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


In the Matter of:                    )
                                     )
Federal-State Joint Board on         ) CC Docket No. 96-45
Universal Service                    ) 

                                   ORDER

Adopted:  March 20, 1998         Released:  March 20, 1998

By the Deputy Chief, Common Carrier Bureau:

I.   INTRODUCTION

     1.    Pursuant to section 1.3 of the Commission's rules, we find good cause to
waive, on a temporary basis, the requirements of two Commission rules.  First, we waive,
on our own motion, the requirement in section 64.604(c)(4)(iii)(I) of the Commission's rules
that the administrator of the Telecommunications Relay Services Fund (TRS Administrator)
use data obtained from TRS contributors only for purposes of administering the TRS Fund. 
We waive this rule to the extent necessary to permit the TRS Administrator to make available
certain TRS data to the administrator of the universal service support mechanisms
(Administrator) for purposes of comparing revenue information provided by contributors on
the Universal Service Worksheet.  
     
     2.    Second, we waive the requirements of section 54.515 of the Commission's
rules, to the extent that section 54.515 provides that a telecommunications carrier seeking
reimbursement from the Administrator for the provision of services to a school or library
must apply the amount of the discount afforded to that school or library as an offset to the
carrier's universal service contribution obligation.  Such waiver is consistent with section
254(h)(1)(B) of the Communications Act of 1934, as amended.  

II.  DISCUSSION

     3.    The Commission has general authority to suspend, waive, or amend its rules,
on its own motion, for good cause.  Courts have held that good cause exists to waive a
Commission rule only if special circumstances warrant a deviation from the general rule, and
such a deviation will serve the public interest.  As discussed more fully below, we find that
special circumstances warrant a deviation from the general requirements of sections
64.604(c)(4)(iii)(I) and 54.515 and that such a deviation is in the public interest.  

     4.     Use of TRS Data by the Universal Service Administrator.  In the pending
NECA II Further Notice, the Commission proposed to amend section 64.604(c)(4)(iii)(I) of
the Commission's rules to permit the Administrator to review TRS data to verify 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.  The Commission sought comment on this tentative conclusion and on the
rule amendments proposed in the NECA II Further Notice.     

     5.    In this Order, we waive on our own motion the requirement in section
64.604(c)(4)(iii)(I) of the Commission's rules that the TRS Administrator use data obtained
from TRS contributors only for purposes of administering the TRS Fund.  Subject to the
limitations set forth below, we waive this requirement to the extent necessary to permit the
TRS Administrator to make available, and to permit the universal service Administrator to
use, TRS contributor revenue information for purposes of permitting the universal service
Administrator to compare revenue information provided by contributors on the Universal
Service Worksheet.  This waiver will remain in effect until such time as the Commission
rules on the section 64.604(c)(4)(iii)(I) rule amendments that were proposed in the NECA II
Further Notice.  The universal service Administrator must keep confidential all data
obtained from the TRS administrator and may not disclose such data in company-specific
form unless directed to do so by the Commission.

     6.    Permitting 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 any inconsistencies between revenue data reported on the TRS
Fund Worksheet and revenue data reported on the Universal Service Worksheet.  In addition, 
as NECA suggests in response to the NECA II Further Notice, we believe that the use of
TRS data for this purpose may provide a more efficient method of monitoring contributors'
compliance with the contribution requirements than if the Administrator were forced to rely
on audits alone.  MCI, BellSouth, and NECA support the Commission's proposed use of
TRS data for this purpose, and no parties filed comments opposing the Commission's
proposal.  

     7.     Contributors to universal service will be required to file the Universal Service
Worksheet by March 31, 1998.  We believe that this waiver will enhance the Administrator's
performance of the collection function for which it is responsible and thereby better ensure
the integrity and efficient administration of the universal service support mechanisms.  We
conclude, therefore, that good cause exists to waive the general requirements of section
64.604(c)(4)(iii)(I), as detailed herein, and that such deviation is in the public interest.

     8.    Choice of Offset or Reimbursement.  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 either 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."  

     9.    In a recent letter, USAC points out an apparent conflict between paragraph
586 of the Universal Service Order and section 54.515 of our rules.  Specifically, 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.  On
the other hand, USAC points out, 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.  USAC asks the Commission to
amend section 54.515 of our rules to conform the text of the rule to that of paragraph 586 of
the Universal Service Order by providing carriers a choice between reimbursement or
offset.

     10.   We agree that section 54.515 of the Commission's rules instructs
telecommunications carriers seeking to receive support for providing services to schools and
libraries to seek an offset to their contribution obligations and appears to allow carriers to
receive direct reimbursement only when the total amount owed to the carrier exceeds the
amount of its universal service contribution.  In light of the apparent inconsistency that has
been brought to our attention between section 254(h)(1)(B) of the Act and section 54.515 of
the Commission's rules, and to provide certainty to carriers, we find that special
circumstances warrant a deviation from the general requirements of section 54.515.  Pending
Commission action reconciling the apparent inconsistency, we waive the requirements of
section 54.515 of the Commission's rules, to the extent that section 54.515 provides that a
telecommunications carrier seeking reimbursement from the Administrator for the provision
of services to a school or library must apply the amount of the discount afforded to that
school or library as an offset to the carrier's universal service contribution obligation.  We
waive this rule 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.  

IV.  ORDERING CLAUSE

     11.   IT IS ORDERED that, pursuant to authority contained in sections 1, 4,
201-205, 218-20, and 254 of the Communications Act of 1934, as amended, 47 U.S.C. 
151, 154, 201-205, 218-220, and 254, and sections 0.91, 0.291, 1.102, and 1.3 of the
Commission's rules, 47 C.F.R.  0.91, 0.291, 1.102, and 1.3, this ORDER is ADOPTED.


     FEDERAL COMMUNICATIONS
COMMISSION

   
                                                                              Ruth Milkman
     Deputy Chief, Common Carrier Bureau