8670 Federal Register / Vol. 73, No. 31 / Thursday, February 14, 2008 / Notices 

change and briefly explain in readily 

understandable fashion the cause of the 

rate change (e.g. inflation, changes in 

external costs or the addition/deletion 

of channels). When the change involves 

the addition or deletion of channels, 

each channel added or deleted must be 

separately identified. Section 76.1602(c) 

requires cable operators to inform 

subscribers in writing of their right to 

file complaints about changes in cable 

programming service tier rates and 

services, and shall provide the address 

and phone number of the local 

franchising authority. 47 CFR 76.1619(b) 

states that in case of a billing dispute, 

the cable operator must respond to a 

written complaint from a subscriber 

within 30 days. In addition, Section 

76.1619 sets forth requirements for 

information on subscriber bills. 

Federal communications commission. 

Marlene H. Dortch, 

Secretary. 

[FR Doc. E8–2805 Filed 2–13–08; 8:45 am] 

BILLING CODE 6712–01–P 

FEDERAL COMMUNICATIONS 

COMMISSION 

Notice of Public Information 

Collection(s) Being Reviewed by the 

Federal Communications Commission, 

Comments Requested 

February 6, 2008. 

SUMMARY: The Federal Communications 

Commission, as part of its continuing 

effort to reduce paperwork burdens, 

invites the general public and other 

Federal agencies to take this 

opportunity to comment on the 

following information collection, as 

required by the Paperwork Reduction 

Act (PRA) of 1995, Public Law 104–13. 

An agency may not conduct or sponsor 

a collection of information unless it 

displays a currently valid control 

number. Pursuant to the PRA, no person 

shall be subject to any penalty for failing 

to comply with a collection of 

information that does not display a 

valid control number. Comments are 

requested concerning (a) whether the 

proposed collection of information is 

necessary for the proper performance of 

the functions of the Commission, 

including whether the information shall 

have practical utility; (b) the accuracy of 

the Commission’s burden estimate; (c) 

ways to enhance the quality, utility, and 

clarity of the information collected; and 

(d) ways to minimize the burden of the 

collection of information on the 

respondents, including the use of 

automated collection techniques or 

other forms of information technology. 

DATES: Written PRA comments should 

be submitted on or before April 14, 

2008. If you anticipate that you will be 

submitting comments, but find it 

difficult to do so within the period of 

time allowed by this notice, you should 

advise the contact listed below as soon 

as possible. 

ADDRESSES: Interested parties may 

submit all PRA comments by e-mail or 

U.S. mail. To submit your comments by 

e-mail, send them to PRA@fcc.gov. To 

submit your comments by U.S. mail, 

mark them to the attention of Cathy 

Williams, Federal Communications 

Commission, Room 1–C823, 445 12th 

Street, SW., Washington, DC 20554. 

FOR FURTHER INFORMATION CONTACT: For 

additional information about the 

information collection, send an e-mail 

to PRA@fcc.gov or contact Cathy 

Williams at 202–418–2918. 

SUPPLEMENTARY INFORMATION: 

OMB Control Number: 3060–0717. 

Title: Billed Party Preference for 

InterLATA 0+ Calls, CC Docket No. 92–

77, 47 CFR 64.703(a), 64.709, and 

64.710. 

Form Number: Not applicable. 

Type of Review: Extension of a 

currently approved collection. 

Respondents: Business or other forprofit entities. 

Number of Respondents: 630 

respondents. 

Estimated Time per Response: 30 

seconds to 50 hours. 

Frequency of Response: On occasion 

reporting requirement. 

Total Annual Burden: 475,728 hours. 

Total Annual Cost: $216,150. 

Obligation to Respond: Required to 

obtain or retain benefit. 

Nature and Extent of Confidentiality: 

An assurance of confidentiality is not 

offered because this information 

collection does not require the 

collection of personally identifiable 

information from individuals. 

Privacy Impact Assessment: No 

impact. 

