Federal Register / Vol. 69, No. 27 / Tuesday, February 10, 2004 / Rules and Regulations 6181

CORPORATION FOR NATIONAL AND 

COMMUNITY SERVICE 

45 CFR Parts 2531 and 2533 

RIN 3045–AA40 

Innovative and Demonstration 

Programs and National Service 

Fellowships

AGENCY: Corporation for National and 

Community Service.

ACTION: Final rule.

SUMMARY: The Corporation for National 

and Community Service (hereinafter the 

‘‘Corporation’’) hereby amends its 

regulations that require the Corporation 

to announce in the Federal Register its 

grant application procedures, selection 

criteria, timing, and other requirements. 

The Grants.gov FIND module is now 

used by all Federal agencies to post 

electronically synopses of funding 

opportunities under Federal financial 

assistance programs that award 

discretionary grants and cooperative 

agreements. In addition, each agency 

must post the full announcement 

electronically. (See 68 FR 58146, 

October 8, 2003) The Corporation 

fulfills this requirement by posting its 

grant announcements on its Web site: 

http://www.cns.gov.whatshot/

notices.html. These revisions will 

eliminate provisions in certain 

regulations that state that the 

Corporation will publish 

announcements in the Federal Register. 

Because the Corporation is required to 

post its funding opportunities on 

Grants.gov, and post its full funding 

announcement electronically on its 

Web-site (68 FR 58146), the Corporation 

considers these changes to be 

administrative in nature. Further, this 

rule does not meet the definition of 

‘‘rule’’ in 5 U.S.C. 804(3)(A) because it 

is a rule of ‘‘particular applicability.’’

Therefore, it is not subject to the 

congressional review requirements in 5 

U.S.C. 801–808.

DATES: These changes are effective as of 

February 10, 2004.

FOR FURTHER INFORMATION CONTACT: Mr. 

William L. Hudson, Telephone: (202) 

606–5000 ext. 265 or via Internet: 

whudson@cns.gov.

SUPPLEMENTARY INFORMATION:

List of Subjects 

45 CFR Part 2531 

Grant programs-social programs, 

Volunteers. 

45 CFR Part 2533 

Scholarships and fellowships, 

Volunteers.

■ For the reasons discussed in the 

Summary, the Corporation for National 

and Community Service amends Parts 

2531 and 2533 of title 45 of the Code of 

Federal Regulations as follows:

PART 2531—INNOVATIVE AND 

SPECIAL DEMONSTRATION 

PROGRAMS

■ 1. The authority citation for Part 2531 

continues to read as follows:

Authority: 42 U.S.C. 12501 et seq.

§ 2531.30 Other innovative and model 

programs.

■ 2. In § 2531.30, remove paragraph (c).

PART 2533—SPECIAL ACTIVITIES

■ 1. The authority citation for Part 2533 

continues to read as follows:

Authority: 42 U.S.C. 12501 et seq.

■ 2. Revise § 2533.10 to read as follows:

§ 2533.10 National service fellowships. 

The Corporation may award national 

service fellowships on a competitive 

basis.

Dated: February 4, 2004. 

Frank R. Trinity, 

General Counsel.

[FR Doc. 04–2799 Filed 2–9–04; 8:45 am] 

BILLING CODE 6050–$$–P

FEDERAL COMMUNICATIONS 

COMMISSION 

47 CFR Part 54 

[CC Docket No. 02–6; FCC 03–323] 

Schools and Libraries Universal 

Service Support Mechanism

AGENCY: Federal Communications 

Commission.

ACTION: Final rule.

SUMMARY: In this document, the 

Commission addresses several matters 

related to the administration of the 

schools and libraries universal service 

mechanism (also known as the e-rate 

program). The adopted rules will 

advance the goals of the schools and 

libraries program by making support for 

internal connections regularly available 

to a larger number of applicants and by 

discouraging waste, fraud, and abuse. 

The Commission also adopts rules that 

provides additional certainty to 

applicants by clarifying existing rules 

and procedures.

DATES: Effective March 11, 2004 except 

for § 54.513(c) which contains 

information collection requirements that 

have not been approved by the Office of 

Management Budget (OMB). The 

Commission will publish a document in 

the Federal Register announcing the 

effective date of that paragraph.

FOR FURTHER INFORMATION CONTACT:

Kathy Tofigh, Attorney, at (202) 418–

1553, Karen Franklin, Attorney, at (202) 

418–7706, or Jennifer Schneider, 

Attorney, at (202) 418–0425 in the 

Telecommunications Access Policy 

Division, Wireline Competition Bureau.

SUPPLEMENTARY INFORMATION: This is a 

summary of the Commission’s Third 

Report and Order in CC Docket No. 02–

6; FCC 03–323, released on December 

23, 2003. There was also a Companion 

Second Further Notice of Proposed 

Rulemaking released in CC Docket No. 

02–6; FCC 03–323, on December 23, 

2003. The full text of this document is 

available for public inspection during 

regular business hours in the FCC 

Reference Center, Room CY–A257, 445 

Twelfth Street, SW., Washington, DC 

20554. 

I. Introduction and Summary 

1. In this Third Report and Order, we 

address several matters related to the 

administration of the schools and 

libraries universal service mechanism 

(also known as the e-rate program). 

First, we adopt rules that will limit the 

ability of schools and libraries to engage 

in wasteful or fraudulent practices when 

obtaining internal connections. 

Specifically, we conclude that eligible 

entities should be precluded from 

upgrading or replacing internal 

connections on a yearly basis. Instead, 

our rules will permit a particular 

eligible entity to receive support for 

discounted internal connections 

services no more than twice in every 

five years. We will permit, however, 

entities to receive discounts on basic 

maintenance associated with internal 

connections on a yearly basis, but 

clarify our rules regarding permissible 

maintenance costs to ensure that such 

discounts are appropriately narrow. We 

also prohibit a school or library from 

transferring equipment purchased with 

universal service discounts, as part of 

eligible internal connections services, 

for a period of three years except in 

limited circumstances. These rules will 

advance the goals of the schools and 

libraries program by making support for 

internal connections regularly available 

to a larger number of applicants and by 

discouraging waste, fraud, and abuse. 

We also adopt a rule creating a more 

formal process for updating annually 

the list of services eligible for support. 

In addition, we codify the Universal 

Service Administrative Company’s 

(USAC or the Administrator) current 

6182 Federal Register / Vol. 69, No. 27 / Tuesday, February 10, 2004 / Rules and Regulations 

practices for allocating costs of services 

between eligible and ineligible 

components consistent with 

Commission rules and requirements, 

codify a prohibition on the provision of 

free services to entities receiving 

discounts, and codify with one 

modification procedures for service 

substitutions. We also clarify existing 

requirements for eligibility of certain 

equipment and services. Finally, we 

adopt rules to implement our prior 

decision to carry forward unused funds 

from the schools and libraries 

mechanism for use in subsequent 

funding years. All rule changes and 

clarifications shall be implemented 

upon the effective date of this Order, 

unless specified otherwise. 

2. This Order is one of a series of 

orders designed to simplify program 

administration, ensure equitable 

distribution of funds, and protect 

against waste, fraud, and abuse. In 

taking these additional steps today, we 

draw on information from a number of 

sources, including issues raised in a 

public forum held in May 2003 on ways 

to improve the schools and libraries 

support mechanism, the Office of the 

Inspector General’s semi-annual reports, 

beneficiary audit reports, and the 

recommendations of USAC’s Waste, 

Fraud, and Abuse Task Force. We 

remain committed to making ongoing 

changes to ensure that this program 

continues to benefit school children and 

library patrons across America. 

II. Third Report and Order 

A. Limits on Use of Internal Connections 

3. In this Order, we adopt a rule 

limiting each eligible entity’s receipt of 

discounts on internal connections to 

twice every five funding years. We 

exempt basic maintenance services from 

this restriction. We also clarify the types 

of maintenance services that are eligible 

for discounts. In addition, we adopt a 

rule that limits an entity’s ability to 

transfer equipment purchased with 

universal service funds.

4. Frequency of Discounts. We 

conclude that each eligible entity may 

receive commitments for discounts on 

Priority Two services, except as 

discussed further, no more than twice 

every five funding years. The practical 

effect of this rule will be to permit 

applicants to receive funding once every 

three years for internal connections, as 

supported by the record, but will allow 

applicants to obtain internal 

connections in two consecutive years as 

part of a staged implementation of 

internal connections. In order to give 

applicants sufficient planning time, we 

conclude that this rule will become 

effective beginning with support 

received in Funding Year 2005. 

Commitments for Priority Two services 

received in years prior to Funding Year 

2005 will not be considered in 

determining an applicant’s eligibility to 

receive support for Priority Two 

services. 

5. For the purpose of determining 

whether an applicant is eligible to 

receive a funding commitment for 

Priority Two services under this rule, 

the five-year period begins in any year, 

starting with Funding Year 2005, in 

which the entity receives discounted 

Priority Two services. The rule is 

applicable to discounts for services that 

are site-specific to the entity and for 

services that are shared by the entity 

with other entities. Thus, if an entity 

receives support only for shared 

services in a particular funding year, 

that funding will be counted as one of 

the two years out of five that it may 

receive support. The restriction does not 

apply to consortium members who do 

not actually receive Priority Two 

funding when other members of the 

consortium receive discounts in specific 

funding periods. 

6. We find that, by limiting the 

frequency in which applicants may 

receive Priority Two discounts, funds 

will be made available to more eligible 

schools and libraries on a regular basis. 

Specifically, we find that the twiceevery-five-years rule we adopt balances 

this goal with the need to ensure that 

the most disadvantaged schools and 

libraries are able to maintain 

functioning internal connections 

networks. Permitting applicants to 

receive support more often than twice 

every five years would not make funds 

available to significantly more eligible 

schools and libraries, while limiting 

applicants to support less frequently 

than twice every five years could 

prevent applicants from updating their 

internal connections as necessary. 

