**Before the**

**Federal Communications Commission**

**Washington, DC 20554**

In the Matter of )

)

Application for Review by )

)

United Talmudical Academy ) File No. SLD-105791

Brooklyn, New York )

)

Schools and Libraries Universal Service ) CC Docket No. 02-6

Support Mechanism )

**order**

**Adopted: October 21, 2003 Released: October 24, 2003**

By the Commission:

1.  The Commission has under consideration an Application for Review
    filed by the United Talmudical Academy (UTA), Brooklyn, New York,
    seeking review of an Order issued by the Common Carrier Bureau (now
    known as the Wireline Competition Bureau) (Bureau) on delegated
    authority.[^1] In the Order, the Bureau upheld a decision of the
    Schools and Libraries Division (SLD) of the Universal Service
    Administrative Company (Administrator) to deny UTA's funding
    requests for Centrex service in Funding Year 1998.[^2] For the
    reasons set forth, we deny the Application for Review and affirm the
    Bureau's decision.

2.  [Background.]{.underline} 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] The Commission's rules require that
    the applicant make a bona fide request for services by filing with
    the Administrator an FCC Form 470, which is posted to the
    Administrator's website for all potential competing service
    providers to review.[^4] After the FCC Form 470 is posted, the
    applicant must wait at least 28 days before entering an agreement
    for services and submitting an FCC Form 471, which requests support
    for eligible services.[^5] SLD reviews the FCC Forms 471 that it
    receives and issues funding commitment decisions in accordance with
    the Commission's rules.

3.  On the FCC Form 470, applicants must attest that any support they
    receive is conditional upon their \"securing access to all of the
    resources, including computers, training, software, maintenance, and
    electrical connections necessary to use the services purchased
    effectively.\"[^6] As part of the FCC Form 471 application, schools
    and libraries must certify that their requests are based on an
    approved technology plan.[^7] The plans are required to be
    independently approved, to ensure that they are based on the
    reasonable needs and resources of the applicant and are consistent
    with the goals of the schools and libraries mechanism.[^8]
    Applicants must also certify that they have secured access to \"to
    all of the resources, including computers, training, software,
    maintenance, and electrical connections necessary to make effective
    use of the services purchased as well as to pay the discounted
    charges for eligible services.\"[^9] SLD reviews the FCC Forms 471
    that it receives and issues funding commitment decisions in
    accordance with the Commission's rules.[^10]

4.  UTA originally requested \$3.4 million in funding for
    telecommunications services, internet access, and internal
    connections for Funding Year 1998, which SLD denied in its entirety.
    SLD concluded that UTA had failed to show that it had the resources
    necessary to make effective use of the services for which it sought
    discounts.[^11] UTA then filed a letter of appeal with SLD, seeking
    review only of the denial of its request for funding for its
    existing telecommunications services, a PBX, and two computer
    networks, totaling \$234,451. In denying this appeal, SLD indicated
    that its necessary resources review had not been applied to
    individual funding requests, but rather to the application as a
    whole.[^12] UTA then sought review of this decision by the
    Commission.[^13]

5.  In *United Talmudical Academy I*, the Commission largely upheld
    SLD's decision to conduct its necessary resources review on the
    application as a whole.[^14] The Commission affirmed that review of
    necessary resources certifications was an integral part of SLD's
    responsibility to ensure compliance with statutory requirements and
    Commission rules, and an important means by which SLD implements the
    Commission's directive to take steps to curb waste, fraud, and abuse
    in this support mechanism. The Commission found that, if SLD were
    required to perform a necessary resources review on individual
    funding requests, it would be required to determine, in the event
    that resources were inadequate to support the whole application,
    which set of discounted services the applicant would have chosen to
    fund if it had been aware of the necessary resource problems in the
    funding requests it actually made.[^15] To require such decisions,
    the Commission found, would undermine the policies and objectives
    underlying the schools and libraries support mechanism that
    individual schools and libraries, not SLD, are best positioned to
    determine their support needs in light of their particular
    technological capabilities and educational needs.[^16]

6.  The Commission thus affirmed as a general matter SLD's practice of
    applying its necessary resources review to the application as a
    whole rather than to individual funding requests, but established
    one exception.[^17] Specifically, the Commission indicated that it
    was reasonable for SLD to conduct a separate necessary resources
    review of those funding requests seeking only "basic voice telephone
    service."[^18] The Commission reasoned that the components and
    resources needed to make effective use of basic telephone service,
    *e.g.*, telephones, were "readily ascertainable" and did not require
    a detailed knowledge of an applicant's overall technology plan.[^19]
    The Commission expressly recognized that under the OMB-approved
    application forms, applicants seeking only basic voice telephone
    service were not even required to file a technology plan.[^20] The
    Commission remanded UTA's application to SLD to determine whether
    UTA submitted requests seeking discounts on basic voice telephone
    service, whether such requests individually passed SLD's review for
    necessary resources, and whether such requests were otherwise in
    compliance with our rules.[^21]