Needs and Uses: Pursuant to 47 CFR 

64.703(a), Operator Service Providers 

(OSPs) are required to disclose, audibly 

and distinctly to the consumer, at no 

charge and before connecting any 

interstate call, how to obtain rate 

quotations, including any applicable 

surcharges. 47 CFR 64.710 imposes 

similar requirements on OSPs to 

inmates at correctional institutions. 47 

CFR 64.709 codifies the requirements 

for OSPs to file informational tariffs 

with the Commission. These rules help 

to ensure that consumers receive 

information necessary to determine 

what the charges associated with an 

OSP-assisted call will be, thereby 

enhancing informed consumer choice in 

the operator services marketplace. 

Federal Communications Commission. 

Marlene H. Dortch, 

Secretary. 

[FR Doc. E8–2807 Filed 2–13–08; 8:45 am] 

BILLING CODE 6712–01–P 

FEDERAL COMMUNICATIONS 

COMMISSION 

[WC Docket No. 02–60, FCC 07–198] 

Rural Health Care Support Mechanism 

AGENCY: Federal Communications 

Commission. 

ACTION: Notice. 

SUMMARY: In this document, the 

Commission selects participants for the 

universal service Rural Health Care 

(RHC) Pilot Program established by the 

Commission in the 2006 Pilot Program 

Order. Sixty-nine of these applicants 

have demonstrated the overall 

qualifications consistent with the goals 

of the Pilot Program to stimulate 

deployment of the broadband 

infrastructure necessary to support 

innovative telehealth and, in particular, 

telemedicine services to those areas of 

the country where the need for those 

benefits is most acute. 

FOR FURTHER INFORMATION CONTACT: 

Thomas Buckley, Senior Deputy Chief; 

Elizabeth Valinoti McCarthy, Attorney; 

or Antoinette Stevens, 

Telecommunications Access Policy 

Division, Wireline Competition Bureau, 

(202) 418–7400, TTY (202) 418–0484. 

SUPPLEMENTARY INFORMATION: This is a 

summary of the Commission’s Order, in 

WC Docket No. 02–60, released 

November 19, 2007. The full text of this 

document is available for public 

inspection during regular business 

hours in the FCC Reference Center, 

Room CY–A257, 445 12th Street, SW., 

Washington, DC 20554. 

I. Introduction 

1. In this Order, the Commission 

selects participants for the universal 

service Rural Health Care (RHC) Pilot 

Program established by the Commission 

in the 2006 Pilot Program Order, 71 FR 

65517, November 8, 2006, pursuant to 

section 254(h)(2)(A) of the 

Communications Act of 1934, as 

amended by the Telecommunications 

Act of 1996 (1996 Act). The initiation of 

the Pilot Program resulted in an 

overwhelmingly positive response from 

those entities the Commission intended 

to reach when it established the 

program last year—health care 

providers, particularly those operating 


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in rural areas. Exceeding even the 

Commission’s own high expectations, 

the Commission received 81 

applications representing approximately 

6,800 health care facilities from 43 

states and three United States territories. 

Sixty-nine of these applicants have 

demonstrated the overall qualifications 

consistent with the goals of the Pilot 

Program to stimulate deployment of the 

broadband infrastructure necessary to 

support innovative telehealth and, in 

particular, telemedicine services to 

those areas of the country where the 

need for those benefits is most acute. 

2. Accordingly, selected participants 

will be eligible for universal service 

funding to support up to 85 percent of 

the costs associated with the 

construction of state or regional 

broadband health care networks and 

with the advanced telecommunications 

and information services provided over 

those networks. In addition, because of 

the large number of selected 

participants, the Commission modifies 

the Pilot Program so that selected 

participants may be eligible for funding 

for the appropriate share of their eligible 

two-year Pilot Program costs over a 

three-year period beginning in Funding 

Year 2007 and ending in Funding Year 

2009. By spreading the two-year costs 

over a three-year commitment period, 

the Commission is able to increase the 

available support for selected 

participants from the amount 

established in the 2006 Pilot Program 

Order to approximately $139 million in 

each funding year of the three-year Pilot 

Program. This will ensure that all 

qualifying applicants are able to 

participate in the Pilot Program and yet 

do so in an economically reasonable and 

fiscally responsible manner, well below 

the $400 million annual cap, and enable 

selected participants to have sufficient 

available support to achieve the goals 

and objectives demonstrated in their 

applications. For the reasons discussed 

below, the Commission also denies 12 

applicants from participating in the 

Pilot Program because these applicants 

have not demonstrated they satisfy the 

overall criteria, principles, and 

objectives of the 2006 Pilot Program 

Order. 

