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TITLE PAGE

I. INTRODUCTION 1

II. EXECUTIVE SUMMARY 3

III. PRINCIPLES 13

A. Overview 13

B. Comments 14

C. Discussion 22

IV. DEFINITION OF UNIVERSAL SERVICE: What Services to Support 28

A. Overview 28

B. Services Proposed in the NPRM 29

C. Other Services 54

D. Feasibility of Providing Designated Services 71

E. Extent of Universal Service Support 84

F. Quality of Service 93

G. Revisiting the Definition of Universal Service 93

V. AFFORDABILITY 112

A. Overview 112

B. Affordability 113

VI. CARRIERS ELIGIBLE FOR UNIVERSAL SERVICE SUPPORT 134

A. Overview 134

B. Eligible Telecommunications Carriers 135

C. Definition of Service Areas 165

D.Unserved Areas 179

VII. HIGH COST SUPPORT 183

A. Overview 183

B. Calculation of Cost 187

C. Determining the Level of Support Using a Benchmark 299

D. Competitive Bidding 318

E. Transition 350

VIII. SUPPORT FOR LOW-INCOME CONSUMERS 357

A. Overview 357

B. Services to be Supported for Low-Income Consumers 359

C. Reevaluation of Existing Low-Income Support Programs 395

IX. ISSUES UNIQUE TO INSULAR AREAS 430

X. SUPPORT FOR SCHOOLS AND LIBRARIES 438

A. Overview 438

B. Functionalities/Services Eligible for Discount 441

C. Intra-School and Intra-Library Connections 466

D. Discount Methodology 485

E. Restrictions Imposed on Schools and Libraries 574

F. Funding Mechanisms for Schools and Libraries 607

G. Sections 706 and 708 614

H. Access to Advanced Telecommunications and Information Services 621

I. Implementation 630

XI. SUPPORT FOR HEALTH CARE PROVIDERS 631

A. Overview 631

B. Services Eligible for Support 634

C. Implementing Support Mechanisms for Comparable Rates 658

D. Eligibility 688

E. Restrictions 717

F. Access to Advanced Telecommunications and Information Services 737

G. Implementation 751

XII. INTERSTATE SUBSCRIBER LINE CHARGES AND CARRIER COMMON LINE CHARGES 753

XIII. ADMINISTRATION 777

A. Overview 777

B. Mandatory Contributors to Support Mechanisms 779

C. Other Providers of Interstate Telecommunications 792

D. The De Minimis Exemption 795

E. Basis for Assessing Contributions 802

F. Revenues Base for Assessing Contributions 814

G. Administrator of Universal Service Support Mechanisms 824

XIV. CONCLUSION 834

XV. RECOMMENDING CLAUSES 835

APPENDIX A Parties Filing Initial Comments

APPENDIX B Parties Filing Reply Comments

APPENDIX C Parties Filing Further Comments

APPENDIX D Parties Filing Proxy Model Comments

APPENDIX E Parties Filing Initial and Reply Comments in CC Docket 80-286

APPENDIX F Analysis of Proxy Models

APPENDIX G Service List

• Statement by FCC Chairman Reed Hundt

• Separate Statement of FCC Commissioner Susan Ness

• Separate Statement of FCC Commissioner Rachelle B. Chong,
  Concurring in Part, Dissenting in Part

• Press Release from Martha S. Hogerty

• Separate Statement of Commissioner Laska Schoenfelder,
  Dissenting in Part

• Press Release of the State Members of the Federal-State Joint Board on Universal Service,
  Consensus Vote of Joint Board on Universal Service Policies Testifies to the Common Commitment to the Faithful Implementation of the Telecommunications Act

• Separate Statement of Commissioner Kenneth McClure,
  Concurring in Part and Dissenting in Part

• Separate Statement of Commissioner Julia Johnson and Chairman Sharon L. Nelson