**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

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| In the matter of                 | *  | CC Docket No. 96-45          |
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**REPORT AND ORDER**

**Adopted: June 27, 2001 Released: June 29, 2001**

By the Commission: Commissioner Abernathy not participating.

# Introduction 

1.  In this Report and Order, we adopt a rule proposed in the Further
    Notice of Proposed Rulemaking (*Notice*),[^1] to provide additional
    time for recipients under the schools and libraries universal
    service support mechanism to implement contracts or agreements with
    service providers for non-recurring services.[^2] We adopt a rule
    that will extend the deadline for receipt of non-recurring services
    from June 30, to September 30 following the close of the funding
    year. Further, we adopt a rule that will establish a deadline for
    the implementation of non-recurring services for certain qualified
    applicants who are unable to complete implementation by the
    September 30 deadline. We find that the amended rules will provide
    schools and libraries with more time to install non-recurring
    services, and thereby make greater use of their universal service
    discounts.

2.  In the *Notice*, the Commission also sought comment on its rule
    addressing the allocation of discounts for schools and libraries
    under the federal universal service mechanism when there is
    insufficient funding to support all requests for internal
    connections. Specifically, the Commission sought comment on whether
    to modify the rule to give funding priority to requests for internal
    connections made by individual schools and libraries that did not
    receive funding commitments for internal connections during the
    previous funding year. After consideration of the proposals, we
    conclude that we will not revise the Commission's rules of priority
    for Funding Year 4 of the schools and libraries universal service
    mechanism.

# BACKGROUND

3.  Pursuant to section 254 of the Act,[^3] eligible schools, libraries,
    and consortia that include eligible schools and libraries, may apply
    for discounted eligible telecommunications, Internet access, and
    internal connections services.[^4] Applicants must apply for
    discounts on an annual basis, in each funding year of the
    program.[^5] The Commission's rules also require schools and
    libraries to use services for which discounts have been committed by
    the Administrator within the funding year for which the discounts
    were sought.[^6]

4.  In the *Universal Service Order*, the Commission established a
    calendar funding year (January 1-December 31) for schools and
    libraries receiving universal service support.[^7] The Commission
    revised its rules in the *Fifth Order on Reconsideration*, and
    changed the funding year for schools and libraries to a fiscal year
    (July 1-June 30).[^8] In order to ease transition to the new fiscal
    year method, the Commission extended the first year by six months so
    the Funding Year 1 funding period ran from January 1, 1998-June 30,
    1999.[^9]

5.  The Commission subsequently extended the deadline for schools and
    libraries to use their discounts on Funding Year 1 non-recurring
    services from June 30, 1999 (the end of the funding period) to
    September 30, 1999.[^10] In Funding Year 1, a number of schools and
    libraries received late notice of funding commitment decisions from
    the Administrator, making it difficult for them to install internal
    connections in a timely manner.[^11] The extension recognized delays
    in the implementation of the schools and libraries universal service
    support mechanism in the first year of the program, and provided
    applicants with additional flexibility in light of that delay.

6.  The Common Carrier Bureau (Bureau) subsequently extended the
    deadline for schools and libraries to use their discounts on
    non-recurring services to September 30 for Funding Years 2 and
    3.[^12] Consistent with the prior Commission Order, the extended
    deadline was intended to give schools and libraries more time to
    implement non-recurring services, and make greater use of their
    universal service discounts. Furthermore, the Bureau concluded that
    extending the deadline until September 30 would allow schools to
    implement non-recurring services over the summer months when schools
    were in recess.[^13]

# DISCUSSION

## Modification of Implementation Schedule for Non-Recurring Services 

### Extension of Installation Deadline for Non-Recurring Services

7.  The Commission sought comment in the *Notice* regarding a
    modification to our rules relating to the deadline for
    implementation of non-recurring services. Non-recurring services are
    funding requests with a one-time cost listed on Block 5 of an
    applicant's FCC Form 471.[^14] We conclude that it is reasonable for
    schools and libraries to have additional time to implement
    non-recurring services, given the fact that many of these services
    must be installed during the summer months when classes are not in
    session. Therefore, we adopt a rule change that would allow schools
    and libraries to implement non-recurring services by September 30,
    following the close of the funding year.[^15]

8.  As noted above, in each year of the schools and libraries program,
    the Commission has extended the deadline for receipt of
    non-recurring services. Non-recurring services often involve the
    installation of equipment or wiring, for which schools and libraries
    incur a one-time cost. As a result, many non-recurring services need
    to be performed while students are not in school or during a time
    period that will modify our rule to permanently minimize disruptions
    for classrooms and students. We now find that it is appropriate to
    extend the deadline from June 30 to September 30. The extended
    deadline is more realistic, and appropriately takes into
    consideration the needs of program participants.