3. In light of the many applications 

the Commission received seeking 

funding and the wide range of network 

and related components for which 

support is sought, the Commission 

further clarifies the facilities and 

services that are eligible and ineligible 

for support to ensure that the Pilot 

Program operates to facilitate the goals 

set forth in the 2006 Pilot Program 

Order. For example, the Commission 

clarifies that eligible costs include the 

non-recurring costs for design, 

engineering, materials, and construction 

of fiber facilities and other broadband 

infrastructure; the non-recurring costs of 

engineering, furnishing, and installing 

network equipment; and the recurring 

and non-recurring costs of operating and 

maintaining the constructed network. 

The Commission also clarifies that 

ineligible costs include those costs not 

directly associated with network design, 

deployment, operations, and 

maintenance. 

4. The Commission provides specific 

guidance to the selected participants 

regarding how to submit existing FCC 

Forms to the universal service Fund 

Administrator, the Universal Service 

Administrative Company (USAC). For 

example, selected participants, in order 

to receive universal service support, 

must submit with the required FCC 

Forms detailed network cost worksheets 

concerning their proposed network 

costs, certifications demonstrating 

universal service support will be used 

for its intended purposes, and letters of 

agency from each participating health 

care provider. In order to receive 

reimbursement, selected applicants 

must also submit, consistent with 

existing processes and requirements, 

detailed invoices showing actual 

incurred costs of project build-out and, 

if applicable, network design studies. 

The Commission also requires that 

selected participants’ network buildouts be completed within five years of 

receiving an initial funding commitment 

letter (FCL). As discussed below, 

selected participants that fail to comply 

with the terms of this Order and with 

the USAC administrative processes will 

be prohibited from receiving support 

under the Pilot Program. The 

Commission also sets forth data 

reporting requirements for selected 

participants where participants must 

submit to USAC and to the Commission 

quarterly reports containing data on 

network build-out and use of Pilot 

Program funds. This information will 

inform the Commission of the costeffectiveness and efficacy of the 

different state and regional networks 

funded by the Pilot Program and of 

whether support is being used in a 

manner consistent with section 254 of 

the 1996 Act, and the Commission’s 

rules and orders. 

5. The Commission also addresses 

various requests for waivers of 

Commission rules filed by applicants 

concerning participation in the Pilot 

Program. Among other things, the 

Commission denies waiver requests of 

the Commission’s rule requiring that 

Pilot Program selected participants 

competitively bid their proposed 

network projects. In doing so, the 

Commission reaffirms that the 

competitive bidding process is an 

important safeguard for ensuring 

universal service funds are used wisely 

and efficiently by requiring the most 

cost effective service providers be 

selected by Pilot Program participants. 

6. In addition, the Commission 

establishes an audit and oversight 

mechanism for the Pilot Program to 

guard against waste, fraud, and abuse, 

and to ensure that funds disbursed 

through the Pilot Program are used for 

appropriate purposes. In particular, 

each Pilot Program participant and 

service provider shall be subject to audit 

by the Commission’s Office of Inspector 

General (OIG) and, if necessary, 

investigated by the OIG to determine 

compliance with the Pilot Program, 

Commission rules and orders, and 

section 254 of the 1996 Act. As 

discussed in greater detail below, 

because audits or investigations may 

provide information showing that a 

beneficiary or service provider failed to 

comply with the statute or Commission 

rules and orders, such proceedings can 

reveal instances in which Pilot Program 

disbursement awards the Commission 

improperly distributed or used in a 

manner inconsistent with the Pilot 

Program. To the extent the Commission 

finds funds were not used properly, 

USAC or the Commission may recover 

such funds and the Commission may 

assess forfeitures or pursue other 

recourse. 

7. Finally, selected participants shall 

coordinate the use of their health care 

networks with the Department of Health 

and Human Services (HHS) and, in 

particular, with its Centers for Disease 

Control and Prevention (CDC) in 

instances of national, regional, or local 

public health emergencies (e.g., 

pandemics, bioterrorism). In such 

instances, where feasible, selected 

participants shall provide access to their 

supported networks to HHS, including 

CDC, and other public health officials. 