7. We are not persuaded by those 

commenters that assert that the most 

disadvantaged applicants will suffer 

from a policy restricting receipt of 

internal connections discounts. The 

Commission remains committed to 

ensuring that discounts continue to flow 

to schools and libraries that are 

economically disadvantaged. Indeed, 

program rules continue to provide 

greater discounts for the most 

economically disadvantaged schools 

and libraries. We recognize, however, 

that many applicants below the very 

highest discount levels are also 

economically disadvantaged and also 

unable to acquire internal connections 

without universal service support. We 

also recognize that demand for universal 

service discounts will likely continue to 

exceed the annual funding cap. Thus, 

we agree with commenters that without 

revising our existing policies, some 

economically disadvantaged applicants 

will continue to be denied Priority Two 

funding. We find that the twice-everyfive-years restriction is appropriate and 

necessary to make advanced 

technologies more accessible to all 

schools and libraries. We further find 

that the twice-every-five-years policy 

will increase the mechanism’s funding 

reach to a greater number of 

economically disadvantaged schools 

and libraries. 

8. It is important to note that even 

with this revised policy on the funding 

of internal connections, funding 

commitments will continue to be made 

in accordance with the annual funding 

cap. Thus, it is conceivable that an 

applicant may be eligible to apply for 

discounts on Priority Two services and 

still be denied funding because demand 

for discounts exceeds available funding. 

In this instance, we encourage 

applicants to reapply for discounts 

during the following funding year. We 

further note that it is the receipt of 

support for Priority Two services, rather 

than the application for support, that 

counts toward the limitation that an 

entity may receive in only two out of 

five years. 

9. Furthermore, we conclude that, by 

precluding a particular entity from 

receiving support for Priority Two 

discounts every year, our modified rule 

strengthens incentives for applicants to 

fully use equipment purchased with 

universal service funds. Our current 

rules permit applicants in the highest 

discount bands to upgrade their 

equipment on a yearly basis, even when 

existing equipment continues to have a 

useful life. By limiting each eligible 

entity’s ability to receive support for 

internal connections, recipients will 

have greater incentive not to waste 

program resources by replacing or 

upgrading equipment on an annual 

basis. 

10. A few commenters maintain that 

limiting funding of internal connections 

will disrupt applicants’ planning and 

budgets. We recognize that our modified 

rule will limit applicant flexibility to 

some extent, particularly for those 

applicants that wish to make modest 

infrastructure investments on a yearly 

basis. But, we conclude that the benefits 

of the rule—namely, making support 

available to more applicants on a regular 

basis and preventing wasteful and 

abusive practices—outweigh the 

potential impact on such applicants. We 

find that the twice-every-five-years 

restriction provides sufficient flexibility 

Federal Register / Vol. 69, No. 27 / Tuesday, February 10, 2004 / Rules and Regulations 6183

for applicants to make efficient use of 

Priority Two funding, and thus is 

reasonable. In particular, we recognize 

that for a variety of different reasons, an 

applicant may not be able to make 

efficient use of program discounts in a 

single year. For example, an applicant’s 

annual resources may require the 

applicant to extend its costs over a 

period of years. Our modified rule 

allows an applicant to seek internal 

connections discounts in two 

consecutive years, thus, enabling an 

entity to spread its costs over two 

funding years. We conclude that 

providing applicants the flexibility to 

implement internal connections over 

two consecutive years is sufficient to 

accommodate the differing planning and 

budgetary needs of most applicants. We 

expect applicants to assume the 

responsibility of adequately planning 

and budgeting to make the most 

effective use of discounts available to 

them. 

11. USAC also suggests that in an 

effort to counter funding limitations, 

some applicants may request more 

funding than they will be able to use in 

a given funding year. We emphasize that 

existing program rules require 

applicants to examine their technology 

needs and budgetary resources before 

making funding requests to ensure that 

applicants make effective use of any 

discounted services that they receive. 

Failure to have an approved technology 

plan is a violation of our current rules. 

We expect funding requests to be based 

on an applicant’s technology plan, not 

based on a scheme to maximize funding. 

A funding request that is not reasonably 

based on a technology plan does not 

constitute a bona fide request for 

services. Further, the Administrator’s 

review and enforcement of the 

necessary resources certification must 

and will continue to serve as a safeguard 

against unreasonable funding requests. 

12. Maintenance Costs. We agree with 

commenters that maintenance costs 

should be exempt from the twice-everyfive-years restriction. The Universal 

Service Order, 62 FR 32862, June 17, 

1997, provides that support for internal 

connections includes ‘‘basic 

maintenance.’’ Maintenance costs 

associated with internal connections 

services are currently eligible for 

discounts as a Priority Two service. 

Proper maintenance of internal 

connections products ensures that 

equipment functions properly, thereby 

limiting uneconomical replacement of 

equipment. We therefore continue to 

allow applicants to apply for discounts 

for maintenance of equipment each 

funding year.

13. We instruct USAC to revise Block 

5 of the FCC Form 471 to include a 

separate category of service for 

maintenance requests, with this form 

change to take effect for Funding Year 

2005. Maintenance requests will 

continue to be funded as Priority Two 

funding. However, maintenance 

requests will be considered for funding 

separately from other requests for 

Priority Two funding and, therefore, 

will not be subject to the twice-everyfive years funding rule we adopt in this 

Order. The revision of the FCC Form 

471 will allow efficient review of the 

Priority Two funding requests. 

14. In response to allegations of waste, 

fraud, and abuse, we prospectively 

clarify the services eligible for Priority 

Two support as basic maintenance costs 

for internal connections. Although the 

Universal Service Order allows support 

for those internal connections services 

that are ‘‘necessary to transport 

information all the way to individual 

classrooms’’ and public areas of a 

library, and specifically authorizes 

support for ‘‘basic maintenance 

services’’ that are ‘‘necessary to the 

operation of the internal connections 

network,’’ our rules do not expressly 

specify the types of maintenance costs 

that are eligible for support. In light of 

our concerns about allegations of waste, 

fraud, and abuse in this area and our 

changes, we conclude that we should 

provide further clarity on what 

maintenance services are ‘‘necessary’’

under the terms of the Universal Service 

Order, and thus eligible for support and 

exempt from the twice-every-five-years 

rule. 

15. Basic maintenance services are 

‘‘necessary’’ if, but for the maintenance 

at issue, the connection would not 

function and serve its intended purpose 

with the degree of reliability ordinarily 

provided in the marketplace to entities 

receiving such services without e-rate 

discounts. Basic maintenance services 

do not include services that maintain 

equipment that is not supported or that 

enhance the utility of equipment 

beyond the transport of information, or 

diagnostic services in excess of those 

necessary to maintain the equipment’s 

ability to transport information. For 

example, basic maintenance will 

include repair and upkeep of previously 

purchased eligible hardware, wire and 

cable maintenance, and basic technical 

support, including configuration 

changes. On-site technical support is 

not necessary to the operation of the 

internal connection network when offsite technical support can provide basic 

maintenance on an as-needed basis. 

Services such as 24-hour network 

monitoring and management also do not 

constitute basic maintenance. Such 

services are therefore ineligible for 

discounts under the schools and 

libraries universal service mechanism. 

16. We also provide greater clarity as 

to how USAC should address requests 

for discounts on technical support for 

internal connections. When confronted 

with products or services that contain 

both eligible and ineligible functions, 

USAC, in the past, has utilized cost 

allocation to determine what portion of 

the product price may receive 

discounts. We generally endorse this 

practice as a reasonable means of 

addressing mixed use products and 

services. At the same time, however, we 

are concerned that it is administratively 

difficult and burdensome to derive 

reasonable cost allocations for the 

eligible portions of services provided 

under a technical support contract. In a 

rapidly-changing marketplace, with 

vendors supplying complex packages of 

services, it simply is not 

administratively feasible to determine 

what portion of a technical support 

contract is directed to basic 

maintenance. Therefore, we hereby 

clarify prospectively that technical 

support, including on-site Help Desks, 

is not eligible under our rules if it 

provides any ineligible features or 

functions. A Help Desk system typically 

goes beyond the level of support 

authorized by the Commission in the 

Universal Service Order, which stated 

that ‘‘[s]upport should be available to 

fund discounts on such items as routers, 

hubs, network file services, and wireless 

LANs and their installation and basic

maintenance * * *.’’ There is no 

language in the Universal Service Order

that contemplates the provision of 

discounts for the comprehensive level of 

support typically provided by a Help 

Desk. On the contrary, the Universal 

Service Order indicates that support 

will be provided for a product or service 

‘‘only if it is necessary to transport 

information all the way to individual 

classrooms. That is, if the service is an 

essential element in the transmission of 

information within the school or library 

* * *.’’ We conclude that if a technical 

support contract provides more than 

basic maintenance, it shall be ineligible 

for discounts under our modified rules. 

We instruct USAC to review and fund 

requests for discounts on maintenance 

services in accordance with this 

clarification, as of the effective date of 

this Order. 

17. Equipment Transfers. We also find 

it appropriate to amend our rules 

expressly to prohibit, except as 

provided below, the transfer of 

equipment purchased with discounts 

from the schools and libraries universal 

6184 Federal Register / Vol. 69, No. 27 / Tuesday, February 10, 2004 / Rules and Regulations 

service support mechanism. The Act 

prohibits the sale or transfer of 

equipment purchased with discounts 

from the universal service program in 

consideration of money or anything else 

of value. Here, in order to promote the 

goal of preventing waste, fraud, and 

abuse, we extend that prohibition to all 

transfers, without regard to whether 

money or anything of value has been 

received in return for a period of three 

years after purchase. 

