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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).

March 18, 1999

Report No. CC 99-7

Emily Hoffnar (202) 418-0253

FCC Adopts Two Orders Related to the
Schools and Libraries Universal Service Support Mechanism
(CC Docket No. 96-45)

The Commission adopted two orders to ensure the continued success of the schools and libraries universal service support mechanism.

In the first Order, adopted today, the Commission clarified how the rules of funding priority should be applied to requests for discounts for services, typically internal connections, that are shared by two or more schools or libraries. Consistent with the Commission's goal that universal service support be directed first to the most economically disadvantaged schools and libraries, the Commission clarified that, when sufficient funds are not available to fund all internal connection requests, funds for discounts to schools and libraries shall be allocated beginning with those applicants at the ninety percent discount level and, to the extent funds remain, to applicants at each descending single discount percentage, that is, eighty-nine percent, eighty-eight percent, and so on.

The Commission's rules prioritize funding requests on the basis of broad discount categories, that is, ninety percent or eighty percent. The Commission's rules also provide that, with regard to requests for services that are shared by two or more schools or libraries, which typically involve internal connections, the discount level should be calculated by averaging the applicable discounts of all member schools and libraries. As a result, the discounts associated with these shared services requests are single discount level percentages, for example, eighty-nine percent, eighty-eight percent, and so on. In this Order, the Commission clarified that its rules on "shared services" and the funding priority rules must be read in concert. In making this clarification, the Commission noted that allocating funds at each descending discount level will enable the neediest schools and libraries to receive their allocation of funds sooner than if the fund Administrator were required to determine the pro rata amount for the entire discount category before distributing support.

In the first Order, the Commission also revised its rules so that, when an appeal from the decision of the fund Administrator relates to a request for additional support by the applicant or involves a challenge by a third party to only a portion of the approved funds, the Administrator may disburse those funds that are not the subject of the appeal during the pendency of the appeal. The existing rules have had the unintended effect of prohibiting the Administrator from disbursing any funds during the pendency of an appeal and as a result are preventing schools and libraries from realizing the benefits of the schools and libraries program.

In the first Order, the Commission also adopted a Further Notice of Proposed Rulemaking seeking comment on a proposed method for allocating funds in the event that the Administrator or the Commission grants an appeal of a decision issued by the Administrator. Although the Administrator has taken all reasonable and appropriate steps to ensure that it will be able to fund fully all appeals that may be granted, the Commission concluded that it is necessary to adopt additional funding priority rules setting forth how funds will be allocated in the unlikely event that sufficient funds are not available at the appeal phase.

In the second Order, adopted yesterday, the Commission addressed concerns raised by various schools and libraries in light of the Commission's extension of the 1998-99 funding year to June 30, 1999. To ensure that schools and libraries have sufficient time to use universal service support that was approved in the first funding year for nonrecurring services such as installation of internal connections, the Commission extended the deadline for using such support until September 30, 1999 -- three months beyond the end of the first funding year. This extension addresses concerns raised by schools and libraries experiencing difficulty completing installation of internal connections within the first funding period.

Finally, in the second Order, the Commission addressed an unintended effect of its extension of the first funding year to June 30, 1999. In the second Order, the Commission revised its rules so that a school or library may extend or renew through June 30, 1999, an existing contract that expired prior to December 31, 1998, without subjecting such extension or renewal to competitive bidding. The existing contract, however, may be extended only for services received between January 1, 1999 and June 30, 1999. By exempting such contracts from the competitive bidding rules, the Commission concluded that it would not have been reasonable to expect a school or library to seek competitive bids for a contract that would cover only the six-month period of the extended funding year.

Action by the Commission March 17, 1999 by Tenth Order on Reconsideration (FCC 99-46). Chairman Kennard, Commissioners Ness, Furchtgott-Roth, Powell and Tristani.

Action by the Commission March 18, 1999 by Fourth Report and Order in CC Docket No. 97-21, Fifth Order on Reconsideration in CC Docket No. 97-21, Eleventh Order on Reconsideration in CC Docket No. 96-45 and Further Notice of Proposed Rulemaking (FCC 99-49). Chairman Kennard, Commissioners Ness, Powell and Tristani, with Commissioner Furchtgott-Roth dissenting. Commissioner Furchtgott-Roth issuing a separate statement.


Common Carrier Bureau contact: Sharon Webber/Irene Flannery (202) 418-7400