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 Federal  Communications  Commission  FCC  03-  260 
 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  UTAs  funding  requests  for  Centrex  service  in  Funding  Year  1998.  2  For  the  reasons  set  forth, 
 we  deny  the  Application  for  Review  and  affirm  the  Bureaus  decision. 
 2.  Background.  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  Commissions  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  Administrators  website  for  all  potential  competing  service  providers  to  review.  4  After  the  FCC 


 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, 
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 Federal  Communications  Commission  FCC  03-  260 
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 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  Commissions  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  Commissions  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 


 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>. 
 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). 
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 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  SLDs  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  SLDs  responsibility  to  ensure  compliance  with  statutory  requirements  and  Commission  rules,  and  an 
 important  means  by  which  SLD  implements  the  Commissions  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  SLDs  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  applicants  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 


 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  SLDs  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. 
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 to  file  a  technology  plan.  20  The  Commission  remanded  UTAs  application  to  SLD  to  determine  whether  UTA  submitted  requests  seeking  discounts  on  basic  voice  telephone  service,  whether 
 such  requests  individually  passed  SLDs  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  UTAs  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  SLDs  decision.  25  The  Bureau  reversed  SLD  as  to  the  cellular  phone  service 
 requests,  noting  that  SLD  had,  subsequent  to  its  action  on  UTAs  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  UTAs  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  SLDs  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  Commissions  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  Bureaus  decision  as  to  the  Centrex  service  requests. 


 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. 
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 10.  Discussion.  We  affirm  the  Bureaus  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  Commissions  decision  must  be  viewed  against  the  backdrop  of  USACs  longstanding  practice  that  Centrex  service  is  not  considered  basic  telephone  service 
 for  purposes  of  application  processing.  Historically,  SLDs  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  customers  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. 


 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. 
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 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.  SLDs  longstanding  policy  not  to  treat  Centrex  as  basic  telephone  service  for  application  processing  purposes  also  serves  to  limit  waste,  fraud,  and  abuse.  Since  the  programs 


 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  UTAs  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  UTAs  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 


 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. 
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 17.  In  conclusion,  we  find  that  there  is  no  indication  that  the  Commission  intended  to  alter  SLDs  existing  definition  of  basic  telephone  service  when  it  carved  out  an  exception  to 
 SLDs  general  practice  of  applying  its  necessary  resources  review  to  the  application  as  a  whole  rather  than  to  individual  funding  requests.  We  affirm  the  Bureaus  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 


 39  We  also  deny  UTAs  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  UTAs  application  for  further  processing  in  United  Talmudical  Academy  I,  we  see  no 


 reason  to  grant  this  request.  As  mentioned  above,  SLDs  definition  of  basic  telephone  service  has  been  posted  on  its  website  since  the  programs  inception.  We  note  that  the  Commission  denied  a  similar  request  to  review  SLDs 
 records  from  UTA  in  United  Talmudical  Academy  I.  See  United  Talmudical  Academy  I,  15  FCC  Rcd  at  432-  433. 
7