18. Recipients of support are expected 

to use all equipment purchased with 

universal service discounts at the 

particular location, for the specified 

purpose for a reasonable period of time. 

Purchasing equipment with universal 

service discounts and then replacing or 

upgrading that equipment annually or 

almost annually is unnecessary and not 

economically rational. Unnecessary 

replacement of equipment suggests that 

entities are not fully utilizing the 

equipment purchased with universal 

service discounts. We agree with 

commenters that such practices deprive 

other eligible entities of the full benefits 

of the schools and libraries universal 

services program. Moreover, the practice 

of purchasing equipment with universal 

service funds, then transferring that 

equipment to other schools and libraries 

with lower discount rates would 

undermine the intent of the 

Commission’s priority rules, and is 

therefore prohibited. We find, however, 

that it would be wasteful to prevent 

recipients from transferring equipment 

that, after a reasonable period of time, 

has been replaced or upgraded. We 

therefore permit recipients freely to 

transfer equipment to other eligible 

entities three years or more after the 

purchase of such equipment. Consistent 

with the Act, however, such transfers 

must not be in consideration of money 

or anything else of value.

19. We agree also with commenters 

that argue that applicants may have 

legitimate reasons to transfer internal 

connections equipment due to the 

closing of a school or other eligible 

facilities. For example, due to a natural 

disaster, a school district may conclude 

that its needs are best served by 

temporarily or permanently closing a 

particular school and transferring its 

students, as well as any valuable 

equipment purchased with supported 

discounts, to other locations. Similarly, 

a school district may choose to close, 

remodel, or consolidate a particular 

school to meet changing demographic 

needs or fiscal realities, and thereby 

transfer the students and useable school 

property to a nearby school. Likewise, a 

county or municipality may choose to 

close a library branch for financial 

reasons. Under these circumstances, we 

find that it would be economically 

rational and consistent with the goals of 

the schools and libraries program for the 

support recipient to transfer any 

equipment it has purchased with 

universal service discounts to another 

eligible location where the equipment 

may be used effectively. We therefore 

conclude that a recipient may transfer 

equipment purchased with universal 

service discounts to other eligible 

entities if the particular location where 

the equipment was originally installed 

is permanently or temporarily closed. In 

these limited circumstances, we note 

that it is not necessary for the 

transferring and receiving entities to 

have comparable discount levels, as 

long as each is eligible under the 

schools and libraries program. 

20. In the event that a recipient is 

permanently or temporarily closed and 

equipment is transferred, the 

transferring entity must notify the 

Administrator of the transfer, and both 

the transferring and receiving entities 

must maintain detailed records 

documenting the transfer and the reason 

for the transfer for a period of five years. 

We instruct the Administrator to verify 

compliance with this requirement as 

part of its beneficiary audit reviews. In 

order to enable the Administrator to 

verify compliance with this transfer 

prohibition, we require all recipients of 

internal connections support to 

maintain asset and inventory records for 

a period of five years sufficient to verify 

the actual location of such equipment. 

21. This rule change shall be 

implemented upon the effective date of 

this Order. To facilitate enforcement of 

this rule, we will amend the FCC Form 

471 for Funding Year 2005 to include a 

reasonable use certification. In order to 

receive discounts, applicants must 

certify that they will use all equipment 

purchased with universal service 

discounts at the particular location for 

the specified purpose. Applicants will 

thereafter be held accountable for their 

compliance with the reasonable use 

certification. 

22. We decline to institute useful life 

criteria for equipment purchased with 

universal service funds. Useful life 

criteria could provide a more equitable 

distribution of Priority Two funding and 

ensure that more applicants receive the 

full benefit of the program by ensuring 

that applicants did not replace 

equipment components of internal 

connections services more frequently 

than necessary. We believe, however, 

that measures adopted, including the 

restriction of transfers and our revised 

policy governing the funding of Priority 

Two equipment, will provide similar 

results in achieving these goals. We also 

conclude that developing and enforcing 

useful life criteria would add a 

significant degree of complexity to the 

program, which would result in 

increased administrative costs and 

burden for both recipients and USAC. 

B. Eligible Services 

23. Although the current cost 

allocation approach used by the 

Administrator reasonably implements 

the Commission’s rules and requirement 

regarding eligible and ineligible 

services, we conclude that 

administration of the schools and 

libraries support mechanism would 

benefit from an explicit rule regarding 

the cost allocation for services with 

mixed eligibility. We also conclude that 

the eligibility process would be 

improved by adopting a rule for the 

yearly updating of the eligible services 

list. Additionally, we codify rules 

prohibiting the provision of ‘‘free’’

services to recipient schools and 

libraries by service providers that also 

provide supported services to those 

schools and libraries and codify 

procedures for applicants to modify 

funding requests that have been granted 

but not yet funded. Finally, we provide 

additional guidance on the provision of 

discounts on services that include the 

lease of on-premises equipment. 

24. Cost Allocation. We specifically 

amend our rules to make clear how 

applicants and service providers should 

allocate costs of a service or product 

that, although generally eligible for 

universal service support, contains both 

eligible and ineligible components. In 

the Universal Service Order, the 

Commission concluded that, when a 

school or library signs a contract for 

both eligible and ineligible services, the 

contract must break out the price of 

eligible services separately from 

ineligible services. Since that time, the 

marketplace has seen an evolution of 

products and services that contain both 

eligible and ineligible features but 

which are not commercially available 

on an unbundled basis. Thus, the issue 

has evolved from merely separately 

listing eligible services and products 

from ineligible services and products to 

one of determining what components or 

features of an otherwise eligible service 

or product may be ineligible when the 

service or product is not commercially 

available on an unbundled basis. 

Consistent with the Commission’s 

directive to separate these costs, the 

Administrator has generally required 

schools, libraries, or the service 

provider to separate the costs of an 

ineligible component from what 

generally would be an eligible service or 

Federal Register / Vol. 69, No. 27 / Tuesday, February 10, 2004 / Rules and Regulations 6185

product. As explained, the 

Administrator has provided reasonable 

guidance, consistent with Commission 

rules and requirements, to schools, 

libraries, and service providers in 

determining the allocation approach. 

25. As part of our efforts to improve 

the operation of the eligibility 

determination process, we explicitly 

amend our rules to include cost 

allocation rules for services and 

products that contain mixed eligible and 

ineligible components, features, or 

functions to provide greater clarity in 

this area. Under these rules, if a product 

or service contains ineligible 

components, costs should be allocated 

to the extent that a clear delineation can 

be made between the eligible and 

ineligible components. The clear 

delineation must have a tangible basis 

and the price for the eligible portion 

must be the most cost-effective means of 

receiving the eligible service. If the 

ineligible functionality is ancillary, the 

costs need not be allocated to the 

ineligible functionality. An ineligible 

functionality may be considered 

‘‘ancillary’’ if (1) a price for the 

ineligible component that is separate 

and independent from the price of the 

eligible components cannot be 

determined, and (2) the specific package 

remains the most cost-effective means of 

receiving the eligible services, without 

regard to the value of the ineligible 

functionality.

26. These cost allocation rules address 

the widespread availability of products 

and services with mixed eligibility and 

are fully consistent with the overriding 

requirement that support be provided 

for eligible services, while preventing 

support for ineligible services. By 

providing service providers and 

applicants a means of allocating costs 

between eligible and ineligible 

components, features or functions of 

what would otherwise be an eligible 

service, the cost allocation method 

increases the variety of service options 

available to schools and libraries, 

improving each school or library’s 

ability to purchase the most useful and 

cost-effective service possible. Without 

this cost allocation approach, applicants 

may fail to pursue the purchase of 

certain advanced telecommunications 

and information services, contrary to the 

intent of section 254. Our E-rate rules 

should not drive the development of 

communications services and 

technologies, but rather should permit 

the marketplace to flourish and innovate 

in ways that meet consumer needs and 

facilitate access to these innovations. 

Schools and libraries should continue to 

allocate eligible and ineligible costs in 

their contracts with service providers. In 

the interests of ensuring that support be 

provided only for eligible services, the 

Administrator also should continue to 

employ the use of the cost allocation 

method when necessary. 

27. The Commission recently 

addressed those circumstances where an 

applicant erroneously identifies certain 

costs as eligible for support by adopting 

the 30 percent rule. Specifically, we 

concluded in the Second Report and 

Order, 68 FR 36931, June 20, 2003, that 

where less than 30 percent of a request 

for support is ineligible, the 

Administrator is permitted to grant 

support, reduced by the amount of 

ineligible services. We clarify that the 

Administrator may rely on the cost 

allocation methods we adopt today in 

applying the 30 percent rule and 

performing any resulting adjustments. 

28. Eligible Services List. We now 

adopt a more formalized process for 

updating the eligible services list, 

beginning with Funding Year 2005. 

Under the new rule, USAC will be 

required to submit by June 30 of each 

year a draft of its updated eligible 

services list for the following funding 

year. The Commission will issue a 

Public Notice seeking comment on 

USAC’s proposed eligible services list. 

At least sixty days prior to the opening 

of the window for the following funding 

year, the Commission will then issue a 

public notice attaching the final eligible 

services list for the upcoming funding 

year. The Commission anticipates that 

this public notice will be released on or 

before September 15 of each year. This 

process will provide greater 

transparency to the development of the 

eligible services list. The yearly updated 

list will interpret what may be funded 

under current rules, and will represent 

a safe harbor that all applicants can rely 

on in preparing their applications for 

the coming funding year. It will provide 

interested parties, both recipients and 

service providers, an opportunity to 

bring to the Commission’s attention 

areas of ambiguity in the application of 

current rules in a rapidly changing 

marketplace. Currently, the only way an 

applicant can determine whether a 

particular service or product is eligible 

under our current rules is to seek 

funding for that service or product, and 

then seek review of the Administrator’s 

decision to deny discounts. The rule we 

adopt today will simplify program 

administration and facilitate the ability 

of both vendors and applicants to 

determine what services are eligible for 

discounts. 