Similarly selected participants shall use 

Pilot Program funding in ways that are 

consistent with HHS’ health information 

technology (IT) initiatives that ‘‘provide 

leadership for the development and 

nationwide implementation of an 

interoperable health information 

technology infrastructure to improve the 

quality and efficiency of health care.’’

Accordingly, where feasible, selected 

participants, as part of their Pilot 

Program network build-out projects 

shall: (1) Use health IT systems and 

products that meet interoperability 

standards recognized by the HHS 

Secretary; (2) use health IT products 

certified by the Certification 


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Commission for Healthcare Information 

Technology; (3) support the Nationwide 

Health Information Network (NHIN) 

architecture by coordinating their 

activities with the organizations 

performing NHIN trial implementations; 

(4) use resources available at HHS’s 

Agency for Healthcare Research and 

Quality (AHRQ) National Resource 

Center for Health Information 

Technology; (5) educate themselves 

concerning the Pandemic and All 

Hazards Preparedness Act and 

coordinate with the HHS Assistant 

Secretary for Public Response as a 

resource for telehealth inventory and for 

the implementation of other 

preparedness and response initiatives; 

and (6) use resources available through 

CDC’s Public Health Information 

Network (PHIN) to facilitate 

interoperability with public health 

organizations and networks. 

II. Discussion 

8. The 2006 Pilot Program Order 

generated overwhelming interest from 

the health care community. The 

Commission received 81 applications 

representing approximately 6,800 health 

care providers. Of these, 69 applications 

covering 42 states and three United 

States territories demonstrate the overall 

qualifications consistent with the goals, 

objectives, and other criteria outlined in 

the 2006 Pilot Program Order necessary 

to advance telehealth and telemedicine 

in their areas by: Describing strategies 

for aggregating the specific needs of 

health care providers within a state or 

region, including providers serving rural 

areas; providing strategies for leveraging 

existing technology to adopt the most 

efficient and cost effective means of 

connecting those providers; describing 

previous experience in developing and 

managing telemedicine programs; and 

detailing project management plans. 

Rather than limit participation to a 

select few among the 69 qualified 

applicants, the Commission finds that it 

would be in the best interests of the 

Pilot Program, and appropriate as a 

matter of universal service policy, to 

accommodate as many of these qualified 

applicants as possible. Moreover, having 

more participants will enable the 

Commission to collect more data and 

thus enhance the Commission’s ability 

to critically evaluate the Pilot Program. 

To accommodate the 69 qualified 

applicants in an economically 

reasonable and fiscally responsible 

manner, including remaining well 

within the existing $400 million annual 

RHC program cap, the Commission 

modifies the Pilot Program to spread 

funding equally over a three-year 

period. Specifically, total available 

support for Year One of the Pilot 

Program (FY 2007 of the existing RHC 

Program), Year Two (FY 2008 of the 

existing RHC Program), and Year Three 

(FY 2009 of the existing RHC Program) 

of the Pilot Program will be 

approximately $139 million per funding 

year. With this modification, the 

Commission is thus able to select all of 

the 69 qualified applicants as eligible to 

participate in the Pilot Program. Finally, 

selected participants shall work with 

HHS and, in particular, CDC, to make 

the health care networks funded by the 

Pilot Program available for use in 

instances of nationwide, regional, or 

local public health emergencies (e.g., 

pandemics, bioterrorism). Selected 

participants shall also use funding in a 

manner consistent with HHS’s health IT 

initiatives. 

A. Overview of Applicants 

9. Consistent with the Commission’s 

goal in the 2006 Pilot Program Order to 

learn from the health care community 

through the design of a bottom-up 

application process, selected 

participants proffered a wide array of 

proposals to construct new health care 

networks or to upgrade existing 

networks and network components in 

an efficient manner. The selected 

proposals range from small-scale, local 

networks to large-scale, statewide or 

multi-state networks. Examples of 

applicants proposing small-scale 

networks include Mountain States 

Health Alliance which seeks $54,400 to 

connect two rural Virginia hospitals to 

an existing network consisting of 11 

Tennessee hospitals. Rural Healthcare 

Consortium of Alabama seeks $232,756 

to connect four critical access hospitals 

in rural Alabama to enable 

teleradiology, lab information systems, 

video conferencing, and secure 

networking with academic medical 

centers and universities. 

