- Elementary and secondary
              schools and classrooms, health care providers, and libraries
              should have access to advanced telecommunications services as
              described in subsection (h).
                `(7) ADDITIONAL PRINCIPLES- Such other principles as the 
              Joint Board and the Commission determine are necessary and
              appropriate for the protection of the public interest,
              convenience, and necessity and are consistent with this Act.
            `(c) DEFINITION- 
                `(1) IN GENERAL- Universal service is an evolving level of
              telecommunications services that the Commission shall establish
              periodically under this section, taking into account advances 
              in telecommunications and information technologies and 
              services. The Joint Board in recommending, and the Commission 
              in establishing, the definition of the services that are
              supported by Federal universal service support mechanisms shall
              consider the extent to which such telecommunications services--
                    `(A) are essential to education, public health, or public
                  safety;
                    `(B) have, through the operation of market choices by
                  customers, been subscribed to by a substantial majority of
                  residential customers;
                    `(C) are being deployed in public telecommunications
                  networks by telecommunications carriers; and
                    `(D) are consistent with the public interest, 
                  convenience, and necessity.
                `(2) ALTERATIONS AND MODIFICATIONS- The Joint Board may, from
              time to time, recommend to the Commission modifications in the
              definition of the services that are supported by Federal
              universal service support mechanisms.
                `(3) SPECIAL SERVICES- In addition to the services included 
              in the definition of universal service under paragraph (1), the
              Commission may designate additional services for such support
              mechanisms for schools, libraries, and health care providers 
              for the purposes of subsection (h).
            `(d) TELECOMMUNICATIONS CARRIER CONTRIBUTION- Every
          telecommunications carrier that provides interstate
          telecommunications services shall contribute, on an equitable and
          nondiscriminatory basis, to the specific, predictable, and
          sufficient mechanisms established by the Commission to preserve and
          advance universal service. The Commission may exempt a carrier or
          class of carriers from this requirement if the carrier's
          telecommunications activities are limited to such an extent that 
          the level of such carrier's contribution to the preservation and
          advancement of universal service would be de minimis.  Any other
          provider of interstate telecommunications may be required to
          contribute to the preservation and advancement of universal service
          if the public interest so requires.
            `(e) UNIVERSAL SERVICE SUPPORT- After the date on which 
          Commission regulations implementing this section take effect, only
          an eligible telecommunications carrier designated under section
          214(e) shall be eligible to receive specific Federal universal
          service support. A carrier that receives such support shall use 
          that support only for the provision, maintenance, and upgrading of
          facilities and services for which the support is intended.  Any 
          such support should be explicit and sufficient to achieve the
          purposes of this section.
            `(f) STATE AUTHORITY- A State may adopt regulations not
          inconsistent with the Commission's rules to preserve and advance
          universal service. Every telecommunications carrier that provides
          intrastate telecommunications services shall contribute, on an
          equitable and nondiscriminatory basis, in a manner determined by 
          the State to the preservation and advancement of universal service
          in that State.  A State may adopt regulations to provide for
          additional definitions and standards to preserve and advance
          universal service within that State only to the extent that such
          regulations adopt additional specific, predictable, and sufficient
          mechanisms to support such definitions or standards that do not 
          rely on or burden Federal universal service support mechanisms.
            `(g) INTEREXCHANGE AND INTERSTATE SERVICES- Within 6 months after
          the date of enactment of the Telecommunications Act of 1996, the
          Commission shall adopt rules to require that the rates charged by
          providers of interexchange telecommunications services to
          subscribers in rural and high cost areas shall be no higher than 
          the rates charged by each such provider to its subscribers in urban
          areas. Such rules shall also require that a provider of interstate
          interexchange telecommunications services shall provide such
          services to its subscribers in each State at rates no higher than
          the rates charged to its subscribers in any other State.
            `(h) TELECOMMUNICATIONS SERVICES FOR CERTAIN PROVIDERS- 
                `(1) IN GENERAL- 
                    `(A) HEALTH CARE PROVIDERS FOR RURAL AREAS- A
                  telecommunications carrier shall, upon receiving a bona 
                  fide request, provide telecommunications services which are
                  necessary for the provision of health care services in a
                  State, including instruction relating to such services, to
                  any public or nonprofit health care provider that serves
                  persons who reside in rural areas in that State at rates
                  that are reasonably comparable to rates charged for similar
                  services in urban areas in that State. A telecommunications
                  carrier providing service under this paragraph shall be
                  entitled to have an amount equal to the difference, if any,
                  between the rates for services provided to health care
                  providers for rural areas in a State and the rates for
                  similar services provided to other customers in comparable
                  rural areas in that State treated as a service obligation 
                  as a part of its obligation to participate in the 
                  mechanisms to preserve and advance universal service.