29. Prohibition of ‘‘Free’’ Services. We 

also take this opportunity to clarify and 

amend our rules to codify a prohibition 

on the provision of free services to an 

eligible entity by a service provider that 

is also providing discounted services to 

the entity. The Commission requires 

that an entity must pay the entire 

undiscounted portion of the cost of any 

services it receives through the schools 

and libraries program. For the purpose 

of this program, the provision of 

unrelated free services by the service 

provider to the entity constitutes a 

rebate of the undiscounted portion of 

the costs, a violation of the 

Commission’s rules. Codifying this 

existing restriction will clarify the 

obligations of schools and libraries that 

receive discounted services under the 

schools and libraries program and 

improve the ability of the Commission 

to take appropriate enforcement action. 

30. Service Substitution. Again, as 

part of our efforts to improve the 

operation of the schools and libraries 

support mechanism, we also formally 

adopt and codify the Administrator’s 

current procedures relating to requests 

for service or equipment changes. These 

procedures provide flexibility to 

applicants where it has become 

necessary to make a minor modification 

to their original funding request. We 

find that the Administrator’s service 

substitution procedures are consistent 

with the Commission’s goal of affording 

schools and libraries maximum 

flexibility to choose the offering that 

meets their needs most effectively and 

efficiently. We conclude that codifying 

these existing procedures in our rules 

will facilitate USAC’s administration of 

the schools and libraries support 

mechanism. In codifying USAC’s 

procedures in our rules, we make one 

modification, however. USAC’s current 

procedures permit a service substitution 

only if the substitution does not result 

in an increase in the pre-discount price 

of the eligible service. We will permit 

applicants to substitute an eligible 

service with a higher pre-discount price, 

but will provide support based on the 

lower, original price, rather than the 

higher price for the substituted service. 

We agree with commenters that this will 

further maximize flexibility for schools 

and libraries to meet their needs 

effectively and efficiently, without 

additional cost to the E-rate program.

31. Accordingly, we amend our rules 

to specify that service change requests 

will be granted for a substitute service 

or product where (1) that service or 

product has the same functionality; (2) 

the substitution does not violate any 

contract provisions or state or local 

procurement laws; (3) the substitution 

does not result in an increase in the 

percentage of ineligible services or 

functions, but (4) support shall be 

provided based on the lesser of the preVerDate jul<14>2003 15:42 Feb 09, 2004 Jkt 203001 PO 00000 Frm 00047 Fmt 4700 Sfmt 4700 E:\FR\FM\10FER1.SGM 10FER1
6186 Federal Register / Vol. 69, No. 27 / Tuesday, February 10, 2004 / Rules and Regulations 

discount price of the original service or 

the substitute service. In order to ensure 

the integrity of the competitive bidding 

process, we require the applicant’s 

request for a service change to include 

a certification that the requested change 

in service is within the scope of the 

controlling Form 470, including any 

associated Requests for Proposal (RFP), 

for the original services. We also require 

that support not be provided in excess 

of the amount for which the applicant 

originally would have been eligible. By 

adopting these procedures as rules, we 

recognize that events may occur 

between the time of the original funding 

request and the time when 

commitments are made that make the 

original funding request impractical or 

even impossible to fulfill. 

32. Eligibility of On-Premises 

Equipment as Part of Priority One 

Service. In the Schools and Libraries 

NPRM, 67 FR 7327, February 19, 2002, 

the Commission sought comment on 

whether to modify its policies regarding 

the funding of Priority One services 

(telecommunications service and 

Internet access) that include service 

provider charges for capital investments 

for wide area networks. Those policies 

were established in the 1999 Tennessee 

Order and the Brooklyn Order.

33. We decline at this time to modify 

our existing policies in this area, and in 

the companion Further Notice of 

Proposed Rulemaking seek more 

focused comment on specific rule 

changes that would limit the availability 

of discounts for service provider charges 

that recoup the cost of significant 

infrastructure investment. We do, 

however, clarify the scope of the 

existing requirements in this area to 

facilitate USAC’s processing of 

applications. 

34. In the 1999 Tennessee Order, the 

Commission addressed the issue of 

whether certain facilities located on the 

applicant’s premises (namely, routers 

and hubs) are part of an end-to-end 

Internet access service or part of internal 

connections. The Commission 

determined that facilities located on an 

applicant’s premises should be 

presumed to be internal connections, 

but that an applicant may rebut that 

presumption. In analyzing the facts 

presented in the 1999 Tennessee Order, 

the Commission concluded that this 

presumption had been rebutted. In 

support of the rebuttal, the Commission 

noted that the hub sites at issue 

constituted the Internet access 

provider’s points of presence and that 

the applicant’s internal connections 

networks would continue to function 

without the hub sites, indicating that 

the hub sites were not necessary to 

transport information within the 

schools’ instructional buildings on a 

single campus. Further, the Commission 

found that other indicia—the ownership 

of the facility, the lack of a leasepurchase arrangement, the lack of an 

exclusivity arrangement, and the fact 

that the service provider was 

responsible for its maintenance—

supported its conclusion that, on 

balance, the facilities should be deemed 

part of an end-to-end service. The 

Commission found that these factors 

weighed against a finding of internal 

connections, even though the cost of 

leasing those facilities represented 

nearly 67 percent of the total funding 

request. The decision was based on the 

facts presented; the Commission did not 

establish a per se requirement that an 

applicant must meet all factors in order 

to receive discounts on service provider 

charges for the cost of leasing onpremises equipment. 

35. We conclude it is administratively 

efficient for USAC to use the factors 

relied upon in the 1999 Tennessee 

Order as a processing standard. USAC 

has posted an advisory on its website 

providing guidance to help applicants 

and service providers understand how it 

has implemented the 1999 Tennessee 

Order. Specifically, USAC has provided 

guidance that a private branch exchange 

(PBX) that routes calls within a school 

or library is not eligible for support as 

Priority One on-premises equipment. 

This guidance is consistent with our 

1999 Tennessee Order because a PBX, 

like most on-premises equipment, is 

presumed to be Priority Two internal 

connections. Moreover, it is unlikely 

that an applicant would be able to 

establish a rebuttal to that presumption, 

because the PBX functions to transmit 

information from and between multiple 

locations within a local network. If the 

PBX were removed from a school, the 

school would lose its ability to route 

phone calls within the building or 

campus, but could maintain its access to 

the public switched telephone network. 

In other words, the PBX is necessary to 

maintain the internal communications 

network, but not its end-to-end access to 

telecommunications services. 

36. We now clarify that the 1999 

Tennessee Order does not preclude the 

provision of support for on-premises 

equipment that constitutes basic 

termination equipment. Accordingly, an 

applicant may receive a discount for the 

lease of a cable modem as part of 

Priority One Internet access. A cable 

modem is a type of basic terminating 

component. It is analogous to a channel 

service unit/data service unit (CSU/

DSU) or a network interface device 

(NID) in that it functions as the 

termination point for a Priority One 

service. The language in the 1999 

Tennessee Order stating that facilities 

located on the school premises are 

presumed to be internal connections 

was enunciated in the context of 

considering the status of network hubs 

and routers, and should not be read to 

encompass basic termination 

equipment. A basic terminating 

component, though normally located on 

a customer’s premises, is necessary to 

receive the end-to-end Internet access 

service because it provides translation 

of the digital transmission using the 

appropriate protocols. In the case of a 

cable modem, it would not be possible 

to receive the Internet access service in 

question without the cable modem on 

the customer’s premises. Conversely, 

the internal connections on the site 

would continue to function without the 

cable modem. Moreover, while 

customers may obtain cable modems 

from other sources, providers of cable 

modem service typically offer customers 

the opportunity to lease a cable modem 

in conjunction with the provision of 

cable modem service. We also note that 

the cost of leasing a cable modem is a 

relatively low proportion of the yearly 

cost of the service. The fact that 

technical limitations would, as a 

practical matter, preclude the service 

provider from using the cable modem to 

deliver service to other customers, 

creating a de facto exclusivity 

arrangement, in our view does not 

support a finding that such equipment 

must be viewed as internal connections. 

Rather, we conclude that it is 

appropriate to provide discounts on the 

lease of a single basic terminating 

component used at a site as a Priority 

One service. 

37. We also clarify that it is 

appropriate to provide Priority One 

discounts on service provider charges to 

recoup the cost of leasing optical 

equipment to light fiber, when that 

optical equipment is the single basic 

terminating component of an end-to-end 

network and it is necessary to provide 

an end-to-end telecommunications or 

Internet access service. We reach that 

conclusion even though the optical 

equipment on the customer’s end, as a 

technical matter, is dedicated to the 

customer’s sole use. 

C. Carryover of Funds

38. We adopt the procedures for 

carrying forward unused funds for the 

schools and libraries program proposed 

in the Schools and Libraries Further 

Notice, 68 FR 36961, June 20, 2003. 

Specifically, we amend our rules to 

require the Administrator to provide 

quarterly estimates to the Commission 

Federal Register / Vol. 69, No. 27 / Tuesday, February 10, 2004 / Rules and Regulations 6187

regarding the amount of unused funds 

that will be available for carryover in 

the subsequent full funding year. We 

further amend our rules so that the 

Commission will carry forward 

available unused funds from prior years 

on an annual basis. We find that, in 

light of the high demand for discounts, 

such action is consistent with section 

254 and the public interest, as well as 

the framework established in the 

Schools and Libraries Order, 67 FR 

41862, June 20, 2002. Accordingly, we 

amend § 54.507(a) of our rules. 