10. Other applicants propose 

networks much larger in scope. For 

instance, Tennessee Telehealth Network 

(TTN) seeks approximately $7.8 million 

to expand upon the existing Tennessee 

Information Infrastructure, a preexisting broadband network serving 

state, local, and educational agencies in 

Tennessee. Upon completion of the 

project, TTN’s network will reach more 

than 440 additional health care 

providers throughout the state enabling 

it to bring the benefits of innovative 

telehealth, such as access to specialists 

in urban areas, to rural sites. In 

addition, certain applicants plan to 

connect multi-state networks, such as 

New England Telehealth Consortium 

(NETC) which seeks approximately $25 

million to connect 555 sites in Vermont, 

New Hampshire, and Maine to the 

Northern Crossroads network, enabling 

connectivity to hospitals and 

universities throughout New England, 

including Rhode Island, Massachusetts, 

and Connecticut. NETC’s resulting 

network would facilitate expansive 

telemedicine benefits, including remote 

trauma consultations, throughout the 

multi-state region. 

11. Numerous applicants also 

demonstrate the serious need to deploy 

broadband networks for telehealth and 

telemedicine services to the rural areas 

of the nation where the needs for these 

services are most acute. For example, 

Pacific Broadband Telehealth 

Demonstration Project seeks to connect 

Hawaii and 11 Pacific Islands to one 

broadband network in the region where 

transportation costs are extremely high 

and health care specialists are 

concentrated mainly in the region’s 

urban centers such as Honolulu. 

12. Similarly, Health Care Research & 

Education Network convincingly 

demonstrates its state’s need for 

expanded telemedicine services: North 

Dakota is an extremely rural state where 

42 of its 53 counties include 30 percent 

or more residents living at or below 200 

percent of the Federal Poverty Level. 

Part or all of 83 percent of North 

Dakota’s counties are designated as 

Health Professional Shortage Areas, and 

94 percent are designated as mental 

health shortage areas. To help alleviate 

these hardships, the University seeks to 

construct a high-speed data network to 

connect, via the existing state fiber 

network, Stagenet, its medical school’s 

four main campus sites and clinical 

medical sites to five rural North Dakota 

health care facilities. Doing so will 

allow for research which would greatly 

accelerate the ability to bring 

contemporary treatment options to rural 

areas. 

13. The Wyoming Telehealth Network 

also demonstrates the need for 

broadband infrastructure for health care 

use. In its application, it explains that 

Wyoming is an extremely low populous 

and rural state, suffering from a severe 

shortage of health care providers. 

Wyoming ranks 45th in physicians per 

100,000 people, and have only 18 

psychiatrists, four certified 

psychological practitioners, and two 

school psychologists statewide. 

Wyoming Telehealth Network’s 

proposed network will extend the reach 

of health care professionals by linking 

the entire state’s 72 hospitals, 

community mental health centers, and 

substance abuse centers, which will 

enable these facilities to transmit data to 

one another and videoconference. As 

these and other applications 


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demonstrate, health care providers in 

rural areas need access to broadband 

facilities for telehealth and telemedicine 

services to be available in rural areas. 

14. Some applicants request Pilot 

Program funding to support build-out to 

tribal lands. For example, Tohono 

O’odham Nation Department of 

Information Technology (Nation) seeks 

funding to connect three of the Nation’s 

remote health care facilities to Internet2 

and to Arizona health care providers 

with existing networks to facilitate 

implementation of a comprehensive 

telemedicine program for the Tohono 

O’odham Nation that will enable the 

Nation to connect into a nationwide 

backbone of networks. The Nation’s 

planned dedicated broadband network 

will result in a comprehensive health 

care delivery system that reaches even 

its most remote geographic areas—a 

particularly important goal considering 

the Nation’s extremely limited public 

transportation system. 