9.  We note that this rule change does not affect the twelve-month
    funding year for non-recurring and recurring services. Rather, this
    rule change only affects the deadline for receiving non-recurring
    services. In addition, we do not increase the amount that schools
    and libraries may receive for non-recurring services for each
    program year. Instead, we are merely providing schools and libraries
    with additional time in which to complete their receipt of these
    discounted non-recurring services.

### Limited Extension for Qualified Applicants

10. In the *Notice*, the Commission also sought comment regarding a rule
    that would further extend the deadline for implementation of
    non-recurring services for schools and libraries that are unable to
    meet the original deadline due to circumstances beyond their
    control.[^16] We adopt the proposed rule, thereby extending the
    deadline for implementation of non-recurring services for certain
    qualified applicants who are unable to meet the September 30
    deadline. Applicants may qualify for the extension, based on
    satisfaction of one of four criteria. Subsequently, the
    Administrator will calculate a revised implementation deadline,
    based on the date that the applicant satisfies one of the criteria.

11. We believe the revised rule will ensure that schools and libraries
    have a reasonable and predictable deadline for implementation of
    non-recurring services. External circumstances, like delayed funding
    decisions or manufacturing problems, can create situations where
    deadlines are both impractical and unreasonable. Adoption of the
    proposed rule will set in place a predictable mechanism to
    recalculate the implementation deadline in certain limited
    circumstances. Furthermore, consistent with the Commission's
    commitment to providing support for schools and libraries, we
    believe that this action will increase the likelihood that schools
    and libraries may successfully utilize discounts available from the
    schools and libraries universal service mechanism.

12. Specifically, under the revised rule, applicants will qualify for an
    extension of the implementation deadline for non-recurring services
    if they satisfy one of the following criteria: (1) applicants whose
    funding commitment decision letters are issued by the Administrator
    on or after March 1 of the funding year for which discounts are
    authorized; (2) applicants who receive service provider change
    authorizations or service substitution authorizations from the
    Administrator on or after March 1 of the funding year for which
    discounts are authorized; (3) applicants whose service providers are
    unable to complete implementation for reasons beyond the service
    provider's control; or (4) applicants whose service providers are
    unwilling to complete installation because funding disbursements are
    delayed while the Administrator investigates their application for
    program compliance.

13. Should an applicant satisfy one of the four criteria, March 1 is the
    key date for calculating the extended deadline. If one of the
    conditions is satisfied before March 1 (of any year), the applicant
    will have until the subsequent September 30 to complete
    implementation. If one of the conditions is satisfied after March 1,
    the applicant will have until September 30 of the following year to
    complete implementation. Therefore, if an applicant receives
    authorization for a service provider change on February 27, 2002
    (before March 1), the deadline for receipt of non-recurring services
    will be September 30, 2002. By contrast, for funding commitments
    made in April 2002 for Funding Year 4 applications (after March 1),
    the deadline for receipt of non-recurring service will be September
    30, 2003.[^17]

14. The Administrator will consider whether criteria (1) and (2) have
    been satisfied, respectively, based on the date that the funding
    commitment decisions are issued, or service provider changes or
    service substitutions are authorized. The revised deadline for
    implementation of non-recurring services will then be determined,
    based on the date that one of these events occurs.

15. Similar to the requirements outlined in the *November 2000 Extension
    Order*, applicants who wish to satisfy criteria (3) should submit
    documentation to the Administrator requesting relief on these
    grounds on or before the original non-recurring services
    deadline.[^18] The revised deadline will be calculated based on the
    date of the Administrator's decision relating to the explanation.
    For example, if an entity is awarded discounts for internal
    connections in Funding Year 4, and installation is delayed due to
    circumstances beyond its control, it will need to file with the
    Administrator an explanation and evidence of the delay on or before
    September 30, 2002. If the Administrator grants an extension before
    March 1, 2003, they will have until September 30, 2003 to complete
    installation.