39. The Administrator shall continue 

to estimate unused funds as the 

difference between the amount of funds 

collected, or made available for that 

particular funding year, and the amount 

of funds disbursed or to be disbursed. 

We note that the Administrator already 

considers the remaining appeals for a 

funding year when identifying unused 

funds. Therefore, we do not believe that 

the carryover of unused funds will 

detract from the funding of outstanding 

appeals. 

40. Consistent with the proposed 

rules in the Schools and Libraries 

Further Notice, we also amend the rules 

to require the Administrator to file with 

the Commission quarterly estimates of 

unused funds from prior years of the 

schools and libraries support 

mechanism when it submits its 

projection of schools and libraries 

program demand for the upcoming 

quarter. This amendment codifies the 

Administrator’s existing reporting 

practice and reporting cycle. The 

quarterly estimate serves to prepare the 

Administrator for the annual release of 

carryover funds and provides schools 

and libraries with general notice 

regarding the amount of unused funds 

that may be made available in the 

subsequent year. We disagree with the 

National Association of Independent 

Schools (NAIS) that the quarterly 

reporting procedure would become too 

cumbersome and hinder the ‘‘overall 

integrity of the program.’’ We do not 

believe that the Administrator will be 

overburdened by this requirement 

because it has been reporting quarterly 

estimates of unused funds for six 

quarters without a problem. 

41. We further amend the rules to 

make unused funds available annually 

in the second quarter of each calendar 

year for use in the next full funding year 

of the schools and libraries mechanism. 

Based on the estimates provided by the 

Administrator, the Commission will 

announce a specific amount of unused 

funds from prior funding years to be 

carried forward in accordance with the 

public interest to increase funds for the 

next full funding year in excess of the 

annual funding cap. For example, the 

Commission will carry forward the 

unused funds as of second quarter 2004 

for use in the Schools and Libraries 

Funding Year 2004, thereby increasing 

the available funds in Funding Year 

2004 above the annual funding cap of 

$2.25 billion. The Wireline Competition 

Bureau will announce the availability of 

carryover funds during the second 

quarter of the calendar year, when it 

announces the universal service 

contribution factor for the third quarter 

of each year. The amount of unused 

funds to be carried forward will be 

deemed approved by the Commission if 

it takes no action within 14 days of 

release of the public notice announcing 

the contribution factor and the amount 

of unused funds. 

42. We determine that it is in the 

public interest to carry forward unused 

funds for disbursement on an annual 

basis in the second quarter of the 

calendar year. Distribution of unused 

funds on an annual basis allows the 

Administrator to refine its calculation of 

available funds over four reporting 

quarters as the funding year progresses 

starting with the third quarter of the 

calendar year. The annual carryover of 

funds during the second quarter of the 

calendar year also coincides with the 

time of year the Administrator begins 

making funding commitment decisions 

for the upcoming funding year. We 

believe that the timing of this process 

provides certainty regarding when 

unused funds will be carried forward for 

use in the schools and libraries program 

with minimal disruption to the 

administration of the program.

43. In order to implement the 

Commission’s prior decision to carry 

over funds beginning April 1, 2003, we 

modify the schedule for this year only 

in order to implement the process for 

Funding Year 2003. We direct the 

Administrator to carry forward unused 

funds as projected for the first quarter of 

2004 for use during the remainder of 

Funding Year 2003. While there will be 

an increase in the amount of funds 

available in Funding Year 2003, we note 

that no decisions previously made by 

USAC concerning the distribution of 

funds for Funding Year 2003 will be 

reversed or revisited. Only funding 

requests that are currently pending will 

be considered for the Funding Year 

2003 carryover funding. Henceforth, 

starting with the second quarter of 2004, 

funds will be carried over on an annual 

basis as described in the previous 

paragraph. 

44. Finally, we take this opportunity 

to revise § 54.509(b) of the 

Commission’s rules to conform to the 

Fifth Order on Reconsideration, 63 FR 

43088, August 12, 1998. Section 

54.509(b) provides that, if the estimates 

of future funding needs of schools and 

libraries lead to a prediction by the 

Administrator that total funding 

requests will exceed available funding 

for a funding year, the Administrator 

shall adjust the discount matrix by 

calculating a percentage reduction of 

support to all schools and libraries, 

except those in the two most 

disadvantaged categories, in order to 

permit all requests in the next funding 

year to be fully funded. The technical 

correction we make to § 54.509(b) 

clarifies that the reduction in percentage 

discounts explained in § 54.509(b) does 

not apply within a filing window or 

period, as described in § 54.507(c). 

Priority within a filing window is 

determined in accordance with 

§ 54.507(g)(1) of the rules. Thus, 

§ 54.509(b) applies only during a 

funding year in which the 

Administrator is acting in accordance 

with § 54.507(g)(2). We find that the rule 

change is exempt from the notice and 

comment requirements of the 

Administrative Procedure Act because it 

concerns a non-substantive technical 

change to the existing rules. 

III. Procedural Matters 

A. Paperwork Reduction Act Analysis 

45. The action contained herein has 

been analyzed with respect to the 

Paperwork Reduction Act of 1995 (PRA) 

and found to impose new or modified 

reporting and/or recordkeeping 

requirements or burdens on the public. 

Implementation of these new or 

modified reporting and/or 

recordkeeping requirements will be 

subject to approval by the Office of 

Management and Budget (OMB) as 

prescribed by the PRA. Specifically, 

§ 54.513(c) will go into effect upon 

announcement in the Federal Register

of OMB approval, to the extent OMB 

approval is required. 

B. Final Regulatory Flexibility Analysis 

46. As required by the Regulatory 

Flexibility Act of 1980, as amended 

(RFA), an Initial Regulatory Flexibility 

Analysis (IRFA) was incorporated in the 

Schools and Libraries NPRM. The 

Commission sought written public 

comment on the proposals in the 

Schools and Libraries NPRM, including 

comment on the IRFA. This present 

Final Regulatory Flexibility Analysis 

(FRFA) conforms to the RFA. 

1. Need for, and Objectives of, the Third 

Report and Order 

47. In this Third Report and Order, we 

adopt rules whereby eligible entities 

6188 Federal Register / Vol. 69, No. 27 / Tuesday, February 10, 2004 / Rules and Regulations 

may receive discount rates for internal 

connections services, except for certain 

basic maintenance services, twice every 

five years and that prohibit a school or 

library from transferring equipment 

purchased with universal service 

discounts, except in limited 

circumstances. These rules will advance 

the goals of the schools and libraries 

program by making support for internal 

connections regularly available to a 

larger number of applicants and by 

reducing the likelihood of waste, fraud, 

and abuse.

2. Summary of Significant Issues Raised 

by Public Comments in Response to the 

IRFA 

48. There were no comments filed 

specifically in response to the IRFA. 

Nevertheless, the agency has considered 

the potential impact of the rules 

proposed in the IRFA on small entities. 

Based on analysis of the relevant data, 

the Commission concludes the new 

rules limit the burdens on small entities 

and result in a de minimis 

recordkeeping requirement. The 

Commission also concludes that the 

new rules will positively impact schools 

and libraries, including small ones, 

seeking universal service support. 

3. Description and Estimate of the 

Number of Small Entities to Which 

Rules Will Apply 

49. The RFA directs agencies to 

provide a description of and, where 

feasible, an estimate of the number of 

small entities that may be affected by 

the proposed rules, if adopted. The RFA 

generally defines the term ‘‘small 

entity’’ as having the same meaning as 

the terms ‘‘small business,’’ ‘‘small 

organization,’’ and ‘‘small governmental 

jurisdiction.’’ In addition, the term 

‘‘small business’’ has the same meaning 

as the term ‘‘small business concern’’

under the Small Business Act. A small 

business concern is one which: (1) Is 

independently owned and operated; (2) 

is not dominant in its field of operation; 

and (3) satisfies any additional criteria 

established by the SBA. A small 

organization is generally ‘‘any not-forprofit enterprise which is independently 

owned and operated and is not 

dominant in its field.’’ Nationwide, as of 

1992, there were approximately 275,801 

small organizations. The term ‘‘small 

governmental jurisdiction’’ is defined as 

‘‘governments of cities, towns, 

townships, villages, school districts, or 

special districts, with a population of 

less than fifty thousand.’’ As of 1997, 

there were about 87,453 governmental 

jurisdictions in the United States. This 

number includes 39,044 county 

governments, municipalities, and 

townships, of which 37,546 

(approximately 96.2%) have 

populations of fewer than 50,000, and of 

which 1,498 have populations of 50,000 

or more. Thus we estimate the number 

of small governmental jurisdictions 

overall to be 84,098 or fewer. 

50. The Commission has determined 

that the group of small entities directly 

affected by the rules herein includes 

eligible schools and libraries and the 

eligible service providers offering them 

discounted services, including 

telecommunications service providers, 

Internet Service Providers (ISPs) and 

vendors of internal connections. Further 

descriptions of these entities are 

provided. In addition, the Universal 

Service Administrative Company is a 

small organization (non-profit) under 

the RFA, and we believe that 

circumstances triggering the new 

reporting requirement will be limited 

and does not constitute a significant 

economic impact on that entity. 

a. Schools and Libraries 

51. As noted, ‘‘small entity’’ includes 

non-profit and small government 

entities. Under the schools and libraries 

universal service support mechanism, 

which provides support for elementary 

and secondary schools and libraries, an 

elementary school is generally ‘‘a nonprofit institutional day or residential 

school that provides elementary 

education, as determined under state 

law.’’ A secondary school is generally 

defined as ‘‘a non-profit institutional 

day or residential school that provides 

secondary education, as determined 

under state law,’’ and not offering 

education beyond grade 12. For-profit 

schools and libraries, and schools and 

libraries with endowments in excess of 

$50,000,000, are not eligible to receive 

discounts under the program, nor are 

libraries whose budgets are not 

completely separate from any schools. 