15. The Commission finds that the 

selected participants demonstrate a 

viable strategy for effective utilization of 

Pilot Program support consistent with 

the principles established in the 2006 

Pilot Program Order, and sufficiently set 

forth how their networks will meet the 

detailed Pilot Program criteria set forth 

in the 2006 Pilot Program Order. As 

discussed in detail below, while the 

Commission finds that the selected 

applications overall satisfy the criteria 

set forth in the 2006 Pilot Program 

Order, many applicants must submit 

additional information to USAC to 

ensure that fund commitments and 

disbursements will be consistent with 

section 254 of the 1996 Act, this Order, 

and the Commission’s rules and orders. 

B. Scope of Pilot Program and Selected 

Participants 

16. In the 2006 Pilot Program Order, 

the Commission stated, ‘‘[o]nce we have 

determined funding needs of the 

existing program, the Commission will 

fund the Pilot Program in an amount 

that does not exceed the difference 

between the amount committed under 

our existing program for the current year 

and $100 million.’’ The Commission 

estimated that approximately $55–60 

million would be available for the Pilot 

Program, based on its past experience 

and estimates of funding requests 

received under the existing program for 

Funding Year 2006. In the 2006 Pilot 

Program Order, the Commission also 

established the Pilot Program as a twoyear program. 

17. Funding Cap. In light of the 

overwhelming need for the Pilot 

Program funding to build-out dedicated 

health care network capacity to support 

telehealth and telemedicine, the 

Commission increases the funding cap 

amount from that set in the 2006 Pilot 

Program Order to approximately $139 

million for each year of the Pilot 

Program. The Commission finds this 

modification necessary to enable the 69 

qualified applicants to implement their 

plans to the fullest extent possible. In 

particular, the Commission believes this 

increased amount of Pilot Program 

funding will enable participants to fully 

realize the benefits to telehealth and 

telemedicine services by making 

universal service support available for 

significant build-out of dedicated 

broadband network capacity. Increased 

support will also provide the 

Commission with an RHC Pilot Program 

extensive enough to soundly evaluate 

and to serve as a basis to propose to 

modify the existing RHC support 

mechanism, all without requiring the 

Commission to reject otherwise 

compliant applications. Although 

available yearly Pilot Program support is 

higher than the Commission originally 

contemplated in the 2006 Pilot Program 

Order, this amount is still well below 

the $400 million cap for each funding 

year of the existing RHC support 

mechanism (even when combined with 

the most recent disbursements under 

the existing RHC support mechanism of 

$41 million), and therefore remains well 

within the existing parameters of 

economic reasonability and fiscal 

responsibility. 

18. Duration of Pilot Program. To 

continue to maintain fiscal discipline, 

the Commission modifies the duration 

of the Pilot Program to require that 

commitments for the two-year program 

costs identified by selected participants 

in their applications occur over a threeyear period. Funding the selected 

applications over a three-year period at 

somewhat lower levels than requested 

based on a two-year program will better 

serve goals of section 254(h)(2)(A) of the 

1996 Act because it provides the 

Commission with sufficient flexibility to 

support more expansive network buildouts, thereby significantly enhancing 

health care providers’ access to 

broadband services and enabling such 

access to occur considerably quicker 

than it otherwise would. Spreading 

commitments over a three-year period 

will also ensure that the Program moves 

forward seamlessly to facilitate 

uninterrupted rural telehealth/ 

telemedicine network build-outs, while 

balancing the need for economic 

reasonableness and responsible fiscal 

management of the program, including 

by staying well within the $400 million 

RHC mechanism cap. In addition, 

expansion of the Pilot Program’s 

duration, as well as increasing available 

aggregate support, will provide greater 

certainty of support to applicants that 

requested funding for multiple years, 

and will obviate the need for 

reapplications during the duration of 

the Pilot Program. Accordingly, the Pilot 

Program will begin in Funding Year 

2007 and end in Funding Year 2009 of 

the existing RHC support mechanism. 

