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 Federal  Communications  Commission  DA  01-  212 
 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  NAFCs  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  NAFCs  application  should  be  remanded  to  SLD  in  order  for  SLD  to  redetermine  whether 
 SLDs  decision  to  reclassify  NAFCs  facilities  as  internal  connections  was  appropriate  in  light  of 
 the  Commissions  Tennessee  Order.  4 

 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 
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 Federal  Communications  Commission  DA  01-  212 
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 I.  BACKGROUND 
 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  NAFCs  application  for  discount 
 funding,  on  the  grounds  that  requests  for  internal  connections  were  not  funded  for  schools  and 
 libraries  at  NAFCs  discount  level.  6  NAFC  appealed  SLDs  decision,  stating  that  its  application 
 sought  discounts  for  telecommunications  services  rather  than  internal  connections.  7  On  March 
 24,  1999,  SLD  denied  NAFCs  appeal.  8  SLD  again  stated  that  NAFCs  request  was  for  what 
 SLD  considered  internal  connections.  SLD  reclassified  NAFCs  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  NAFCs  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 
 Administrators  Decision  on  Appeal  had  been  issued  on  March  24,  1999,  more  than  30  days 
 prior  to  NAFCs  filing  of  its  appeal  with  the  Commission,  the  Common  Carrier  Bureau 
 dismissed  NAFCs  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 

 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  (Administrators  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). 
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 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 
 A.  Timeliness  of  NAFCs  Appeal 
 5.  Under  these  circumstances,  NAFCs  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. 

 B.  Merits  of  NAFCs  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  SLDs  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,  NAFCs  argument  concerning  the  classification  of  Ameritechs  managed 
 router  services  and  data  service  unit/  channel  service  unit  (DSU/  CSU)  as  internal  connections 
 may  have  merit.  Therefore,  we  direct  SLD  to  review  NAFCs  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 

 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  applicants  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. 
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 services.  Although  the  Commissions  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  NAFCs  application  to  SLD,  and  direct  SLD  to 
 reconsider  NAFCs  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 

 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). 
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