Certain other statutory definitions apply 

as well. The SBA has defined for-profit, 

elementary and secondary schools and 

libraries having $6 million or less in 

annual receipts as small entities. In 

Funding Year 2 (July 1, 1999 to June 20, 

2000) approximately 83,700 schools and 

9,000 libraries received funding under 

the schools and libraries universal 

service mechanism. Although we are 

unable to estimate with precision the 

number of these entities that would 

qualify as small entities under SBA’s 

size standard, we estimate that fewer 

than 83,700 schools and 9,000 libraries 

might be affected annually by our 

action, under current operation of the 

program. 

b. Telecommunications Service 

Providers 

52. We have included small 

incumbent local exchange carriers in 

this RFA analysis. A ‘‘small business’’

under the RFA is one that, inter alia,

meets the pertinent small business size 

standard (e.g., a telephone 

communications business having 1,500 

or fewer employees), and ‘‘is not 

dominant in its field of operation.’’ The 

SBA’s Office of Advocacy contends that, 

for RFA purposes, small incumbent 

local exchange carriers are not dominant 

in their field of operation because any 

such dominance is not ‘‘national’’ in 

scope. We have therefore included small 

incumbent carriers in this RFA analysis, 

although we emphasize that this RFA 

action has no effect on the 

Commission’s analyses and 

determinations in other, non-RFA 

contexts. 

53. Incumbent Local Exchange 

Carriers (LECs). Neither the Commission 

nor the SBA has developed a size 

standard for small incumbent local 

exchange services. The closest size 

standard under SBA rules is for Wired 

Telecommunications Carriers. Under 

that size standard, such a business is 

small if it has 1,500 or fewer employees. 

According to Commission data, 1,337 

incumbent carriers reported that they 

were engaged in the provision of local 

exchange services. Of these 1,337 

carriers, an estimated 1,032 have 1,500 

or fewer employees and 305 have more 

than 1,500 employees. Consequently, 

the Commission estimates that most 

providers of incumbent local exchange 

service are small businesses that may be 

affected by the rules and policies 

adopted herein. 

54. Competitive Local Exchange 

Carriers (CLECs), Competitive Access 

Providers (CAPs) and ‘‘Other Local 

Exchange Carriers.’’ Neither the 

Commission nor the SBA has developed 

a size standard for small businesses 

specifically applicable to providers of 

competitive exchange services or to 

competitive access providers or to 

‘‘Other Local Exchange Carriers.’’ The 

closest applicable size standard under 

SBA rules is for Wired 

Telecommunications Carriers. Under 

that size standard, such a business is 

small if it has 1,500 or fewer employees. 

According to Commission data, 609 

companies reported that they were 

engaged in the provision of either 

competitive access provider services or 

competitive local exchange carrier 

services. Of these 609 companies, an 

estimated 458 have 1,500 or fewer 

employees and 151 have more than 

1,500 employees. In addition, 35 

Federal Register / Vol. 69, No. 27 / Tuesday, February 10, 2004 / Rules and Regulations 6189

carriers reported that they were ‘‘Other 

Local Exchange Carriers.’’ Of the 35 

‘‘Other Local Exchange Carriers,’’ an 

estimated 34 have 1,500 or fewer 

employees and one has more than 1,500 

employees. Consequently, the 

Commission estimates that most 

providers of competitive local exchange 

service, competitive access providers, 

and ‘‘Other Local Exchange Carriers’’

are small entities that may be affected 

by the rules and policies adopted 

herein.

55. Interexchange Carriers (IXCs).

Neither the Commission nor the SBA 

has developed a size standard for small 

businesses specifically applicable to 

interexchange services. The closest 

applicable size standard under SBA 

rules is for Wired Telecommunications 

Carriers. Under that size standard, such 

a business is small if it has 1,500 or 

fewer employees. According to the 

Commission’s most recent data, 261 

companies reported that their primary 

telecommunications service activity was 

the provision of payphone services. Of 

these 261 companies, an estimated 223 

have 1,500 or fewer employees and 48 

have more than 1,500 employees. 

Consequently, the Commission 

estimates that the majority of payphone 

service providers are small entities that 

may be affected by the rules and 

policies adopted herein. 

56. Wireless Service Providers. The 

SBA has developed a small business 

size standard for wireless small 

businesses within the two separate 

categories of Paging and Cellular and 

Other Wireless Telecommunications.

Under both SBA categories, a wireless 

business is small if it has 1,500 or fewer 

employees. According to the 

Commission’s most recent data, 1,761 

companies reported that they were 

engaged in the provision of wireless 

service. Of these 1,761 companies, an 

estimated 1,175 have 1,500 or fewer 

employees and 586 have more than 

1,500 employees. Consequently, the 

Commission estimates that most 

wireless service providers are small 

entities that may be affected by the rules 

and policies adopted herein. 

57. Private and Common Carrier 

Paging. In the Paging Third Report and 

Order, 62 FR 16004, April 3, 1997, we 

developed a small business size 

standard for ‘‘small businesses’’ and 

‘‘very small businesses’’ for purposes of 

determining their eligibility for special 

provisions such as bidding credits and 

installment payments. A ‘‘small 

business’’ is an entity that, together with 

its affiliates and controlling principals, 

has average gross revenues not 

exceeding $15 million for the preceding 

three years. Additionally, a ‘‘very small 

business’’ is an entity that, together with 

its affiliates and controlling principals, 

has average gross revenues that are not 

more than $3 million for the preceding 

three years. An auction of Metropolitan 

Economic Area licenses commenced on 

February 24, 2000, and closed on March 

2, 2000. Of the 985 licenses auctioned, 

440 were sold. Fifty-seven companies 

claiming small business status won. At 

present, there are approximately 24,000 

Private-Paging site-specific licenses and 

74,000 Common Carrier Paging licenses. 

According to Commission data, 474 

carriers reported that they were engaged 

in the provision of either paging and 

messaging services or other mobile 

services. Of those, the Commission 

estimates that 457 are small, under the 

SBA approved small business size 

standard. 

c. Internet Service Providers 

58. Internet Service Providers. The 

SBA has developed a small business 

size standard for ‘‘On-Line Information 

Services,’’ North American Industry 

Classification System (NAICS) code 

514191. This category comprises 

establishments ‘‘primarily engaged in 

providing direct access through 

telecommunications networks to 

computer-held information compiled or 

published by others.’’ Under this small 

business size standard, a small business 

is one having annual receipts of $18 

million or less. Based on firm size data 

provided by the Bureau of the Census, 

3,123 firms are small under SBA’s $18 

million size standard for this category 

code. Although some of these Internet 

Service Providers (ISPs) might not be 

independently owned and operated, we 

are unable at this time to estimate with 

greater precision the number of ISPs 

that would qualify as small business 

concerns under SBA’s small business 

size standard. Consequently, we 

estimate that there are 3,123 or fewer 

small entity ISPs that may be affected by 

this analysis.

d. Vendors of Internal Connections 

59. The Commission has not 

developed a small business size 

standard specifically directed toward 

manufacturers of internal network 

connections. The closest applicable 

definitions of a small entity are the size 

standards under the SBA rules 

applicable to manufacturers of ‘‘Radio 

and Television Broadcasting and 

Communications Equipment’’ (RTB) and 

‘‘Other Communications Equipment.’’

According to the SBA’s regulations, 

manufacturers of RTB or other 

communications equipment must have 

750 or fewer employees in order to 

qualify as a small business. The most 

recent available Census Bureau data 

indicates that there are 1,187 

establishments with fewer than 1,000 

employees in the United States that 

manufacture radio and television 

broadcasting and communications 

equipment, and 271 companies with 

less than 1,000 employees that 

manufacture other communications 

equipment. Some of these 

manufacturers might not be 

independently owned and operated. 

Consequently, we estimate that the 

majority of the 1,458 internal 

connections manufacturers are small. 

e. Miscellaneous Entities 

60. Wireless Communications 

Equipment Manufacturers. The SBA has 

established a small business size 

standard for radio and television 

broadcasting and wireless 

communications equipment 

manufacturing. Under this standard, 

firms are considered small if they have 

750 or fewer employees. Census Bureau 

data for 1997 indicate that, for that year, 

there were a total of 1,215 

establishments in this category. Of 

those, there were 1,150 that had 

employment under 500, and an 

additional 37 that had employment of 

500 to 999. The percentage of wireless 

equipment manufacturers in this 

category is approximately 61.35%, so 

the Commission estimates that the 

number of wireless equipment 

manufacturers with employment under 

500 was actually closer to 706, with an 

additional 23 establishments having 

employment of between 500 and 999. 

The Commission estimates that the 

majority of wireless communications 

equipment manufacturers are small 

businesses. 

4. Description of Projected Reporting, 

Recordkeeping, and Other Compliance 

Requirements for Small Entities 

61. In this Third Report and Order, we 

adopt a rule that prohibits the transfer 

of equipment purchased with universal 

service discount, except in limited 

circumstances. Further, we provide that 

the excepted, limited circumstances 

consist of a discount recipient 

temporarily or permanently closing its 

operations where the original 

equipment was installed. In that 

instance, we require a recipient, who 

closes permanently or temporarily and 

transfers equipment to another eligible 

entity, to notify the Administrator of a 

transfer and require the transferring and 

receiving entities to maintain detailed 

records of the transfer consistent with 

the Commission’s recordkeeping 

requirements for five years. We do not 

believe that these reporting and 

6190 Federal Register / Vol. 69, No. 27 / Tuesday, February 10, 2004 / Rules and Regulations 

recordkeeping requirements will result 

in a significant economic impact. 