19. Administration of Funding Year 

2006 Funds. In establishing the Pilot 

Program duration, the Commission 

applies to Funding Year 2007 the 

moneys that USAC already collected in 

Funding Year 2006 for the Pilot 

Program. Because the Commission did 

not receive approval from the OMB 

until March 8, 2007, only two months 

prior to the application deadline of May 

7, 2007, and because applicants could 

not meet the June 30, 2007, deadline for 

submitting Funding Year 2006 forms to 

USAC, the Commission finds it 

impracticable to begin the Pilot Program 

in Funding Year 2006 as originally 

contemplated. Consequently, the 

Commission begins the USAC 

application, commitment, and 

disbursement process for the Pilot 

Program with Funding Year 2007. Total 

available support for Year One of the 

Pilot Program (Funding Year 2007 of the 

existing RHC support mechanism), Year 

Two (Funding Year 2008 of the existing 

RHC support mechanism), and Year 

Three (Funding Year 2009 of the 

existing RHC support mechanism) of the 

Pilot Program will be approximately 

$139 million per Pilot Program funding 

year. The funding total is capped by the 

maximum amount allowable funding for 

each applicant during the three-year 

period. 

20. Selected Participants. Appendix B 

of this Order lists each selected 

participant’s eligible support amounts 

for each Pilot Program funding year. As 

indicated in Appendix B, selected 

participants’ available support for each 

funding year of the Pilot Program is onethird of the sum of their Year One and 

Year Two application funding requests, 

as calculated by the Commission. 

Calculations are based on 85 percent of 

each selected participant’s funding 

request. For selected participants that 

did not clearly request 85 percent 

funding for their total costs, the 

Commission has adjusted the support 

level to the appropriate 85 percent level. 

The Commission finds that committing 

this funding over a three-year period 

ensures the Pilot Program remains 

economically reasonable and fiscally 

responsible while allowing selected 

participants to remain eligible to receive 

their entire eligible Funding Year One 


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and Year Two support as identified in 

their applications. Although the 

Commission increases available support 

amounts, as explained in greater detail 

below, selected participants may not 

exceed the available support for each 

funding year as listed in Appendix B. 

The selected participants also remain 

required to provide at least 15 percent 

of their network costs from other 

specified sources. In addition, the 

Commission requires that selected 

participants’ network build-outs be 

completed within five years of receiving 

an initial funding commitment letter 

(FCL). 

21. Priority System. Contrary to the 

Commission’s findings in the 2006 Pilot 

Program Order, the Commission also, on 

its own motion, modifies the Pilot 

Program structure by declining to 

establish a funding priority system 

similar to the priority system provided 

for in the universal service schools and 

libraries mechanism. In the 2006 Pilot 

Program Order, the Commission found 

that applications for support under the 

existing rural health care program 

would be funded before funding any of 

the projects proposed in the Pilot 

Program. The Commission had limited 

funding for the Pilot Program to the 

difference between the amount 

committed to the existing rural health 

care program and $100 million. The 

Commission finds it is not necessary to 

establish a priority system for the rural 

health care program because the 

Commission has eliminated the $100 

million cap on funding for the existing 

program and the Pilot Program. As such, 

the Commission’s expansion of the Pilot 

Program will ensure that both the 

applicants under the existing program 

and those under the Pilot Program 

receive funding for all eligible expenses 

they have included in their 

applications. 

C. Qualifications of Selected 

Participants 

22. In the 2006 Pilot Program Order, 

the Commission instructed applicants to 

indicate how they plan to fully utilize 

a broadband network to provide health 

care services and to present a strategy 

for aggregating the specific needs of 

health care providers within a state or 

region, including providers that serve 

rural areas. Overall, selected 

participants demonstrated significant 

need for RHC Pilot Program funding for 

health care broadband infrastructure 

and services for their identified health 

care facilities, and provided the 

Commission with sufficiently detailed 

proposals. In their applications, each 

selected participant explained the goals 

and objectives of their proposed 

networks and generally addressed other 

criteria on which the Commission 

sought information in the 2006 Pilot 

Program Order. Selected participants 

must meet the goals and objectives they 

identified in their Pilot Program 

applications. In addition, each selected 

participant must comply with all Pilot 

Program administrative requirements 

discussed below to receive universal 

service support funding. 

23. Network Utilization. In the 2006 

Pilot Program Order, the Commission 

set forth the network goals and 

objectives for applicants to meet to be 

considered for Pilot Program funding. In 

particular, the Commission requested 

that applicants indicate how they will 

utilize dedicated broadband capacity to 

provide health care services. Selected 

participants sufficiently set forth the 

various ways in which they would 

appropriately utilize a broadband 

network. For example, Virginia Acute 

Stroke Telehealth Project proposes a 

broadband network that would focus on 

the continuum of care (prevention 

through rehabilitation) for stroke 

patients in rural and underserved areas 

of Virginia. Illinois Rural HealthNet 

Consortium plans to use its network for 

a wide variety of telemedicine 

applications, including video 

conferencing, remote doctor-patient 

consultations, and tele-psychiatry. 