7.  On remand, after engaging in further review, SLD granted three of
    UTA's eight funding requests.[^22] The unfunded requests sought
    cellular and Centrex service, which SLD determined were not "basic
    voice telephone service." [^23] UTA then sought review of this
    decision.[^24]

8.  In *United Talmudical Academy II*, the Common Carrier Bureau
    reversed in part and affirmed in part SLD's decision.[^25] The
    Bureau reversed SLD as to the cellular phone service requests,
    noting that SLD had, subsequent to its action on UTA's application
    on remand, modified its definition of "basic phone service" to
    include cellular service. The Bureau reasoned that cellular service
    should be considered basic voice telephone service for purposes of
    the schools and libraries support mechanism because the resources
    necessary for such service were as readily ascertainable as those
    for Plain Old Telephone Service (POTS).[^26] The Bureau thus
    concluded that UTA's request for cellular phone service should have
    received a separate necessary resources review and remanded that
    portion of the application to SLD for further action.[^27]

9.  The Bureau affirmed SLD's denial of funding for Centrex service,
    reasoning that UTA was not entitled to a separate necessary
    resources review for that service under the reasoning of the
    Commission's *United Talmudical Academy* order. In particular, the
    Bureau concluded that Centrex should not be viewed as "basic voice
    telephone service" for purposes of the schools and libraries
    mechanism because users may not be able to effectively utilize the
    features of Centrex service without training, unlike POTS.[^28] UTA
    then filed the pending Application for Review, challenging the
    Bureau's decision as to the Centrex service requests.

10. [Discussion.]{.underline} We affirm the Bureau's conclusion that UTA
    was not entitled to a separate necessary resources review for its
    requested Centrex service, although we rely upon different reasoning
    than the Bureau order. In resolving this issue today, we reaffirm
    the importance of ensuring that all applicants for discounts have
    the resources to utilize effectively the services for which they
    request discounts. Moreover, we emphasize the importance of
    applicants demonstrating a need for the services requested through
    an independently approved technology plan. Both serve to implement
    the statutory requirement that discounts be provided on bona fide
    requests for services to be used for educational purposes, and
    represent important measures to help ensure that critical universal
    service support is provided without waste, fraud, or abuse. [^29]

11. In this Application for Review, UTA argues that the Bureau erred in
    concluding that Centrex should not be viewed as basic telephone
    service for purposes of this program because it failed to analyze
    the actual Centrex service that UTA receives.[^30] UTA asserts that
    the actual service that it ordered does not have any advanced
    features, requires little or no training, and should thus be found
    to constitute basic voice telephone service.[^31] To support its
    assertions, UTA submits a letter from Verizon, its service provider,
    stating that the service is a "basic Centrex account consisting of
    83 lines in which basic features are built into the contract price."
    Verizon states that the features included are "simple to use" and
    require "little or no training . . . ."[^32]

12. We conclude that the nature of the particular Centrex service at
    issue is not relevant to our analysis. When the Commission directed
    USAC to determine which of the original funding requests sought
    funding for basic telephone service, it did not enunciate a new
    policy for what should be defined as basic telephone service under
    the schools and libraries support mechanism. Rather, the
    Commission's decision must be viewed against the backdrop of USAC's
    longstanding practice that Centrex service is not considered "basic
    telephone service" for purposes of application processing.
    Historically, SLD's Eligible Services List has drawn a distinction
    between "Centrex," defined as "\[a\] private communications system
    that consists of a wide variety of features provided by central
    office software and extended to the customer's premises via local
    distribution facilities" and "basic telephone service," defined as
    including both "Plain Old Telephone Service and long distance
    telephone service."[^33] The significance of this distinction, fully
    recognized by the Commission in *United Talmudical Academy I*, is
    that applicants seeking basic telephone service are not required to
    justify the acquisition of that service in a technology plan.[^34]
    The Commission merely was directing USAC to determine which of the
    funding requests sought discounts on basic telephone service, as
    USAC had consistently defined that term in the past.

13. Adopting a case-by-case approach to determining whether and what
    type of Centrex should be viewed as basic telephone service would
    inevitably create significant uncertainty for applicants and SLD as
    to whether any particular Centrex service request could qualify as
    basic telephone service. Applicants could not be confident in
    advance of whether their Centrex service should be included in a
    technology plan, nor could SLD be sure of whether a particular
    Centrex request should receive a separate necessary resources
    review. This could delay the efficient processing of applications,
    and have unintended consequences for applicants that fail to
    correctly anticipate whether their requested service should be
    addressed in a technology plan. We conclude that all parties benefit
    from being able to anticipate with certainty, prior to the filing of
    an FCC Form 471, their obligations in the application process in
    connection with requests for Centrex service.