16. Furthermore, we recognize that there may be a wide range of
    situations under criteria (3) in which an applicant through no fault
    of its own is unable to complete installation by the applicant's
    original September 30 implementation deadline. Circumstances beyond
    the service provider's control may include manufacturing delays and
    natural disasters.[^19] Commenters suggested that the Commission
    further clarify the type of events that may satisfy criteria
    (3).[^20] Because we are unable to anticipate every type of
    circumstance that may arise under criteria (3), we instead direct
    the Administrator to address such situations on a case by case
    basis, consistent with the reasoning set forth in this Order.

17. With regard to criteria (4), applicants must certify to the
    Administrator that its service provider was unwilling to deliver or
    install non-recurring services before the expiration of the original
    non-recurring services installation deadline, because the
    Administrator had withheld payment for those services on a
    properly-submitted invoice for more than 60 days after the
    submission of the invoice. Applicants must make this certification
    on or before the original non-recurring services installation
    deadline. The revised implementation date will be calculated based
    on the date that the funds are released by the Administrator.

18. We conclude that a rule change will ensure schools and libraries are
    not penalized when they are not responsible for missing the
    installation deadline. Additionally, implementation of this policy
    will provide clarity to the Administrator and applicants by
    establishing a certain deadline for installation. Ultimately, this
    rule gives all schools and libraries the opportunity to schedule
    implementation of non-recurring services over the summer months.

### Extension of Competitive Bidding Rules 

19. In addition, we adopt a rule granting a limited extension of the
    Commission's competitive bidding rules for contracts for
    non-recurring services. Under this rule, contracts for non-recurring
    services may be voluntarily extended to coincide with the
    appropriate deadline for implementation. Parties may not, however,
    extend other contractual provisions beyond the dates established by
    the Commission's rules without complying with the competitive
    bidding process. This action will ensure equitable treatment for
    recipients of discounts for non-recurring services.

## Funding Priority for Internal Connections 

20. In the *Notice*, the Commission also sought comment on two options
    relating to the Commission's rules of priority and the distribution
    of support for internal connections. The Commission determined it
    was appropriate to consider revising the rules of priority because
    of heavy demand in Funding Year 4 of the schools and libraries
    universal service mechanism. In April, the Administrator estimated
    that after funding priority one services (telecommunications
    services and Internet access) in Funding Year 4, there would not be
    enough funds available to fund priority two requests (internal
    connections) from the poorest schools and libraries, who qualify for
    a 90% discount under the schools and libraries discount matrix.
    [^21]

21. The first proposal in the *Notice* was to maintain the Commission's
    rules as currently written, which direct that the remaining funds be
    prorated by discount band. The second proposal was to give funding
    priority to requests for internal connections made by individual
    schools and libraries that did not receive funding commitments for
    internal connections during the previous funding year. After
    consideration of two proposals regarding the distribution of support
    for internal connections, we now conclude that we will not revise
    the rules of priority relating to the funding of internal
    connections for Funding Year 4 of the schools and libraries program.
    Therefore, under the current rules, the Administrator will allocate
    the available funds among applicants in the 90 percent discount
    level on a pro rata basis, so that each such applicant in Funding
    Year 4 receives a portion of the amount requested.[^22]

22. The overwhelming majority of commenters expressed concern about
    revising the rules of priority during Funding Year 4, after the
    application process had closed.[^23] In fact, commenters suggested
    that they would have structured their technology plans differently
    had they been aware of the proposed rules of priority.[^24]
    Furthermore, commenters emphasized the need for predictability and
    raised operational questions regarding implementation of the rule in
    the current funding year.[^25] Given the strong concerns voiced by
    the schools and libraries community, we agree that the Commission
    should not revise its rules of priority for Funding Year 4 of the
    schools and libraries universal service mechanism.

23. Several commenters supported giving funding priority to requests for
    internal connections made by individual schools and libraries that
    did not receive funding commitments for internal connections during
    the previous funding year.[^26] Those commenters believed that the
    proposed rules would enable many needy schools and libraries, who
    have not previously been awarded discounts, the opportunity to
    receive funding for internal connections.[^27] The Commission is
    strongly committed to ensuring that discounts continue to go to
    schools and libraries that are economically disadvantaged. Based on
    the current record, we conclude it is not reasonable to revise the
    rule for Funding Year 4 applications. We will continue to consider
    the operational and other implementation issues raised by commenters
    for future funding years.