62. The rule adopted today, limiting 

the frequency of receiving discount rates 

for internal connections, does not 

involve additional reporting, 

recordkeeping, or compliance 

requirements for small entities. 

Similarly, the rule adopted in this Third 

Report and Order, creating a more 

formal process for annually updating 

the list of services eligible for support, 

does not involve additional reporting, 

recordkeeping, or compliance 

requirements for small entities. The 

rules adopted governing cost allocation 

between eligible and ineligible services, 

provision of free services, and service 

substitution do not impose additional 

reporting, recordkeeping, or compliance 

requirements for small entities. Finally, 

the rules regarding carryover of unused 

funds do not require additional 

reporting or recordkeeping for small 

entities participating in the schools and 

libraries universal support mechanism.

5. Steps Taken To Minimize the 

Significant Economic Impact on Small 

Entities, and Significant Alternatives 

Considered 

63. The RFA requires an agency to 

describe any significant alternatives that 

it has considered in developing its 

approach, which may include the 

following four alternatives (among 

others): ‘‘(1) establishment of differing 

compliance or reporting requirements or 

timetables that take into account the 

resources available to small entities; (2) 

the clarification, consolidation, or 

simplification of compliance and 

reporting requirements under the rule 

for such small entities; (3) the use of 

performance rather than design 

standards; and (4) an exemption from 

coverage of the rule, or any part thereof, 

for such small entities.’’

64. Although we received no IRFA 

comments, we considered alternatives 

to the proposed recordkeeping 

requirements for small entities. In 

creating the narrow exception to the 

equipment transfer policy adopted in 

this Third Report and Order, we 

recognize the Commission’s need to 

protect the integrity of the schools and 

libraries support mechanism by curbing 

waste, fraud, and abuse while 

acknowledging circumstances that 

justify permitting the transfer of 

discounted equipment received by a 

program beneficiary, small or large. We 

recognize that we must require certain 

recordkeeping to verify the appropriate 

use of universal service funds. 

Consideration was afforded to having 

the recipient file equipment transfer 

records with USAC and having USAC 

maintain the records. However, we 

conclude that requiring a filing with 

USAC would be more burdensome for 

the recipient than having the recipient 

collect and maintain its equipment 

transfer records. Complying with the 

processes promulgated by USAC would 

be more burdensome than requiring 

each beneficiary to retain its own files 

because the beneficiary would have to 

do more than send the documents to 

USAC. The beneficiary would have to 

comply with the procedural scheme 

devised by USAC for compiling, and 

mailing or delivering the records, and 

quality control measures for assuring 

that the records submitted were 

properly identified with the correct 

beneficiary. In the RFA, an exemption of 

small entities from the recordkeeping 

requirements is listed as a possible 

alternative. In this instance, exemption 

from the recordkeeping requirement 

would impede the Commission’s ability 

to account for funds distributed through 

the schools and libraries program and 

would undermine the Commission’s 

efforts to prevent waste, fraud, and 

abuse. 

65. Report to Congress: The 

Commission will send a copy of the 

Order, including this FRFA, in a report 

to be sent to Congress pursuant to the 

Congressional Review Act, see 5 U.S.C. 

801(a)(1)(A). In addition, the 

Commission will send a copy of the 

Order, including the FRFA, to the Chief 

Counsel for Advocacy of the Small 

Business Administration. A copy of the 

Order and FRFA (or summaries thereof) 

will also be published in the Federal 

Register. 

IV. Ordering Clauses 

66. Pursuant to the authority 

contained in sections 1, 4(i), 4(j), 201–

205, 214, 254, and 403 of the 

Communications Act of 1934, as 

amended, this Third Report and Order 

is adopted. 

67. Part 54 of the Commission’s rules, 

is amended as set forth, effective March 

11, 2004 except for § 54.513(c) which 

contains information collection 

requirements that have not been 

approved by the Office of Management 

Budget (OMB). The Commission will 

publish a document in the Federal 

Register announcing the effective date 

of that section. 

68. The Commission’s Consumer and 

Governmental Affairs Bureau, Reference 

Information Center, shall send a copy of 

this Third Report and Order, including 

the Final Regulatory Flexibility 

Analysis, to the Chief Counsel for 

Advocacy of the Small Business 

Administration.

List of Subjects in 47 CFR Part 54 

Reporting and recordkeeping 

requirements, Telecommunications, 

Telephone.

Federal Communications Commission. 

Marlene H. Dortch, 

Secretary.

Final Rules

■ For the reasons discussed in the 

preamble, the Federal Communications 

Commission amends 47 CFR part 54 as 

follows:

PART 54—UNIVERSAL SERVICE

■ 1. The authority citation continues to 

read as follows:

Authority: 47 U.S.C. 1, 4(i), 201, 205, 214, 

and 254 unless otherwise noted.

■ 2. Amend § 54.504 by revising 

paragraph (b)(2)(iii) and by adding 

paragraphs (f) and (g) to read as follows:

§ 54.504 Requests for services.

* * * * *

(b) * * * 

(2) * * * 

(iii) The services will not be sold, 

resold, or transferred in consideration 

for money or any other thing of value, 

and will not be transferred, with or 

without consideration for money or any 

other thing of value, except as permitted 

by the Commission’s rules;

* * * * *

(f) Service substitution. (1) The 

Administrator shall grant a request by 

an applicant to substitute a service or 

product for one identified on its FCC 

Form 471 where: 

(i) The service or product has the 

same functionality; 

(ii) The substitution does not violate 

any contract provisions or state or local 

procurement laws; 

(iii) The substitution does not result 

in an increase in the percentage of 

ineligible services or functions; and 

(iv) The applicant certifies that the 

requested change is within the scope of 

the controlling FCC Form 470, including 

any associated Requests for Proposal, for 

the original services. 

(2) In the event that a service 

substitution results in a change in the 

pre-discount price for the supported 

service, support shall be based on the 

lower of either the pre-discount price of 

the service for which support was 

originally requested or the pre-discount 

price of the new, substituted service. 

(3) For purposes of this rule, the broad 

categories of eligible services 

(telecommunications service, Internet 

access, and internal connections) are not 

deemed to have the same functionality 

with one another. 

Federal Register / Vol. 69, No. 27 / Tuesday, February 10, 2004 / Rules and Regulations 6191

(g) Mixed eligibility services. A 

request for discounts for a product or 

service that includes both eligible and 

ineligible components must allocate the 

cost of the contract to eligible and 

ineligible components. 

(1) Ineligible components. If a product 

or service contains ineligible 

components, costs must be allocated to 

the extent that a clear delineation can be 

made between the eligible and ineligible 

components. The delineation must have 

a tangible basis, and the price for the 

eligible portion must be the most costeffective means of receiving the eligible 

service. 

(2) Ancillary ineligible components. If 

a product or service contains ineligible 

components that are ancillary to the 

eligible components, and the product or 

service is the most cost-effective means 

of receiving the eligible component 

functionality, without regard to the 

value of the ineligible component, costs 

need not be allocated between the 

eligible and ineligible components. 

Discounts shall be provided on the full 

cost of the product or service. An 

ineligible component is ‘‘ancillary’’ if a 

price for the ineligible component 

cannot be determined separately and 

independently from the price of the 

eligible components, and the specific 

package remains the most cost-effective 

means of receiving the eligible services, 

without regard to the value of the 

ineligible functionality. 

(3) The Administrator shall utilize the 

cost allocation requirements of this 

subparagraph in evaluating mixed 

eligibility requests under § 54.504(d)(1).

■ 3. Section § 54.506 is revised to read as 

follows:

§ 54.506 Internal connections. 

(a) A service is eligible for support as 

a component of an institution’s internal 

connections if such service is necessary 

to transport information within one or 

more instructional buildings of a single 

school campus or within one or more 

non-administrative buildings that 

comprise a single library branch. 

Discounts are not available for internal 

connections in non-instructional 

buildings of a school or school district, 

or in administrative buildings of a 

library, to the extent that a library 

system has separate administrative 

buildings, unless those internal 

connections are essential for the 

effective transport of information to an 

instructional building of a school or to 

a non-administrative building of a 

library. Internal connections do not 

include connections that extend beyond 

a single school campus or single library 

branch. There is a rebuttable 

presumption that a connection does not 

constitute an internal connection if it 

crosses a public right-of-way. 

(b) Basic maintenance services. Basic 

maintenance services shall be eligible as 

an internal connections service if, but 

for the maintenance at issue, the 

internal connection would not function 

and serve its intended purpose with the 

degree of reliability ordinarily provided 

in the marketplace to entities receiving 

such services. Basic maintenance 

services do not include services that 

maintain equipment that is not 

supported or that enhance the utility of 

equipment beyond the transport of 

information, or diagnostic services in 

excess of those necessary to maintain 

the equipment’s ability to transport 

information. 

(c) Frequency of discounts for internal 

connections services. Each eligible 

school or library shall be eligible for 

support for internal connections 

services, except basic maintenance 

services, no more than twice every five 

funding years. For the purpose of 

determining eligibility, the five-year 

period begins in any funding year, 

starting with Funding Year 2005, in 

which the school or library receives 

discounted internal connections 

services other than basic maintenance 

services. If a school or library receives 

internal connections services other than 

basic maintenance services that are 

shared with other schools or libraries 

(for example, as part of a consortium), 

the shared services will be attributed the 

school or library in determining 

whether it is eligible for support.

■ 4. Amend § 54.507 by adding 

paragraphs (a)(1) and (a)(2) to read as 

follows:

§ 54.507 Cap. 

(a) * * * 

(1) Amount of unused funds. The 

Administrator shall report to the 

Commission, on a quarterly basis, 

funding that is unused from prior years 

of the schools and libraries support 

mechanism. 