14. SLD's longstanding policy not to treat Centrex as basic telephone
    service for application processing purposes also serves to limit
    waste, fraud, and abuse. Since the program's inception, applicants
    have not been required to prepare, submit and have an approved
    technology plan for basic telephone service.[^35] In contrast, all
    applicants have been required to justify their need for Centrex
    service in an independently approved technology plan.[^36] This
    independent check helps to ensure that schools and libraries do not
    order more expensive telecommunications offerings merely because
    significant discounts are available.

15. There may be a reasonable argument that Centrex should be treated as
    a basic telephone service in future funding years, to streamline
    application processing. In our view, such a change, if appropriate,
    should be implemented uniformly, upon the commencement of the
    application window for a future funding year, so that all applicants
    are subject to the same requirements. But we decline, in the course
    of this adjudicatory matter, to change the policies that have
    applied consistently and equally to all applicants in the past,
    merely because the application of that policy to one applicant led
    to a denial of funding in Funding Year 1998.

16. Finally, we note that, in one respect, UTA overstates the adverse
    consequences of this decision. UTA asserts that the decision impairs
    its ability to seek discounts on its "long term, 7 year, contract .
    . . with Verizon for the Centrex service . . . ."[^37] To the extent
    that UTA believes that it is prohibited from seeking discounts on
    any year of its 7-year Centrex service contract with Verizon, UTA is
    mistaken. The underlying problem with UTA's requests was a failure
    to demonstrate that it had the necessary resources in Funding Year
    1998 to make effective use of the requested services. This
    determination affects only UTA's Funding Year 1998 application, and
    would not bar UTA from demonstrating that it has the necessary
    resources in subsequent years to support its requested services,
    including, presumably, its Centrex service.[^38]

17. In conclusion, we find that there is no indication that the
    Commission intended to alter SLD's existing definition of basic
    telephone service when it carved out an exception to SLD's general
    practice of applying its necessary resources review to the
    application as a whole rather than to individual funding requests.
    We affirm the Bureau's conclusion that, for purposes of the schools
    and libraries program, Centrex service is not a "basic voice
    telephone service" and therefore UTA was not entitled to a separate
    necessary resources review for its funding request for Centrex in
    Funding Year 1998.[^39]

18. ACCORDINGLY, IT IS ORDERED that the Application for Review filed by
    United Talmudical Academy on November 29, 2001 is DENIED.

    FEDERAL COMMUNICATIONS COMMISSION

    Marlene H. Dortch

    Secretary

[^1]: *Application for Review of the Decision of the Common Carrier
    Bureau By United Talmudical Academy*, CC Docket Nos. 96-45 and
    97-21, Application for Review, filed November 29, 2001 (Application
    for Review).

[^2]: *Request for Review by United Talmudical Academy, Federal-State
    Joint Board on Universal Service, Changes to the Board of Directors
    of the National Exchange Carrier Association, Inc.*, File No.
    SLD-105791, CC Dockets No. 96-45 and 97-21, Order, 16 FCC Rcd 18812
    (Com. Car. Bur. 2001) (*United Talmudical Academy II*).

[^3]: 47 C.F.R. §§ 54.502, 54.503.

[^4]: Schools and Libraries Universal Service, Description of Services
    Requested and Certification Form, OMB 3060-0806 (December 1998) (FCC
    Form 470); 47 C.F.R. § 54.504(b); *Federal-State Joint Board on
    Universal Service*, CC Docket No. 96-45, Report and Order, 12 FCC
    Rcd 8776, 9078, para. 575 (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 First Report and
    Order* in part and reversing and remanding on unrelated grounds),
    *cert. denied, Celpage, Inc. v. FCC*, 120 S. Ct. 2212 (2000), *cert.
    denied,* *AT&T Corp. v. Cincinnati Bell Tel. Co*., 120 S. Ct. 2237
    (2000*), cert. dismissed,* *GTE Service Corp. v. FCC*, 121 S. Ct.
    423 (2000).

[^5]: 47 C.F.R. § 54.504(b), (c); Schools and Libraries Universal
    Service, Services Ordered and Certification Form, OMB 3060-0806
    (December 1998) (FCC Form 471).

[^6]: *See* FCC Form 470, at Item 25.

[^7]: *See* FCC Form 471; *Universal Service Order*, 12 FCC at 9077,
    paras. 572-573.

