Subject:
ALAWON v7, n1 - 4TH RECONSIDERATION ORDER SUMMARY; HIGHLIGHTS
Date:
Mon, 05 Jan 1998 15:03:43 -0500
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ALAWON Volume 7, Number 1
ISSN 1069-7799 January 5, 1998
American Library Association Washington Office Newsline
In this issue: (217 lines)
UNIVERSAL SERVICE: 1997 HIGHLIGHTS
PRELIMINARY SUMMARY OF THE FOURTH ORDER ON RECONSIDERATION
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UNIVERSAL SERVICE: 1997 HIGHLIGHTS
In 1997 the Federal Communications Commission took a number of
actions dealing with universal service. Below is a look back at
the highlights and a preliminary summary of the fourth
Reconsideration Order released December 30, 1997.
*In May, the FCC released the Order on universal service,
establishing discounts ranging from 20-90% and a $2.25
billion annual fund.
* In July, the Commission dealt with the issues surrounding
the contracts question raised by the May Order.
* In August, the FCC created the Universal Service
Administration Company (USAC), the Schools and Libraries
Corporation (SLC), and the Rural Health Care Corporation
(RHCC) to administer the funds for universal service.
* In September, the board of the SLC was named and met for
the first time.
* In October, the Commission created a filing window of 75
days, within which all applications will be treated equally.
* In mid-December, the Commission determined the funding
schedule for the first six months of the universal service
program.
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SUMMARY OF THE FOURTH ORDER ON RECONSIDERATION
NOTE: Most FCC orders are available electronically from the FCC
(www.fcc.gov/ccb/universal_service/); additional information is
also available from OITP (www.ala.org/oitp/univserv.html). This
summary is also available from the OITP web site
(www.ala.org/oitp/4threcon.html)
On December 30, 1997, the Federal Communications Commission
released its Fourth Order on Reconsideration dealing with
universal service. This long-awaited order addresses many of the
questions that libraries and schools have had about the
functioning of the program.
TECHNOLOGY PLAN AND REVIEW
REVIEW OF TECHNOLOGY PLANS: The Fourth Order on Reconsideration
("the Order") does give some clarification on a number of issues
surrounding the technology plans and review. An approved
technology plan will still be required, because the FCC believes
that such a plan is in the "public interest." (Para. 148) The
approval of technology plans can be done pursuant to either the
procedures of the appropriate state agency or the Schools and
Libraries Corporation (SLC), provided that seeking approval from
the SLC does not circumvent state or local law. (Para. 157) The
FCC also recognized that the SLC will be structuring a plan
approval process, which is expected to be released shortly.
ELIGIBLE SERVICES
ADMINISTRATIVE FACILITIES/"EDUCATIONAL PURPOSES": The FCC decided
that the discounts would not cover internal connections in
non-instructional school and library administrative buildings
unless the internal connections are necessary to deliver services
to an instructional building or library. (Para. 209-210) The
Order is silent on whether Internet and telecommunications
services delivered to these facilities are eligible.
DEFINITION OF INTERNAL CONNECTIONS: Internal connections are
defined as "connections between or among multiple instructional
buildings that comprise a single school campus or multiple
non-administrative buildings that comprise a single library
branch, but do not include connections that extend beyond that
single school campus or library branch." (Para. 210)
WIDE AREA NETWORKS: The Order states that wide area networks
which are built and purchased by libraries and schools are not
eligible for discounts because they are not "telecommunications
services." (Para. 193). This does not preclude schools and
libraries from receiving universal service discounts on a WAN run
over leased lines because such an arrangement constitutes a
telecommunications service.