(2) Application of unused funds. On 

an annual basis, in the second quarter 

of each calendar year, all funds that are 

collected and that are unused from prior 

years shall be available for use in the 

next full funding year of the schools and 

libraries mechanism in accordance with 

the public interest and notwithstanding 

the annual cap, as described in 

paragraph (a) of this section.

* * * * *

■ 5. Amend § 54.509 by revising 

paragraph (b) to read as follows:

§ 54.509 Adjustments to the discount 

matrix.

* * * * *

(b) Reduction in percentage discounts. 

At all times other than within a filing 

period described in § 54.507(c), if the 

estimates schools and libraries make of 

their future funding needs lead the 

Administrator to predict that total 

funding request for a funding year will 

exceed the available funding, the 

Administrator shall calculate the 

percentage reduction to all schools and 

libraries, except those in the two most 

disadvantaged categories, necessary to 

permit all requests in the next funding 

year to be fully funded.

* * * * *

■ 6. In § 54.513, revise the section 

heading and add paragraph (c) to read as 

follows:

§ 54.513 Resale and transfer of services.

* * * * *

(c) Eligible services and equipment 

components of eligible services 

purchased at a discount under this 

subpart shall not be transferred, with or 

without consideration of money or any 

other thing of value, for a period of three 

years after purchase, except that eligible 

services and equipment components of 

eligible services may be transferred to 

another eligible school or library in the 

event that the particular location where 

the service originally was received is 

permanently or temporarily closed. If an 

eligible service or equipment 

component of a service is transferred 

due to the permanent or temporary 

closure of a school or library, the 

transferor must notify the Administrator 

of the transfer, and both the transferor 

and recipient must maintain detailed 

records documenting the transfer and 

the reason for the transfer for a period 

of five years.

■ 7. Amend § 54.516 by adding a second 

sentence to paragraph (a) to read as 

follows:

§ 54.516 Auditing. 

(a) * * * Schools and libraries shall be 

required to maintain asset and inventory 

records of equipment purchased as 

components of supported internal 

connections services sufficient to verify 

the actual location of such equipment 

for a period of five years after purchase.

* * * * *

■ 8. Add § 54.522 to subpart F to read as 

follows:

§ 54.522 Eligible services list. 

The Administrator shall submit by 

June 30 of each year a draft list of 

services eligible for support, based on 

the Commission’s rules, in the following 

funding year. The Commission will 

issue a Public Notice seeking comment 

on the Administrator’s proposed eligible 

6192 Federal Register / Vol. 69, No. 27 / Tuesday, February 10, 2004 / Rules and Regulations 

services list. At least 60 days prior to the 

opening of the window for the following 

funding year, the Commission shall 

release a Public Notice attaching the 

final eligible services list for the 

upcoming funding year.

■ 9. Add § 54.523 to subpart F to read as 

follows:

§ 54.523 Payment for the non-discount 

portion of supported services. 

An eligible school, library, or 

consortium must pay the non-discount 

portion of services or products 

purchased with universal service 

discounts. An eligible school, library, or 

consortium may not receive rebates for 

services or products purchased with 

universal service discounts. For the 

purpose of this rule, the provision, by 

the provider of a supported service, of 

free services or products unrelated to 

the supported service or product 

constitutes a rebate of the non-discount 

portion of the supported services.

[FR Doc. 04–2732 Filed 2–9–04; 8:45 am] 

BILLING CODE 6712–01–P

FEDERAL COMMUNICATIONS 

COMMISSION 

47 CFR Part 73 

[DA 04–29; MM Docket No. 02–14; RM–

10358; RM–10764] 

Radio Broadcasting Services; Castle 

Dale, UT, Coalville, UT; Huntsville, UT, 

Jerome, ID, Ketchum, ID, Naples, UT, 

Parowan, UT, Payson, UT, Rupert, ID, 

and South Jordan, Salina, Tooele, 

Wellington, UT

AGENCY: Federal Communications 

Commission.

ACTION: Final rule.

SUMMARY: In response to a 

counterproposal in this proceeding filed 

jointly by Millcreek Broadcasting, 

L.L.C., Community Wireless of Park 

City, Inc., and George S. Flinn, Jr., this 

document modifies the respective 

authorizations of Station KUUU to 

specify operation on Channel 223C2 at 

South Jordan, Utah, Station KCUA to 

specify operation on Channel 223C at 

Naples, Utah, and Station KPED to 

specify operation on Channel 276C at 

Coalville, Utah. To accommodate these 

modifications, this document modifies 

the licenses of Station KKMV, Rupert, 

Idaho, to specify operation on Channel 

291C0 and Station KTCE, Payson, Utah, 

to specify operation on Channel 221A. 

To accommodate Channel 221A at 

Payson, this document substitutes 

Channel 237C3 at Wellington, Utah, and 

Channel 271C3 at Castle Dale, Utah. See 

67 FR 5961, February 8, 2002. The 

reference coordinates for the Channel 

223C2 allotment at South Jordan, Utah, 

are 40–39–35 and 112–12–05.The 

reference coordinates for the Channel 

223C allotment at Naples, Utah, are 40–

35–08 and 109–42–08. The reference 

coordinates for the Channel 276C 

allotment at Coalville, Utah, are 40–55–

46 and 111–00–26. The reference 

coordinates for the Channel 291C0 

allotment at Rupert, Idaho, are 42–23–

40 and 113–42–05. The reference 

coordinates for the Channel 221A 

allotment at Payson, Utah, are 40–03–20 

and 111–49–43. The reference 

coordinates for the Channel 237C3 

allotment at Wellington, Utah, are 39–

32–33 and 110–44–05. The reference 

coordinates for the Channel 271C3 

allotment at Castle Dale, Utah, are 39–

12–48 and 111–01–18.

DATES: Effective March 1, 2004.

FOR FURTHER INFORMATION CONTACT:

Robert Hayne, Media Bureau, (202) 418–

2177.

SUPPLEMENTARY INFORMATION: This is a 

synopsis of the Report and Order in MB 

Docket No.02–14 adopted January 14, 

2004, and Released January 16, 2004. 

The full text of this decision is available 

for inspection and copying during 

normal business hours in the FCC 

Reference Information Center at Portals 

ll, CY–A257, 445 12th Street, SW., 

Washington, DC. The complete text of 

this decision may also be purchased 

from the Commission’s copy contractor, 

Qualex International, Portals II, 445 

12th Street, SW., Room CY–B402, 

Washington, DC 20554, telephone (202) 

863–2893, facsimile (202) 863–2898, or 

via e-mail qualixint@aol.com.

List of Subjects in 47 CFR Part 73 

Radio, Radio broadcasting.

■ Part 73 of the Code of Federal 

Regulations is amended as follows:

PART 73—RADIO BROADCAST 

SERVICES

■ 1. The authority citation for part 73 

continues to read as follows:

Authority: 47 U.S.C. 154, 303, 334 and 336.

§ 73.202 [Amended]

■ 2. Section 73.202(b), the Table of FM 

Allotments under Idaho, is amended by 

removing Channel 223C and adding 

Channel 291C0 at Rupert.

■ 3. Section 73.202(b), the Table of FM 

Allotments under Utah, is amended by 

removing Channel 237C3 and adding 

Channel 271C3 at Castle Dale, by 

removing Channel 223C3 and by adding 

Channel 276C at Coalville, by removing 

Huntsville, Channel 276C3, by adding 

Naples, Channel 223C2, by removing 

Channel 222A and adding Channel 221A 

at Payson, by adding South Jordan, 

Channel 223C2, by removing Tooele, 

Channel 221C3, by removing Channel 

221C3 and adding Channel 237C3 at 

Wellington.

Federal Communications Commission. 

John A. Karousos, 

Assistant Chief, Audio Division, Media 

Bureau.

[FR Doc. 04–2841 Filed 2–9–04; 8:45 am] 

BILLING CODE 6712–01–P

FEDERAL COMMUNICATIONS 

COMMISSION 

47 CFR Part 73 

[DA 04–30; MB Docket No. 03–164; RM–

10737] 

Radio Broadcasting Services; Marmet 

and Montgomery, WV

AGENCY: Federal Communications 

Commission.

ACTION: Final rule.

SUMMARY: In response to a Notice of 

Proposed Rule Making, 68 FR 43704 

(July 24, 2003), this document reallots 

Channel 227A from Montgomery, West 

Virginia, to Marmet, West Virginia, and 

provides Marmet with its first local 

aural transmission service. The 

coordinates for Channel 227A at Marmet 

are 38°13′09′′ North Latitude and 

81°25′05′′ West Longitude, with a site 

restriction of 13.4 kilometers (8.3 miles) 

east of Marmet, West Virginia.

DATES: Effective March 1, 2004.

FOR FURTHER INFORMATION CONTACT: R. 

Barthen Gorman, Media Bureau, (202) 

418–2180.

SUPPLEMENTARY INFORMATION: This is a 

synopsis of the Commission’s Report 

and Order, MB Docket No. 03–164, 

adopted January 14, 2004, and released 

January 16, 2004. The full text of this 

Commission decision is available for 

inspection and copying during normal 

business hours in the FCC’s Reference 

Information Center at Portals II, CY–

A257, 445 12th Street, SW., 

Washington, DC. This document may 

also be purchased from the 

Commission’s duplicating contractors, 

Qualex International, Portals II, 445 

12th Street, SW., Room CY–B402, 

Washington, DC, 20554, telephone 202–

863–2893, facsimile 202–863–2898, or 

via e-mail qualexint@aol.com.

List of Subjects in 47 CFR Part 73 

Radio, Radio broadcasting.

■ Part 73 of title 47 of the Code of Federal 

Regulations is amended as follows: