DOCKET FILE GOPY ORIGINAl
Federal Communications Commission DA 01-351
Before the
Federal Communications Commission
Washington, D.C. 20554 ZOGl MAR I S A II: 58
In the Matter of
Request for Review ofthe
Decision ofthe
Universal Service Administrator by
Cheney Public Schools
Cheney, Washington
Federal-State Joint Board on
Universal Service
Changes to the Board ofDirectors ofthe
National Exchange Carrier Association, Inc.
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ORDER
File No. SLD-142969
CC Docket No. 96-45/
CC Docket No. 97-21
ED
Adopted: March 5, 2001 Released: March 6, 2001
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By the Common Carrier Bureau:
1. The Common Carrier Bureau (Bureau) has under consideration a Request for
Review filed by the Cheney Public Schools (Cheney), Cheney, Washington on May 16,2000.
1
Cheney seeks review ofa funding commitment decision issued by the Schools and Libraries
Division (SLD) ofthe Universal Service Administrative Company (Administrator) pursuant to a
funding request for internal connections.
2
For the reasons set forth below, we deny Cheney's
Request for Review.
2. Under the schools and libraries universal service support mechanism, eligible
schools, libraries, and consortia that include eligible schools and libraries, may apply for
discounts for eligible telecommunications services, Internet access, and internal connections.
3
In
order to receive discounts on eligible services, the Commission's rules require that the applicant
submit to the Administrator a completed FCC Form 470, in which the applicant sets forth the
I Requestfor Review by Cheney School District No. 360, filed May 16,2000 (Request for Review).
2 See Letter from Schools and Libraries Division, Universal Service Administrative Company, to Chris Wickund,
Cheney Public School District No. 360, issued October 12, 1999 (Funding Commitment Decision Letter); Letter
from Schools and Libraries Division, Universal Service Administrative Company, to David Sackville-West,
Cheney Public Schools, issued April 18,2000 (Administrator's Decision on Appeal).
J 47 C.F.R. §§ 54.502, 54.503.
Federal Communications Commission DA 01-351
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school's technological needs and the services for which it seeks discounts.
4
Once the school has
complied with the Commission's competitive bidding requirements and signed a contract for
eligible services, it must file an FCC Form 471 application to notify the Administrator ofthe
services that have been ordered, the carrier with whom the school has signed the contract, and an
estimate of funds needed to cover the discounts to be given for eligible services.
5
This
infonnation is generally provided in Block 5 ofFCC Form 471. Among other information,
Block 5 requires the applicant to indicate services requested, the name ofthe service provider,
the type ofservice or product for which support is sought, and the estimated total annual pre
discount cost. Using information provided by the applicant in its FCC Form 471, the
Administrator determines the amount ofdiscounts for which the school is eligible.
3. The instant appeal arises from Cheney's application for discounted internal
connections for the 1999-2000 funding year, Funding Request Number (FRN) 227849. In its
FCC Form 471, filed on April 2, 1999, Cheney sought support in a single funding request for
telecommunications services or products that it valued at $296,305. SLD denied Cheney's
request on the grounds that 30 percent or more ofCheney's funding request was for ineligible
telephone sets.
6
Cheney filed an appeal with SLD on October 28, 1999, claiming that, when its
estimate was submitted on its Form 471, telephone sets were eligible as they were not excluded
on the Schools and Libraries Eligibility List.? In response, SLD affirmed its decision, stating that
the funding request included ineligible services that resulted in the denial ofthe entire amount of
the funding request. SLD stated that telephone sets are unquestionably ineligible products.
8
4. Cheney filed the instant appeal with the Commission on May 16,2000. In this
4 47 C.F.R. § 54.504 (b)(l), (b)(3).
5
47 C.F.R. § 54.504(c).
6 See Funding Commitment Decision Letter at 5. The "30 percent policy" is not a Commission rule, but rather
is an SLD operating procedure established pursuant to FCC policy. See Changes to the Board ofDirectors afthe
National Exchange Carrier Association, Inc., Federal-State Joint Board on Universal Service, CC Docket Nos. 97
21 and 96-45, Third Report and Order in CC Docket No. 97·21 and Fourth Order on Reconsideration in CC Docket
No. 97-21 and Eighth Order on Reconsideration in CC Docket No. 96·45, 13 FCC Rcd 25058 (1998). This
operating procedure, used during SLD's application review process, enables SLD to efficiently process requests for
funding for services that are eligible for discounts but that also include some ineligible components. If30 percent or
less ofthe request is for funding ofineligible services, SLD normally will consider the application and issue a
funding commitment for the eligible services. Ifmore than 30 percent of the request is for funding ofineligible
services, SLD will deny the funding request in its entirety. The 30 percent policy allows SLD to efficiently process
requests for funding that contain only a small amount of ineligible services without expending significant fund
resources working with applicants that are requesting funding of ineligible services.
7 See Letter from David Sackville-West, Cheney School District No. 360, to Schools and Libraries Division,
Universal Service Administrative Company, filed October 28, 1999. The Eligibility List provides guidance on the
eligibility of various products and services and is available on the SLD Website at <www.sl.universalservice.org/
reference/eligible.asp>.
