**Before the**

**Federal Communications Commission**

**Washington, DC 20554**

In the Matter of )

)

Request for Review of the )

Decision of the )

Universal Service Administrator by )

)

Petersburg City Public Schools ) File No. SLD-147805

Petersburg, Virginia )

)

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

Universal Service )

)

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

the National Exchange Carriers Association, Inc. )

**order**

**Adopted: March 7, 2001 Released: March 8, 2001**

By the Common Carrier Bureau:

1.  The Common Carrier Bureau (Bureau) has under consideration a Request
    for Review submitted by Petersburg City Public Schools (Petersburg),
    Petersburg, Virginia, filed June 6, 2000. [^1] Petersburg seeks
    review of a decision issued by the Schools and Libraries Division
    (SLD) of the Universal Service Administrative Company
    (Administrator), denying its request for funding of
    telecommunication services under the schools and libraries
    program.[^2] For the reasons set forth below, we deny the 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] The Commission's rules require that the applicant
    make a bona fide request for services by filing with the
    Administrator an FCC Form 470,[^4] which is posted to the
    Administrator's website for all potential competing service
    providers to review.[^5] 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.[^6] 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 471, the applicant indicates the products or
    services for which it has entered into an agreement, the carrier
    with whom the applicant has entered into the agreement, and an
    estimate of the funds needed to cover the discounts requested.[^7]
    This information is generally provided in Block 5 of FCC Form 471.
    Among other information, Block 5 requires that, for each request,
    the applicant specify the service requested, the name of the service
    provider, the type of service or product, the estimated annual
    pre-discount cost and the claimed discount rate. Applicants also
    breakdown the total annual cost by specifying the estimated one-time
    cost, if any, and the estimated monthly cost, if any.

4.  In Block 5 of its FCC Form 471, Petersburg City Schools listed three
    requests. The second, Funding Request Number (FRN) 293659, which is
    at issue here, was for "Telecommunications Services" to be provided
    by Bell Atlantic. Petersburg indicated that the estimated one-time
    pre-discount cost for these services was \$145,978.32, the estimated
    monthly pre-discount cost was \$7,145.50, and the estimated total
    annual pre-discount cost was \$212,524.32. Petersburg also provided
    several attachments intended to support its figures. An attachment
    titled "Petersburg Public Schools Telephone System Proposal,"
    detailed costs as follows:

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(1) \$82,222.36 for Telephone Equipment,

(2) \$50,734.76 for Equipment Installation/Wiring Costs,

(3) \$11,021.20 for ISDN Service Installation,

(4) \$2,000.00 for Enhanced Call Processing (needed "To Support Homework
    Hotline Application" on the ISDN lines),

(5) \$5,545.50 for monthly ISDN costs, and

(6) \$1,600 for the monthly cost to support "Enhanced Call
    Processing."[^8]

SLD determined that the estimated pre-discount annual cost of
\$212,524.32 results from adding the costs of (1) through (4) with 12
times the cost of (5). Our independent review of the documents does not
reveal any other calculation consistent with the \$212,524.32 total. We
therefore accept it for purposes of this appeal.[^9]

4.  In its Funding Commitment Letter dated October 12, 1999, SLD denied
    Petersburg's \$212,524.32 request on the ground that 30 percent or
    more of the request was for telephone equipment, an ineligible
    product under the program rules.[^10] On November 9, 1999,
    Petersburg appealed to SLD, asserting that the inclusion of the
    telephone unit cost in the request was not intended to indicate that
    Petersburg was requesting funding of those products, but merely to
    indicate its "compliance with \[its\] State Technology long range
    goals."[^11] Petersburg alleged that its actual request was only for
    three items of the six noted above (items 2, 3 and 5, including
    equipment installation, ISDN installation and monthly ISDN costs)
    and for \$11,391 in "Monthly circuit costs."[^12]

5.  On May 8, 2000, SLD denied the appeal. It reiterated its conclusion
    that the funding request included more than 30 percent of ineligible
    services or products because of the request for telephone equipment.
    It also stated that \"corrections to the application can not be made
    once the application is approved, unless proven the error is the
    fault of SLD."[^13] Petersburg then timely filed the pending appeal
    with the Commission.

6.  In its Request for Review, Petersburg again states that the
    inclusion of the telephone equipment costs in its funding request
    was not intended to indicate that Petersburg was requesting funding
    for that equipment, but only to indicate its compliance with its
    State Technology long-range goals.[^14]

7.  It is undisputed that, on its face, the request includes the cost of
    telephone equipment in the amount of \$82,222.36, or 38.7 percent of
    the \$212,524.32 requested. While Petersburg may not have intended
    its listing of telephone equipment costs in the request to be
    interpreted as seeking discounts on the telephones, the application
    on its face did appear to make such a request. There is nothing in
    the application that would lead an SLD reviewer to determine that
    the information relating to the cost of the telephones was provided
    to establish compliance with technology planning requirements. In
    light of the thousands of applications that SLD must review and
    process each year, we find that it is administratively appropriate
    to require an applicant to be responsible for correctly and
    unambiguously reporting its estimated pre-discount costs in
    completing its FCC Form 471 upon which its ultimate funding is
    dependent.[^15] Petersburg's misleading presentation of information
    in its application, even if unintentional, thus provides no grounds
    for appeal.

