**Before the**

**Federal Communications Commission**

**Washington, DC 20554**

In the Matter of )

)

Request for Review of the )

Decision of the )

Universal Service Administrator by )

)

New Albany-Floyd County ) File No. SLD-27572

Consolidated School Corporation )

New Albany, Indiana )

)

Federal-State Joint Board on Universal Service ) CC Docket No. 96-45

)

Changes to the Board of Directors of the ) CC Docket No. 97-21

National Exchange Carrier Association, Inc. )

**order ON ReCONSIDERATION**

**Adopted: January 30, 2001 Released: January 31, 2001**

By the Common Carrier Bureau:

1.  In this Order, we grant the petition for reconsideration filed by
    the New Albany-Floyd County Consolidated School Corporation (NAFC)
    on November 1, 1999[^1] regarding our decision to dismiss, as
    untimely,[^2] the appeal NAFC filed on April 26, 1999.[^3]
    Furthermore, after reviewing NAFC's appeal of the March 24, 1999
    decision issued by the Schools and Libraries Division (SLD) of the
    Universal Service Administrative Company (Administrator), we
    conclude that NAFC's application should be remanded to SLD in order
    for SLD to redetermine whether SLD's decision to reclassify NAFC's
    facilities as internal connections was appropriate in light of the
    Commission's *Tennessee Order*.[^4]

# I. Background {#i.-background .unnumbered}

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.[^5] During the first funding year (January 1, 1998 -
    June 30, 1999) of the support mechanism, SLD granted all approved
    requests for discounts for telecommunications services and Internet
    access and granted all approved requests for internal connections
    for schools eligible for discounts of at least 70 percent.

3.  By letter dated February 18, 1999, SLD denied NAFC's application for
    discount funding, on the grounds that requests for internal
    connections were not funded for schools and libraries at NAFC's
    discount level.[^6] NAFC appealed SLD's decision, stating that its
    application sought discounts for telecommunications services rather
    than internal connections.[^7] On March 24, 1999, SLD denied NAFC's
    appeal.[^8] SLD again stated that NAFC's request was for what SLD
    considered internal connections. SLD reclassified NAFC's entire
    request as internal connections services so as to avoid the
    possibility of treating priority two services (internal connections)
    as priority one services (telecommunications services and Internet
    access). Further, SLD denied NAFC's funding request for the
    reclassified internal connections services because it did not
    qualify for the threshold 70 percent discount.[^9]

4.  On April 26, 1999, NAFC filed an appeal with the Commission. Because
    the Administrator's Decision on Appeal had been issued on March 24,
    1999, more than 30 days prior to NAFC's filing of its appeal with
    the Commission, the Common Carrier Bureau dismissed NAFC's appeal as
    untimely on October 25, 1999. That decision, however, failed to
    recognize that the Commission was closed on April 23, 1999, the day
    that would otherwise have been the last day to file an appeal, due
    to activities associated with the 50^th^ Anniversary NATO Summit. In
    a Public Notice announcing that it would be closed, the Commission
    stated that all filings due on April 23, 1999 would be considered
    timely if filed on the next official work day, i.e., Monday, April
    26, 1999.[^10]

# II. Discussion {#ii.-discussion .unnumbered}

## A. Timeliness of NAFC's Appeal {#a.-timeliness-of-nafcs-appeal .unnumbered}

5.  Under these circumstances, NAFC's appeal, filed on April 26, 1999,
    was timely and must be considered on its merits. We therefore vacate
    our Order dismissing that appeal and consider it on the merits here.

## Merits of NAFC's Appeal

6.  In its appeal, NAFC argues that SLD incorrectly classified its
    requests for Ameritech-managed router services and Internet server
    facilities as internal connections equipment rather than as Internet
    access or telecommunications services, as NAFC had characterized
    it.[^11] NAFC further argues that, even if SLD was correct in
    reclassifying some of those facilities as internal connections, SLD
    erroneously denied NAFC support for that portion of its application
    that clearly was for telecommunications services and Internet
    access.

7.  Subsequent to SLD's March 24, 1999 decision on appeal, the
    Commission issued its *Tennessee Order*, in which it considered
    whether certain facilities on school premises could be properly
    considered Internet access, rather than internal connections.[^12]
    We believe that under the *Tennessee Order*, NAFC's argument
    concerning the classification of Ameritech's managed router services
    and data service unit/channel service unit (DSU/CSU) as internal
    connections may have merit. Therefore, we direct SLD to review
    NAFC's application again and apply the test described in the
    *Tennessee Order* to determine whether the services NAFC
    characterized as telecommunications services or Internet access were
    properly characterized as such.[^13]

8.  Furthermore, even if SLD finds that some of the services sought by
    NAFC are for internal connections and thus not eligible for support,
    we find that SLD should not penalize NAFC for commingling its
    requests for discounts for priority one services and priority two
    services. Although the Commission's *Fifth Reconsideration Order*
    requires SLD to treat requests for internal connections differently
    from those for telecommunications services and Internet access,[^14]
    that *Order* was not released until June 22, 1998, while NAFC filed
    its FCC Form 471 on April 8, 1998.

9.  In *Williamsburg-James City*,[^15] the Commission held that, in
    cases where, as here, an FCC Form 471 was submitted before the
    establishment of the Commission\'s rules of priority, applicants
    could not have been aware of the need to segregate carefully their
    service requests. Consequently, the Commission held that, in appeals
    addressing such circumstances, applications should be remanded to
    SLD for reprocessing, with priority one services (telecommunications
    and Internet access) and priority two services (internal
    connections) being considered separately on their own merits. We,
    therefore, remand NAFC's application to SLD, and direct SLD to
    reconsider NAFC's FCC Form 471 and, if warranted, to issue a new
    funding commitment decision letter providing discounts for all
    appropriate priority one services requested by NAFC.[^16]

10. ACCORDINGLY, IT IS ORDERED, pursuant to authority delegated under
    sections 0.91, 0.291, and 54.722(a) of the Commission\'s rules, 47
    C.F.R. §§ 0.91, 0.291, and 54.722(a), that the Petition for
    Reconsideration filed by New Albany-Floyd County Consolidated School
    Corporation on November 1, 1999 to reconsider the dismissal of the
    Appeal it filed on April 26, 2000 is GRANTED.