# PROCEDURAL MATTERS 

**A. Paperwork Reduction Act (PRA)**

24. The action contained herein has been analyzed with respect to the
    paperwork Reduction Act of 1995 (PRA) and found to impose new or
    modified reporting and/or recordkeeping requirements or burdens on
    the public. Implementation of these new or modified reporting and/or
    recordkeeping requirements will be subject to approval by the Office
    of Management and Budget (OMB) as prescribed by the PRA, and will go
    into effect upon announcement in the Federal Register of OMB
    approval.

## Final Regulatory Flexibility Analysis (FRFA)

## 25. As required by the Regulatory Flexibility Act (RFA),[^28] an Initial Regulatory Flexibility Analysis (IRFA) was incorporated in the *Notice*.[^29] The Commission sought written public comments on the proposals in the *Notice*, including comment on the IRFA. This present Final Regulatory Flexibility Analysis (FRFA) conforms to the RFA, as amended.[^30] {#as-required-by-the-regulatory-flexibility-act-rfa-an-initial-regulatory-flexibility-analysis-irfa-was-incorporated-in-the-notice.-the-commission-sought-written-public-comments-on-the-proposals-in-the-notice-including-comment-on-the-irfa.-this-present-final-regulatory-flexibility-analysis-frfa-conforms-to-the-rfa-as-amended. .unnumbered}

### Need for, and Objectives of, the Rules

26\. We modify our rules to provide additional time for recipients under
the schools and libraries universal service support mechanism to
implement contracts or agreements with service providers for
non-recurring services. First, we extend the deadline for receipt of
non-recurring services from June 30, to September 30 following the close
of the funding year. Second, we establish a deadline for the
implementation of non-recurring services for certain qualified
applicants who are unable to complete implementation by the September 30
deadline.

27\. The Commission also sought comment on its rule addressing the
allocation of discounts for schools and libraries under the federal
universal service mechanism when there is insufficient funding to
support all requests for internal connections. After consideration, the
Commission will not revise the Commission's rules of priority for
Funding Year 4 of the schools and libraries universal service mechanism.

### Summary of Significant Issues Raised by the Public Comments in Response to the IRFA

### 28. The Commission received no comments directly addressing the IRFA.  {#the-commission-received-no-comments-directly-addressing-the-irfa. .unnumbered}

### Description and Estimate of the Number of Small Entities To Which Rules Will Apply

29\. The RFA directs agencies to provide a description of and, where
feasible, an estimate of the number of small entities that may be
affected by the proposed rules, if adopted.[^31] The RFA generally
defines the term "small entity" as having the same meaning as the terms
"small business," "small organization," and "small governmental
jurisdiction."[^32] In addition, the term "small business" has the same
meaning as the term "small business concern" under the Small Business
Act.[^33] A small business concern is one that: (1) is independently
owned and operated; (2) is not dominant in its field of operation; and
(3) satisfies any additional criteria established by the Small Business
Administration (SBA).[^34] A small organization is generally "any
not-for-profit enterprise which is independently owned and operated and
is not dominant in its field."[^35] Nationwide, as of 1992, there were
approximately 275,801 small organizations.[^36] "Small governmental
jurisdiction"[^37] generally means "governments of cities, counties,
towns, townships, villages, school districts, or special districts, with
a population of less than 50,000."[^38] As of 1992, there were
approximately 85,006 governmental entities in the United States.[^39]
This number includes 38,978 counties, cities, and towns; of these,
37,566, or 96 percent, have populations of fewer than 50,000.[^40] The
Census Bureau estimates that this ratio is approximately accurate for
all governmental entities. Thus, of the 85,006 governmental entities, we
estimate that 81,600 (96 percent) are small entities.

30\. Under the schools and libraries universal service support
mechanism, which provides support for elementary and secondary schools
and libraries, an elementary school is generally "a non-profit
institutional day or residential school that provides elementary
education, as determined under state law."[^41] A secondary school is
generally as "a non-profit institutional day or residential school that
provides secondary education, as determined under state law," and not
offering education beyond grade 12.[^42] For-profit schools and
libraries, and schools and libraries with endowments in excess of
\$50,000,000, are not eligible to receive discounts under the program,
nor are libraries whose budgets are not completely separate from any
schools.[^43] Certain other statutory definitions apply as well.[^44]
The SBA has defined as small entities elementary and secondary schools
and libraries having \$5 million or less in annual receipts.[^45] In
funding year 2 (July 1, 1999 to June 20, 2000) approximately 83,700
schools and 9,000 libraries received discounts under the schools and
libraries universal service mechanism. Although we are unable to
estimate with precision the number of these entities that would qualify
as small entities under SBA's definition, we estimate that fewer than
83,700 schools and 9,000 libraries would be affected annually by the
rules promulgated in this Order, under current operation of the program.

### Description of Projected Reporting, Recordkeeping, and Other Compliance Requirements

31\. We adopt a rule that will require certain applicants, outlined in
criteria (3) and (4) above, to submit information to the Administrator
in order to qualify for an extension of the deadline for installation of
non-recurring services. Under criteria (3), applicants whose service
providers are unable to complete implementation for reasons beyond the
service provider's control must submit documentation to the
Administrator requesting relief on these grounds. In order to comply
with the requirements for criteria (4), applicants must certify to the
Administrator that its service provider was unwilling to deliver or
install non-recurring services before the expiration of the original
non-recurring services installation deadline, because the Administrator
had withheld payment for those services on a properly-submitted invoice
for more than 60 days after the submission of the invoice.

### Steps Taken to Minimize Significant Economic Impact on Small Entities, and Significant Alternatives Considered

32\. The RFA requires an agency to describe any significant alternatives
that it has considered in reaching its proposed approach, which may
include the following four alternatives (among others): (1) the
establishment of differing compliance and reporting requirements or
timetables that take into account the resources available to small
entities; (2) the clarification, consolidation, or simplification of
compliance or reporting requirements under the rule for small entities;
(3) the use of performance, rather than design, standards; and (4) an
exemption from coverage of the rule, or part thereof, for small
entities.[^46]

33\. The Commission adopts two administrative modifications relating to
the deadline for implementation of non-recurring services. First, the
Commission extends the deadline for implementation of non-recurring
services from June 30 of each funding year to September 30. Second, the
Commission establishes an extended deadline for certain qualified
applicants who are unable to meet the September 30 deadline. We believe
that the extension of the deadline for the installation of non-recurring
services has the same impact on small and large entities. Further, we
believe that the extension of the deadline has no adverse or disparate
effect on small or large entities. We previously determined that this
was a situation that we needed to evaluate alternatives, had there been
any concern expressed about the impact on small entities. After
consideration, we conclude that all impact is beneficial and all impact
is the same for small and large entities.

34\. In the *Notice*, the Commission also sought comment relating to the
allocation of discounts for schools and libraries when there is
insufficient funding to support all requests for internal connections.
We conclude in this Report and Order that we will not revise the
Commission's rules of priority for Funding Year 4 of the schools and
libraries universal service mechanism. Because the Commission
promulgates no additional final rules with respect to the rules of
priority, there is no impact on small businesses to consider.

35. **Report to Congress:** The Commission will send a copy of this
    Report and Order, including this FRFA, in a report to be sent to
    Congress pursuant to the Small Business Regulatory Enforcement
    Fairness Act of 1996.[^47] In addition, the Commission will send a
    copy of the Report and Order, including this FRFA, to the Chief
    Counsel for Advocacy of the Small Business Administration. A copy of
    the Report and Order and FRFA (or summaries thereof) will also be
    published in the Federal Register.[^48]

    **C.** **Effective Date of Final Rules**

36. Pursuant to 5 U.S.C. § 553(d),[^49] the rule changes adopted herein
    shall take effect thirty (30) days after publication in the Federal
    Register.

# V. ORDERING CLAUSES 

37\. Accordingly, IT IS ORDERED that, pursuant to the authority
contained in sections 1-4, 201-205, 218-220, 254, 303(r), and 403 of the
Communications Act of 1934, as amended, 47 U.S.C. §§ 151-154, 201-205,
318-220, 254, 303(r), 403, section 553 of the Administrative Procedure
Act, 5 U.S.C. § 553, *In the Matter of Federal-State Joint Board on
Universal Service,* Report and Order in CC Docket No. 96-45 IS ADOPTED.
The collection of information contained within this Report and Order is
contingent upon approval by the Office of Management and Budget.

38. IT IS FURTHER ORDERED that Part 54 of the Commission's Rules, 47
    C.F.R. Part 54, IS AMENDED as set forth in Appendix A attached
    hereto, effective thirty (30) days after the publication of this
    REPORT AND ORDER in the Federal Register.

    39\. IT IS FURTHER ORDERED that the Commission's Consumer
    Information Bureau, Reference Information Center, SHALL SEND a copy
    of this Report and Order, including the Final Regulatory Flexibility
    Analysis, to the Chief Counsel for Advocacy of the Small Business
    Administration.