8.  In some cases involving denials of funding for allegedly ineligible
    services, we have granted an appeal where it appeared, after
    considering the application and supporting documents together, that
    the request in question was not reasonably understood as
    incorporating ineligible services in the amount determined by
    SLD.[^16] Here, however, nothing within the bounds of the
    application demonstrates that SLD's interpretation is unreasonable
    or suggests that the inclusion of telephone equipment in the
    \$212,524.32 request did not reflect an actual request. Rather, only
    on appeal did Petersburg argue for the first time that the cost of
    the telephone equipment was included in the application to
    demonstrate compliance with technology planning requirements. As
    Petersburg's stated intent is not reflected on the face of the
    application, it must be considered an amendment to that application.

9.  SLD has established a policy that applicants are not permitted to
    amend completed FCC Forms 471 to remove ineligible service requests
    after the closure of the filing window.[^17] This policy imposes
    upon applicants the responsibility of preparing their applications
    carefully and obtaining appropriate assistance to avoid including
    ineligible expenses. [^18] If applicants were permitted to correct
    their applications after SLD has denied them, it would eliminate any
    incentive for them 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 of errors and fraud. In
    light of the thousands of applications that SLD reviews and
    processes each funding year, administrative necessity requires that
    each applicant be responsible for clearly and accurately describing
    its funding request and for understanding all applicable program
    rules. The applicant must act to ensure that its request for
    discounts satisfies program rules, which limit universal service
    mechanism funds to eligible services only.[^19] For that reason,
    Petersburg's Request for Review must be denied.

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 Request for Review
    filed by Petersburg City Public Schools, dated June 6, 2000, is
    DENIED.

    FEDERAL COMMUNICATIONS COMMISSION

    Carol E. Mattey

    Deputy Chief, Common Carrier Bureau

[^1]: Letter from Herbert H. Morris, Petersburg Public Schools, to
    Federal Communications Commission, filed June 6, 2000 (Request for
    Review).

[^2]: Section 54.719(c) of the Commission's rules provides that any
    person aggrieved by an action taken by a division of the
    Administrator may seek review from the Commission. 47 C.F.R. §
    54.719(c).

[^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 (FCC Form 470).

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

[^7]: 47 C.F.R. § 54.504(c).

[^8]: FCC Form 471, Petersburg City Schools, filed April 6, 1999,
    Attachment.

[^9]: Thus, although item (6), "Enhanced Call Processing," was included
    in Petersburg's stated monthly costs (\$7,145.50, which is the sum
    of (5) and (6)), it was not included in the applicant's estimated
    total annual costs (which, again, were derived only from items (1)
    through (5)). This error was not remarked upon by either Petersburg
    or SLD. In any case, it does not affect the issue presented by this
    Request for Review. Even had the cost for item (6) been included in
    the total annual costs, and further assuming that "Enhanced Call
    Processing" were found to be an eligible service, the ineligible
    Telephone Equipment would still be more than 30 percent of the
    total. Specifically, the total annual costs would be \$231,724.32,
    and the cost of the Telephone Equipment would be 35.5 percent of
    those costs.

[^10]: Letter from Schools and Libraries Division, Universal Service
    Administrative Co., to Herbert H. Morris, Petersburg City School
    District, dated October 12,1999, at 5 (Funding Commitment Decision
    Letter). 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 of Directors of the 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. If 30
    percent or less of the request is for funding of ineligible
    services, SLD normally will consider the application and issue a
    funding commitment for the eligible services. If more than 30
    percent of the request is for funding of ineligible 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.

[^11]: Letter from Herman Morris, Petersburg City Schools, to Schools
    and Libraries Division, Universal Service Administrative Co., filed
    November 11, 1999 at 1 (Appeal to SLD).

[^12]: Appeal to SLD at 1. The \$11,391 figure does appear in a document
    attached to Petersburg's FCC Form 471 entitled "Petersburg City
    Schools Network Proposal" but as indicated above, it does not play
    any role in the calculation of the \$212,524.32 requested.

[^13]: Letter from Schools and Libraries Division, Universal Service
    Administrative Co., to Herbert Morris, Petersburg City Schools,
    dated May 8, 2000 at 1 (Administrator's Decision on Appeal).

[^14]: Request for Review at 1.

[^15]: *Request For Review By Scranton School District, Federal-State
    Joint Board on Universal Service, Changes to the Board of Directors
    of the National Exchange Carrier Association, Inc.*, File No.
    SLD-112318, CC Docket Nos. 96-45, 97-21, Order , 15 FCC Rcd 181, 184
    (Com. Car. Bur. 2000).

[^16]: *Request for Review By Franklin County Public Schools,
    Federal-State Joint Board on Universal Service, Changes to the Board
    of Directors of the National Exchange Carrier Association, Inc*,
    File No. SLD-115024, CC Docket Nos. 96-45 and 97-21, DA 00-2049,
    Order, para. 6 (Com. Car. Bur. rel. September 7, 2000) ("while
    Franklin County's Form 471 was vague, we believe nonetheless that it
    was unreasonable to assume that the majority of the . . . monthly
    charge labeled as 'recurring costs' was for hardware costs alone.
    Because SLD incorrectly determined that the funding request from
    Franklin County was for ineligible services or products, \[the\]
    request for review is granted . . . .").

[^17]: *Request for Review By Ubly Community Schools, Federal-State
    Joint Board on Universal Service, Changes to the Board of Directors
    of the National Exchange Carrier Association, Inc*, File No.
    SLD-113262, CC Dockets No. 96-45 and 97-21, DA 00-1517, Order, para.
    7 (Com. Car. Bur. rel. July 10, 2000). 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), 54.507(c).

[^18]: Assistance is available to applicants from many sources,
    including SLD's website.

[^19]: 47 C.F.R. §§ 54.504 *et seq*.