[^8]: *Universal Service Order*, 12 FCC at 9078, para. 574; *see also*
    SLD web site, Technology Plans,
    \<[http://www.sl.universalservice.org/apply/step2.asp#1]{.underline}\>.

[^9]: *See* FCC Form 471, at Item 22.

[^10]: SLD is charged with the responsibility of developing applications
    and associated instructions, and administering the application
    process. *See* 47 C.F.R. § 54.705(a)(1); *see also Changes to the
    Board of Directors of the National Exchange Carrier Association,
    Inc., Federal State Joint Board on Universal Service*, Third Report
    and Order 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, 25075-76, para. 30-31 and 34 (1998).

[^11]: Letter from Schools and Libraries Division, Universal Service
    Administrative Company, to Mozes Greenfeld, United Talmudical
    Academy, dated February 26, 1998 \[sic\] (actual date February 26,
    1999) (Funding Commitment Decision Letter).

[^12]: SLD subsequently informed UTA that its application suffered from
    deficiencies in the areas of hardware, professional development,
    software, and maintainence, with the numbers submitted by UTA
    deviating by as much as 20% from SLD's projections of the resources
    necessary to make effective use of the services for which UTA sought
    discounts. See Letter of Ellen Wolfhagen, Schools and Libraries
    Division of the Universal Service Administrative Company, to Mozes
    Greenfield, United Talmudical Academy, dated August 9, 1999, at 2.

[^13]: *See* Letter of Appeal of Mozes Greenfeld, United Talmudical
    Academy, to the Federal Communications Commission, dated August 11,
    1999 (First Request for Review*).*

[^14]: *See* *Request for Review by United Talmudical Academy,
    Federal-State Board on Universal Service, Changes to the Board of
    Directors of the National Exchange Carrier Association, Inc.*, File
    No. SLD-105791, CC Dockets No. 96-45 and 97-21, 15 FCC Rcd at
    430-432, paras. 15-18 (2000) (*United Talmudical Academy I*).

[^15]: *Id.*, 15 FCC Rcd at 431, para. 16.

[^16]: *Id.*

[^17]: *Id.*, 15 FCC Rcd at 431-32, para. 18.

[^18]: *Id.*

[^19]: *Id.*

[^20]: *Id. (citing* FCC Form 470, Description of Services Requested and
    Certification Form, OMB 3060-0806, Block 6, Item 22 (December 1997)
    and FCC Form 471, Services Ordered and Certification Form, OMB
    3060-0806, Block 6, Item 23 (December 1997).

[^21]: *Id.*, 15 FCC Rcd at 432, para. 19.

[^22]: Letter from Schools and Libraries Division, Universal Service
    Administrative Company, to Mozes Greenfeld, United Talmudical
    Academy, dated August 21, 2000 (Second Funding Commitment Decision
    Letter).

[^23]: *See* Request for Review at 1-2.

[^24]: Letter from Eugene Sander, United Talmudical Academy, to Federal
    Communications Commission, filed September 20, 2000 (Second Request
    for Review).

[^25]: *See* *United Talmudical Academy II*, 16 FCC Rcd 18812.

[^26]: *Id.*, 16 FCC Rcd at 18817, para. 12.

[^27]: *Id.*

[^28]: *Id.*, 16 FCC Rcd at 18817, para. 14.

[^29]: 47 U.S.C. §254(h)(1)(B).

[^30]: Application for Review at 4.

[^31]: Application for Review at 4-5.

[^32]: Application for Review, Attachment (Verizon Letter).

[^33]: *See* Schools and Libraries Eligible Services List (December 2,
    1999) (Eligible Services List).

[^34]: 15 FCC Rcd at 431-32, para. 18.

[^35]: *See* FCC Form 470, Description of Services Requested and
    Certification Form, OMB 3060-0806, Block 6, Item 22 (December 1997)
    and FCC Form 471, Services Ordered and Certification Form, OMB
    3060-0806, Block 6, Item 23 (December 1997).

[^36]: *See* *Id*.; Eligible Services List at 2.

[^37]: Application for Review at 3.

[^38]: UTA received funding commitments of \$1,321,930 in Funding Year
    1999, \$763,529 in Funding Year 2000, and \$784,207 in Funding Year
    2001.

[^39]: We also deny UTA's request to review the records of both SLD and
    the Bureau regarding this matter. *See* Application for Review at 6.
    In light of our conclusion that the Commission did not make any
    change in SLD policy when it remanded UTA's application for further
    processing in *United Talmudical Academy I*, we see no reason to
    grant this request. As mentioned above, SLD's definition of basic
    telephone service has been posted on its website since the program's
    inception. We note that the Commission denied a similar request to
    review SLD's records from UTA in *United Talmudical Academy I*. *See
    United Talmudical Academy I*, 15 FCC Rcd at 432-433.