                    `(B) EDUCATIONAL PROVIDERS AND LIBRARIES- All
                  telecommunications carriers serving a geographic area 
                  shall, upon a bona fide request for any of its services 
                  that are within the definition of universal service under
                  subsection (c)(3), provide such services to elementary
                  schools, secondary schools, and libraries for educational
                  purposes at rates less than the amounts charged for similar
                  services to other parties. The discount shall be an amount
                  that the Commission, with respect to interstate services,
                  and the States, with respect to intrastate services,
                  determine is appropriate and necessary to ensure affordable
                  access to and use of such services by such entities. A
                  telecommunications carrier providing service under this
                  paragraph shall--
                        `(i) have an amount equal to the amount of the
                      discount treated as an offset to its obligation to
                      contribute to the mechanisms to preserve and advance
                      universal service, or
                        `(ii) notwithstanding the provisions of subsection 
                      (e) of this section, receive reimbursement utilizing 
                      the support mechanisms to preserve and advance 
                      universal service.
                `(2) ADVANCED SERVICES- The Commission shall establish
              competitively neutral rules--
                    `(A) to enhance, to the extent technically feasible and
                  economically reasonable, access to advanced
                  telecommunications and information services for all public
                  and nonprofit elementary and secondary school classrooms,
                  health care providers, and libraries; and
                    `(B) to define the circumstances under which a
                  telecommunications carrier may be required to connect its
                  network to such public institutional telecommunications
                  users.
                `(3) TERMS AND CONDITIONS- Telecommunications services and
              network capacity provided to a public institutional
              telecommunications user under this subsection may not be sold,
              resold, or otherwise transferred by such user in consideration
              for money or any other thing of value.
                `(4) ELIGIBILITY OF USERS- No entity listed in this 
              subsection shall be entitled to preferential rates or treatment
              as required by this subsection, if such entity operates as a
              for-profit business, is a school described in paragraph (5)(A)
              with an endowment of more than $50,000,000, or is a library not
              eligible for participation in State-based plans for funds under
              title III of the Library Services and Construction Act (20
              U.S.C. 335c et seq.).
                `(5) DEFINITIONS- For purposes of this subsection:
                    `(A) ELEMENTARY AND SECONDARY SCHOOLS- The term
                  `elementary and secondary schools' means elementary schools
                  and secondary schools, as defined in paragraphs (14) and
                  (25), respectively, of section 14101 of the Elementary and
                  Secondary Education Act of 1965 (20 U.S.C. 8801).
                    `(B) HEALTH CARE PROVIDER- The term `health care 
                  provider' means--
                        `(i) post-secondary educational institutions offering
                      health care instruction, teaching hospitals, and 
                      medical schools;
                        `(ii) community health centers or health centers
                      providing health care to migrants;
                        `(iii) local health departments or agencies;
                        `(iv) community mental health centers;
                        `(v) not-for-profit hospitals;
                        `(vi) rural health clinics; and
                        `(vii) consortia of health care providers consisting
                      of one or more entities described in clauses (i) 
                      through (vi).
                    `(C) PUBLIC INSTITUTIONAL TELECOMMUNICATIONS USER- The
                  term `public institutional telecommunications user' means 
                  an elementary or secondary school, a library, or a health
                  care provider as those terms are defined in this paragraph.
            `(i) CONSUMER PROTECTION- The Commission and the States should
          ensure that universal service is available at rates that are just,
          reasonable, and affordable.
            `(j) LIFELINE ASSISTANCE- Nothing in this section shall affect 
          the collection, distribution, or administration of the Lifeline
          Assistance Program provided for by the Commission under regulations
          set forth in section 69.117 of title 47, Code of Federal
          Regulations, and other related sections of such title.
            `(k) SUBSIDY OF COMPETITIVE SERVICES PROHIBITED- A
          telecommunications carrier may not use services that are not
          competitive to subsidize services that are subject to competition.
          The Commission, with respect to interstate services, and the 
          States, with respect to intrastate services, shall establish any
          necessary cost allocation rules, accounting safeguards, and
          guidelines to ensure that services included in the definition of
          universal service bear no more than a reasonable share of the joint
          and common costs of facilities used to provide those services.