> FEDERAL COMMUNICATIONS COMMISSION
>
> Magalie Roman Salas

Secretary

**APPENDIX A -- FINAL RULES**

Part 54 of Title 47 of the Code of Federal Regulations is amended as
follows:

**PART 54 -- UNIVERSAL SERVICE**

**Subpart F -- Universal Service Support for Schools and Libraries**

1.  Section 54.507 is amended by revising paragraph (d) to read as
    follows:

**§ 54.507 Cap.**

> \*\*\*

\(d\) *Annual filing requirement.* Schools and libraries, and consortia
of such eligible entities shall file new funding requests for each
funding year no sooner than the July 1 prior to the start of that
funding year. Schools, libraries, and eligible consortia must use
recurring services for which discounts have been committed by the
Administrator within the funding year for which the discounts were
sought. The deadline for implementation of non-recurring services will
be September 30 following the close of the funding year. An applicant
may request and receive from the Administrator an extension of the
implementation deadline for non-recurring services if it satisfies one
of the following criteria:

(1) The applicant's funding commitment decision letter is issued by the
    Administrator on or after March 1 of the funding year for which
    discounts are authorized;

(2) The applicant receives a service provider change authorization or
    service substitution authorization from the Administrator on or
    after March 1 of the funding year for which discounts are
    authorized;

(3) The applicant's service provider is unable to complete
    implementation for reasons beyond the service provider's control; or

(4) The applicant's service provider is unwilling to complete
    installation because funding disbursements are delayed while the
    Administrator investigates their application for program compliance.

\*\*\*

**APPENDIX B -- COMMENTS**

**[Commenter]{.underline} [Abbreviation]{.underline}**

American Federation of Teachers AFT

American Library Association ALA

Anaheim Union High School District Anaheim

Atkinson County School District Atkinson

California Department of Education CDE

Chandler, Rod Chandler

City of Boston, Boston Public Schools and

Boston Public Library Boston Schools and Libraries

Cleveland Municipal School District CMSD

Cleveland Public Schools Cleveland

Coalition of Predictable E-rate Priorities Coalition PEP

Comweb Technology Group Comweb

Consortium for School Networking & Intern'l.

