******************************************************** NOTICE ******************************************************** This document was converted from WordPerfect to ASCII Text format. Content from the original version of the document such as headers, footers, footnotes, endnotes, graphics, and page numbers will not show up in this text version. All text attributes such as bold, italic, underlining, etc. from the original document will not show up in this text version. Features of the original document layout such as columns, tables, line and letter spacing, pagination, and margins will not be preserved in the text version. If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) ) CC Docket No. 96-45 Federal-State Joint Board on ) Universal Service ) ORDER Adopted: August 7, 1998; Released: August 7, 1998 By the Acting Chief, Common Carrier Bureau: 1. In this Order, we clarify the application of the Commission's "lowest corresponding price" requirement set forth in the Universal Service Order. We clarify that this requirement was not intended to preempt state law, and does not obligate carriers to offer rates that would violate state laws. I. Background 2. In the Universal Service Order, the Commission provided that schools and libraries should be eligible to apply for discounted telecommunications services, Internet access, and internal connections, subject to certain limitations and conditions. The Universal Service Order concluded that, to ensure that their lack of experience in dealing with telecommunications providers does not prevent schools and libraries from receiving competitive prices, service providers must offer services to eligible schools and libraries at prices no higher than the lowest price the provider charges to similarly situated non-residential customers for similar services. The Commission clarified that, for purposes of determining the lowest corresponding price, similar services would include those provided under contract as well as those provided under tariff. The Commission established a rebuttable presumption that rates offered within the previous three years are compensatory. 3. In the Fourth Reconsideration, the Commission concluded that earlier versions of tariffs that have been modified should be included in the comparable rates upon which the lowest corresponding rate is determined, "[u]nless a regulatory agency has found that the tariffed rate should be changed, and affirmatively ordered such change, or absent a showing that the rate is not compensatory." A question has been raised whether the lowest corresponding rate can be based on rates not lawfully offered under state law. II. Discussion 4. Although the Commission disagreed with the general assertion that the lowest corresponding price should not reflect expired tariffs, the Commission did not expressly preempt state laws governing what rates may lawfully be offered to eligible schools and libraries. In the absence of such an expressly stated intention to preempt, we conclude that the Commission did not intend to require carriers to base the lowest corresponding rate on rates that may not lawfully be offered under state law. Thus, we interpret the Fourth Reconsideration as requiring only that rates that may be offered consistent with state law must be made available as the lowest corresponding price. III. Ordering Clause 5. Accordingly, IT IS ORDERED that, pursuant to section 4(i) and section 254 of the Communications Act of 1934, as amended, 47 U.S.C.  154(i) and 254, and sections 0.91 and 0.291 of the Commission's rules, 47 C.F.R.  0.91 and 0.291, the lowest corresponding price requirement is clarified as set forth above. FEDERAL COMMUNICATION COMMISSION James D. Schlichting Acting Chief, Common Carrier Bureau