11. IT IS FURTHERED ORDERED that the Appeal filed by New Albany-Floyd
    County Consolidated School Corporation on April 26, 1999, is GRANTED
    to the extent discussed herein.

12. IT IS FURTHERED ORDERED that the Administrator IS DIRECTED to
    implement the decision herein.

    FEDERAL COMMUNICATIONS COMMISSION

Carol E. Mattey

Deputy Chief, Common Carrier Bureau

[^1]: *Petition for Reconsideration of* *Request for Review of the
    Decision of the Universal Service Administrator by New Albany Floyd
    County Consolidated School Corporation*, SLD-27572, CC Docket No.
    96-45, Order, DA 99-2298 (rel. Oct. 25, 1999), filed Nov. 1, 1999.

[^2]: *Request for Review of the Decision of the Universal Service
    Administrator by New Albany Floyd County Consolidated School
    Corporation*, SLD-27572, CC Docket No. 96-45, Order, DA 99-2298
    (rel. Oct. 25, 1999).

[^3]: *Request for Review of the Decision of the Universal Service
    Administrator by New Albany Floyd County Consolidated School
    Corporation*, SLD-27572, CC Docket No. 96-45, filed April 26, 1999.
    (Appeal)

[^4]: *Request for Review by the Department of Education of the State of
    Tennessee of the Decision of the Universal Service Administrator,
    Request for Review by Integrated Systems and Internet Solutions,
    Inc., of the Decision of the Universal Service Administrator,
    Request for Review by Education Networks of America of the Decision
    of the Universal Service Administrator,* CC Docket Nos. 96-45 and
    97-21, Order, 14 FCC Rcd 13734 (1999) (*Tennessee Order*).

[^5]: 47 C.F.R. §§ 54.502, 54.503.

[^6]: Letter from the Schools and Libraries Division, Universal Service
    Administrative Company, to Roger Whaley, NAFC School Corp, dated
    February 18, 1999.

[^7]: Letter from Roger Whaley, New Albany-Floyd County Consolidated
    School Corp., to Schools and Libraries Division, Universal Service
    Administrative Company, filed March 3, 1999 (March 3, 1999 Letter).

[^8]: Letter from the Schools and Libraries Division, Universal Service
    Administrative Company, to Roger Whaley, NAFC School Corp, dated
    March 24, 1999 (Administrator's Decision on Appeal).

[^9]: In June 1998, the Commission established funding priorities that
    placed funding requests for telecommunications and Internet access
    services ahead of those seeking aid for internal connections.
    *Federal-State Joint Board on Universal Service*, CC Docket No.
    96-45, Fifth Order on Reconsideration and Fourth Report and Order in
    CC Docket No. 96-45, 13 FCC Rcd 14915, 14934-14940, paras. 31-38
    (1998) (*Fifth Reconsideration Order*).

[^10]: *FCC Closes on Friday, April 23, 1999*, Public Notice, released
    April 12, 1999.

[^11]: Appeal, at 3. NAFC initially characterized its request as a
    request for telecommunications services. March 3, 1999 Letter.
    Later, NAFC characterized the service as "Internet access," because
    the telecommunications lines were being used to gain access to the
    Internet. Appeal at 3.

[^12]: *Tennessee Order*, 14 FCC Rcd at 13746-55, paras. 25-42.

[^13]: In the *Tennessee Order*, the Commission concluded that a
    facility located on an applicant's premises is presumed to be a
    component of internal connections, but that presumption may be
    rebutted if the facility at issue functions exclusively as a point
    of presence for an Internet service provider and there are no other
    indications that the facility is mischaracterized as a component of
    an Internet access service. *Tennessee Order*, 14 FCC Rcd at
    13753-54, paras. 37-38. Relevant indicia include ownership of the
    facility used to provide service, any lease-purchase arrangements
    regarding such facility, exclusivity arrangements regarding such
    facility, maintenance agreements regarding such facility, and
    upfront capital costs. *Tennessee Order*, 14 FCC Rcd at 13574-55,
    paras. 39-40.

[^14]: *See* *Fifth Reconsideration Order,* 13 FCC Rcd at 14934, para.
    31.

[^15]: *Request for Review of the Decision of the Universal Service
    Administrator by Williamsburg-James City Public Schools,* CC Docket
    Nos. 96-45 and 97-21, Order, 14 FCC Rcd 20152 (1999)
    (*Williamsburg-James City*); *See also Request for Review of the
    Decision of the Universal Service Administrator by Bonner Springs
    Unified School District #204 Bonner Springs, Kansas, Federal-State
    Joint Board on Universal Service Changes to the Board of Directors
    of the National Exchange Carrier Association, Inc.*, CC Docket Nos.
    96-45, 97-21, File No. SLD 32985, Order, DA 00-1044 (Common Carrier
    Bur. rel. May 17, 2000).

[^16]: Whether NAFC will be entitled to funding for its priority one
    services will depend upon the extent that ineligible products and
    services were included within its request. *See, e.g., Request for
    Review of the Decision of the Universal Service Administrator by
    Redwood City School District,* CC Docket Nos. 96-45 and 97-21,
    Order, DA 99-2616, at para. 5 (Common Carrier Bur. rel. Nov. 22,
    1999).