Society for Technology in Education CoSN

Council of the Great City Schools Great City

Custom Fit, Inc. Custom Fit

Denver Public Schools DPS

Desert Communications Desert

Dziuba, Mathew L. Dziuba

Edgewood Independent School District Edgewood

Emilienburg, Steven Emilienburg

E-Rate Elite Services, Inc. EES

Evergreen School District #50 Evergreen

Fisher, Wayne Fisher

Gallup-McKinley County Public Schools Gallup-McKinley

Garza, Juana Garza

George, Micky D. George

Iberville Parish Schools Iberville

Illinois K-12 Illinois K-12

Illinois State Board of Education Illinois

Information Technology Industry Council ITI

Intelenet Commission Intelenet

Kansas City, MO School District Kansas City

Kellogg Consulting, LLC Kellogg

Kelm, Paul E. Kelm

King, Don King

Lamont School District Lamont

Los Angeles Unified School District LAUSD

Lewis, Jon Lewis

Lewis, Quinna Lewis

Lloyd, Jim Lloyd

Memphis City Schools Memphis

Mid-Del Public Schools Mid-Del

National Independent Private Schools Association NIPSA

The New Mexico Council on Technology

In Education Council

The New York City Board of Education NYC

The New York Public Library NYPL

Olivier, Betty Olivier

Paramount Unified School District Paramount

School District of Philadelphia School District

Pinkston, Mike Pinkston

Qwest Corporation Qwest

Skiatook Schools Skiatook

Serban Sound & Communications Serban

The South Cook Education Consortium Consortium

St. Louis City School District St. Louis

St. Michael's School St. Michael's

Sulphur Public Schools Sulphur

TeleComp Technologies TeleComp

Tel/Logic, Inc. d.b.a. E-Rate Central Tel/Logic

United States Telecom Association USTA

Wehe, Glenn Wehe

Weisiger, Greg Weisiger

Williams, Virginia Kay Williams

Wisconsin Dept. of Public Instruction Wisconsin

WorldCom, Inc. WorldCom

Zelley, Bryan Zelley

**APPENDIX C -- REPLY COMMENTS**

**[Commenter]{.underline} [Abbreviation]{.underline}**

Barnwell School District 19

Calhoun County Public Schools

Charleston County School District

Cleveland Municipal School District CMSD

The Council of the Great City Schools Great City Schools

Education and Library Networks Coalition EdLiNC

Funds For Learning, LLC

Georgetown County School District

Hampton County School District

Johnakin Middle School of Marion

Marion Intermediate School Media Center

Marion School District One

Marion School District #3

Marlboro County, School District

Orange Consolidated School District Five

Williamsburg County School District

[^1]: *Federal-State Joint Board on Universal Service*, CC Docket No.
    96-45, Further Notice of Proposed Rulemaking, FCC 01-143 (rel. April
    30, 2001) (*Notice*). For unabbreviated names of parties filing
    comments and reply comments, *see* Appendix B and C to this Report
    and Order.

[^2]: *See* Appendix A.

[^3]: 47 U.S.C. § 254.

[^4]: 47 C.F.R. §§ 54.502, 54.503.

[^5]: *See Federal-State Joint Board on Universal Service*, CC Docket
    No. 96-45, Report and Order, 12 FCC Rcd 8776, 9062, para. 544 (1997)
    (*Universal Service Order*), as corrected by *Federal‑State Joint
    Board on Universal Service*, CC Docket No. 96‑45, Errata, FCC 97‑157
    (rel. June 4, 1997), *affirmed in part*, *Texas Office of Public
    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).

[^6]: *Id*. *See also Federal-State Joint Board on Universal Service*,
    CC Docket No. 96045, Fifth Order on Reconsideration and Fourth
    Report and Order, 13 FCC Rcd 14915, 14921, para. 9 (1998)(*Fifth
    Order on Reconsideration*); 47 C.F.R. § 54.507(d), (e).

[^7]: *Universal Service Order*, 12 FCC Rcd at 9057, para. 535, and
    9234, para. 710.

[^8]: *Fifth Order on Reconsideration*, 13 FCC Rcd at 14916, para. 1,
    and 1490, para. 8.

[^9]: *Id.*

[^10]: *Federal-State Joint Board on Universal Service*, CC Docket No.
    96-45, Tenth Order on Reconsideration, 14 FCC Rcd 5983, 5991-94,
    para. 17-23 (1999) (*Tenth Order on Reconsideration*).

[^11]: *Id.* at 5992-3, para. 19-20.

[^12]: *See Federal-State Joint Board on Universal Service*, Order, CC
    Docket No. 96-45, 15 FCC Rcd 8064 (Com. Car. Bur. 2000)(*May 2000
    Extension*); *Notice* at paras. 10-12.

[^13]: *May 2000 Extension* 15 FCC Rcd at 8067, paras. 5-6; *Notice* at
    para. 11.

[^14]: Schools and Libraries Universal Service, Services Ordered and
    Certification Form, OMB 3060-0806 (Form 471).

[^15]: Under the revised rule, schools and libraries receiving funding
    commitments for non-recurring services in Funding Year 4 will have
    until September 30, 2002 to implement these services.

[^16]: In Funding Year 2, the September 30 deadline was extended for
    eligible schools and libraries who, through no fault of their own,
    were unable to complete installation of non-recurring services by
    the deadline. Specifically, the deadline was extended by an
    additional year for those applicants: (1) whose Year 2 funding
    commitment letters were issued by the Administrator on or after
    April 4, 2000; (2) who received service provider change
    authorizations or service substitutions from the Administrator on or
    after April 4, 2000; (3) whose service providers were unable to
    complete implementation for reasons beyond the service provider's
    control; or (4) who had their funding disbursements delayed while
    the Administrator investigated their application for program
    compliance. *See Federal-State Joint Board on Universal Service*,
    Order, CC Docket No. 96-45, DA 00-2444 (Com. Car. Bur., rel.
    November 1, 2000) (*November 2000 Extension Order*)*,* paras. 8-9.

[^17]: In the case of Funding Year 2 "out of window applications"
    funding commitments made in April 2001 for Funding Year 2
    applications (after March 1), the deadline for receipt of
    non-recurring service will be September 30, 2002.

[^18]: *See November 2000 Extension Order*, at para. 9. We note that the
    original non-recurring services installation deadline is considered
    to be September 30, following the close of the funding for which
    services were sought.

[^19]: *See Id.*; *Request for Waiver of September 30, 2000 Deadline for
    Implementation of Non-recurring Services by Baldwin County Board of
    Education, Federal-State Joint Board on Universal Service*, Order,
    CC Docket No. 96-45, DA 01-747 (Com. Car. Bur. rel. March 27, 2001).