8 See Administrator's Decision on Appeal.
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Federal Communications Commission DA 01-351
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appeal, Cheney states that the funding request was submitted in reliance on the information
found in SLD's official website. Cheney states that on April 1, 1999, it obtained the most
current public version ofthe Eligibility List offthe website. Cheney states that this publication
did not state that telephone sets are not eligible for the funding program.
9
Cheney claims that ifit
had not included the telephone sets in its original submission, its entire funding request would
have been approved.
lo
Cheney requests that the district receive a funding commitment based on
the original amount requested less the cost ofthe telephone sets. I I
5. We have reviewed Cheney's appeal and conclude that Cheney has not shown that
its request for discounts on internal connections was improperly denied. The program's rules
state that universal service funds support only eligible servic'es.
12
In the Universal Service Order,
the Commission expressly denied support for the purchase ofequipment that is not needed to
transport information to individual classroom.
13
Moreover, in a Public Notice issued June 11,
1998, the Bureau emphasized that no universal service funds will be provided for telephone sets.
14
The instructions for the FCC Form 471 clearly state: "YOU MAY NOT SEEK SUPPORT ON
THIS FORM FOR INELIGIBLE SERVICES.,,15 The instructions further clarify that "[w]hile
you may contract with the same service provider for both eligible and ineligible services, your
contract or purchase agreement must clearly break out costs for eligible services from those for
ineligible services.,,16 The instructions direct applicants to SLD's website for additional
information. The fact that SLD did not specifically list a particular product as ineligible on its
Eligibility List, however, does not automatically render that product eligible for support. SLD's
Eligibility List is a guide to assist program applicants; it is not intended as an exhaustive
determination ofeligibility or ineligibility for the entire universe ofsupported products and
9 See Request for Review at 1.2.
10 See Request for Review at 3.
II See Request for Review at 4.
12
47 C.F.R. § 54.504 et seq.
13 Federal-State Joint Board on Universal Service, CC Docket No. 96-45, Report and Order, 12 FCC Rcd 8776,
9021-9022, para. 460 (1997) (Universal Service Order), as corrected by Federal-State Joint Board on Universal
Sen>ice, CC Docket No. 96-45, Errata, FCC 97-157 (reI. June 4, 1997), affirmed in part, Texas Office ofPublic Utility
Counsel v. FCC, 183 F.3d 393 (5th Cir. 1999) (affirming Universal Service Order in part and reversing and
remanding on unrelated grounds), cert. denied, Celpage, Inc, v. FCC, 120 S. Ct. 2212 (May 30,2000), cert. denied,
AT& T Corp. v. Cincinnati Bell Tel. Co., 120 S. Ct. 2237 (June 5, 2000), cert, dismissed. GTE Service Corp. v. FCC,
121 S. Ct. 423 (November 2, 2000). Telephone handsets and other peripheral equipment, such as fax machines and
computers in the classroom, do not provide the necessary transmission function and are not supported. Id,
14 "Common Carrier Bureau Reiterates Services Eligible for Discounts to Schools and Libraries," CC Docket No.
96-45, Public Notice, DA 98-1110, 13 FCC Rcd 16570 (Com. Car. Bur. 1998).
15 Instructions for Completing the Schools and Libraries Universal Service Services Ordered and Certification
Form (FCC Form 471) (December 1998) at 15 (Form 471 Instructions).
16 Form 471 Instructions at 16,
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Federal Communications Commission DA 01-351
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services. In light ofthe thousands ofapplications that SLD reviews and processes each funding
year, it is administratively necessary to place on the applicant the responsibility ofunderstanding all
relevant program rules and procedures. We, therefore, deny Cheney's appeal.
6. Moreover, amending its FCC Form 471, as Cheney suggests, to exclude the
telephone sets contravenes SLD's policy that applicants shall not be permitted to amend completed
Forms 471 to remove ineligible service requests after the closure ofthe filing window. I? If
applicants were permitted to correct their applications after SLD has denied them, it would
eliminate any incentive to avoid including ineligible expenses in their funding requests. This would
significantly increase the administrative burden SLD would face while carrying out its obligation to
guard against the occurrence oferrors and fraud. Therefore, we cannot permit Cheney to amend its
FCC Form 471.
7. ACCORDINGLY, IT IS ORDERED, pursuant to authority delegated under
sections 0.91, 0.291, and 54.722(a) ofthe Commission's rules, 47 C.F.R. §§ 0.91,0.291, and
54.722(a), that the Request for Review filed May 16,2000, by Cheney Public Schools, Cheney,
Washington, IS DENIED.
FEDERAL COMMUNICATIONS COMMISSION
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Carol E. Mattey
Deputy Chief, Common Carrier Bureau
17 The Commission's rules require that applicants file a completed Form 471 by the filing window deadline to be
considered pursuant to the funding priorities for "in-window" applicants. 47 C.F.R. §§ 54.504(c), 54.5079(c).
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