STATE NETWORKS: The Order also clarifies the eligibility of state
networks to receive discounts. For telecommunications services,
a state network is only able to receive discounts in the same
fashion that a consortium is eligible to receive discounts. It
can apply on behalf of the schools and libraries, but cannot
receive reimbursement directly from the universal service fund
because state networks are not telecommunications service
providers. (Para.183) However, for Internet access and internal
connections, a state network may either secure discounts on the
purchase of such services or can receive direct reimbursement
from the universal service fund, since the state network can be a
non-telecommunications provider of Internet access and internal
connections services. (Para. 190)
AGGREGATION
SHARED AND SITE SPECIFIC SERVICES: The Order specifies that, for
services which will only be used by a single school or library,
the individual discount rate for that school or library should be
used. (Para. 205) The Commission declined to specify a mechanism
for how libraries and schools will calculate a discount for
"shared" services, although they expect some guidance will come
from the Schools and Libraries Corporation. Consortia will need
to "certify that each individual institution listed as a member
of a consortium and included in determining the discount rate
will receive a proportionate share of the shared services within
each year in which the institution is used to calculate the
aggregate discount rate." (Para. 206) (Shared services are
described as "those [services] that cannot, without substantial
difficulty, be identified with particular users or be allocated
directly to particular entities.") (Para. 206)
CONTRACTS
GRANDFATHERING OF CONTRACTS: The Order makes a number of changes
to the rules regarding "pre-existing" contracts. The Commission
changed the "grandfathering" date for contracts. Under the new
rules, all contracts signed on or before July 10, 1997 will be
exempted from the competitive bidding requirement for the entire
duration of the contract. Services provided under contracts
signed after July 10, 1997 but before the SLC web site becomes
operational (and begins accepting applications) will only be
eligible for discounts for the period in which the discounts
first apply through December 31, 1998. All contracts signed
after the web site becomes operational and begins accepting
applications will not be eligible for support unless the
applicant has gone through the SLC competitive bidding process.
(Para. 217)
MASTER CONTRACTS: A number of issues surrounding master contracts
were also clarified. First, the same grandfathering rules that
apply to the eligibility of normal contracts apply to master
contracts. (Para. 233) Services provided under master contracts
signed on or prior to July 10, 1997 will be eligible for
discounts and exempt from the SLC's competitive bidding
requirements for the entire duration of the contract. Services
provided under master contracts signed after July 10, 1997 but
before the SLC web site becomes available will be eligible for
discounts for the period in which the discounts first apply
through December 31, 1998. (Para. 218) Second, the operative
date for determining master contract eligibility is the date that
the master contract was signed, not the date that the eligible
school or library signed a service agreement with the service
provider. (Para. 234) Finally, the competitive bidding
requirement can be satisfied by either the entity signing the
master contract or by the applicant. (Para. 233) If a master
contract does not qualify as a "pre-existing" contract and was
not subject to the SLC's competitive bidding process, an
applicant must engage in the SLC's competitive bidding process on
its own before signing on to the master contract.
MINOR MODIFICATIONS TO CONTRACTS: Finally, the Order specifies
that, for "minor modifications" to existing contracts, libraries
and schools will not be required to re-bid the contract. (Para.
224) The definition of "minor modifications" is to be determined
by state law or, if there is no applicable state definition, by
the cardinal change doctrine. (Para. 226-8) Regardless of the
definition used, applicants will be required to file a new Form
471 in order to make a minor modification. (Para. 229)
OTHER ISSUES
COSTS COVERED: The Order clarifies that the discounts apply to
"all reasonable charges, including federal and state taxes, that
are incurred by obtaining an eligible telecommunications
services. Charges for termination liability, penalty surcharges,
and other charges not included in the cost of obtaining the
eligible service will not be covered." (Para. 243)
CONTRIBUTION TO THE UNIVERSAL SERVICE FUND: The Commission ruled
that schools, libraries, colleges, universities, and health care
providers that are selling telecommunications services will not
be required to contribute to the fund. (Para. 284) However,
remember that services purchased with universal service funds
cannot be resold.
STATE DISCOUNTS AND THE FEDERAL FUND: The federal universal
service discounts will be applied to the price of services "prior
to the application of any state-provided support for schools or
libraries." (Para. 196)
_________________________________________________________________
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Contributors: Aleck Johnson
Andrew Magpantay
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