[^20]: *See* New York Public Library Comments at 4; Qwest Corporation
    Comments at 4.

[^21]: After processing applications for Funding Year 4 of the schools
    and libraries universal service mechanism, the Administrator
    estimated that in Funding Year 4 (July 1, 2001 to June 30, 2002)
    demand is \$5.195 billion, well above the \$2.25 billion funding
    cap. *See* Letter from Kate L. Moore, President, Universal Service
    Administrative Company, Schools and Libraries Division, to Dorothy
    Attwood, Chief, Common Carrier Bureau, Federal Communications
    Commission, dated April 17, 2001 (*USAC Letter*). The Administrator
    based the demand estimate on the funding requests in 37,188
    applications received or postmarked by January 18, 2001, the close
    of the Form 471 filing window for Funding Year 4.

[^22]: *See* 47 U.S.C. §54.507(g)(iv). Because Funding Year 4 demand
    exceeds the funding cap there is only enough money to fund
    applicants in the 90% discount level on a pro rata basis. *See*
    *USAC Letter.*

[^23]: *See, e.g.*, School District of Philadelphia Comments at 3; City
    of Boston, Boston Public Schools, and Boston Public Library Comments
    at 2; Illinois State Board of Education at 2; Iberville Parish
    Schools Comments; Desert Communications Comments; New Mexico Council
    on Technology and Education Comments at 4.

[^24]: *See, e.g*., Denver Public Schools Comments at 2; St. Louis City
    Schools District Comments at 2.

[^25]: *See, e.g*., New York City Board of Education Comments at 3
    (classifying "recurring maintenance" within the internal connection
    category would result in many schools being ineligible in Funding
    Year 4); American Library Association Comments at 7 (substantive
    changes to program rules in Funding Year 4 violates the principles
    of predictability and program consistency).

[^26]: *See, e.g.,* Evergreen School District Comments; Skiatook Schools
    Comments.

[^27]: *See, e.g.,* Paramount Unified School District Comments; Anaheim
    Union High School District Comments; Pinkston Comments.

[^28]: *See* 5 U.S.C. § 603. The RFA, *see* 5 U.S.C. § 601 *et seq.*,
    has been amended by the Contract with America Advancement Act of
    1996, Pub. L. No. 104-121, 110 Stat. 847 (1996) (CWAAA). Title II of
    the CWAAA is the Small Business Regulatory Enforcement Fairness Act
    of 1996 (SBREFA).

[^29]: *Federal-State Joint Board on Universal Service*, CC Docket No.
    96-45, Further Notice of Proposed Rulemaking, FCC 01-143 (rel. April
    30, 2001) (*Notice*).

[^30]: *See* 5 U.S.C. § 604.

[^31]: 5 U.S.C. § 603(b)(3).

[^32]: 5 U.S.C. § 601(6).

[^33]: 5 U.S.C. § 601(3) (incorporating by reference the definition of
    "small business concern" in 15 U.S.C. § 632). Pursuant to the RFA,
    the statutory definition of a small business applies "unless an
    agency, after consultation with the Office of Advocacy of the Small
    Business Administration and after opportunity for public comment,
    establishes one or more definitions of such term which are
    appropriate to the activities of the agency and publishes such
    definition(s) in the Federal Register." 5 U.S.C. § 601(3).

[^34]: Small Business Act, 15 U.S.C. § 632.

[^35]: 5 U.S.C. § 601(4).

[^36]: 1992 Economic Census, U.S. Bureau of the Census, Table 6 (special
    tabulation of data under contract to Office of Advocacy of the U.S.
    Small Business Administration).

[^37]: 47 C.F.R. § 1.1162.

[^38]: 5 U.S.C. § 601(5).

[^39]: U.S. Dept. of Commerce, Bureau of the Census, "1992 Census of
    Governments."

[^40]: *Id*.

[^41]: 47 C.F.R. § 54.500(b).

[^42]: 47 C.F.R. § 54.500(j).

[^43]: 47 C.F.R. § 54.501.

[^44]: *See* *id.*

[^45]: 13 C.F.R. § 121.201, North American Industry Classification
    System (NAICS) Codes 61111, 51412.

[^46]: *See* 5 U.S.C. § 603.

[^47]: *See* 5 U.S.C. § 801(a)(1)(A).

[^48]: *See* 5 U.S.C. § 604(b).

[^49]: *See* 5 U.S.C. § 553(d).