Pacific Broadband Telehealth 

Demonstration Project seeks to 

interconnect seven existing networks to 

link health care providers throughout 

Hawaii and the Pacific Island region. 

The network will enable delivery of 

broadband telehealth and telemedicine 

for clinical applications, continuing 

medical, nursing and public health 

education, and electronic health records 

support. Alaska Native Tribal Health 

Consortium plans to connect rural 

health care providers throughout Alaska 

to urban health centers via a network 

that will support teleradiology, 

electronic medical records, and 

telepsychiatry through video 

conferencing. 

24. Based on the Commission’s review 

of all 81 of the applications, the 

Commission finds that the 69 selected 

participants have shown that they 

intend to utilize dedicated health care 

network capacity consistent with the 

goals set forth in the 2006 Pilot Program 

Order. Thus, in selecting these 

applicants as eligible to receive funding 

for broadband infrastructure and 

services, the Commission will advance 

the goals of, among other things, 

bringing the benefits of telehealth and 

telemedicine to areas where the need for 

these benefits is most acute; allowing 

patients to access critically needed 

specialists in a variety of practices; and 

enhancing the health care community’s 

ability to provide a rapid and 

coordinated response in the event of a 

national health care crisis. 

25. Leveraging of Existing Technology. 

In the 2006 Pilot Program Order, the 

Commission stated that applicants 

should leverage existing technology to 

adopt the most efficient and cost 

effective means of connecting providers. 

The Commission explained that the 

Pilot Program would be ‘‘technically 

feasible’’ because it would not require 

development of any new technology, 

but rather would enable participants to 

utilize any currently available 

technology. In general, selected 

participants explained how their 

proposed networks would leverage 

existing technology. Examples of 

applicants leveraging existing 

technology include the Association of 

Washington Public Hospital Districts, 

which plans to create a ‘‘network of 

networks’’ by interconnecting six 

existing networks to create a state-wide 

network. And Colorado Health Care 

Connections proposes to leverage an 

existing state network as the basis for a 

dedicated health care network for 

Colorado’s public and non-profit health 

care providers. The goal is to connect all 

50 rural hospitals and 76 rural clinics to 

the state network, which in turn is 

connected to the major metropolitan 

tertiary hospitals, and Internet2 and 

National LambdaRail. 

26. Aggregation. In the 2006 Pilot 

Program Order, the Commission 

instructed applicants to provide 

strategies for aggregating the specific 

needs of health care providers, 

including providers that serve rural 

areas within a state or region. In general, 

selected participants sufficiently 

explained how their proposed networks 

would aggregate the needs of health care 

providers, including rural health care 

providers. For example, Palmetto State 

Providers Network plans to link large 

tertiary centers, academic medical 

centers, rural hospitals, community 

health centers, and rural office-based 

practices in four separate rural/ 

underserved areas in South Carolina 

into a developing fiber optic statewide 

backbone which connects to Internet2, 

NLR, and the public Internet. Similarly, 

Iowa Rural Health Telecommunications 

Program plans to link 100 hospitals in 

57 counties in Iowa, one Nebraska 

hospital, and two South Dakota 

hospitals to a broadband network which 

will: Facilitate timely diagnosis and 

initiation of appropriate treatment or 

transfer of patients in rural 

communities; facilitate rapid access to 

and transmission of diagnostic images 


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and patient information between 

hospitals; extend and improve terrorism 

and disaster preparedness and response 

through communication network 

interoperability between hospitals, the 

Iowa Department of Public Health, and 

Iowa Homeland Security and 

Emergency Management; and enable 

future remote monitoring and care 

coordination for intensive care patients. 

27. Creation of Statewide or Regional 

Health Care Networks and Connection 

to Dedicated Nationwide Backbone. In 

the 2006 Pilot Program Order, the 

Commission instructed applicants to 

submit proposals that would facilitate 

the creation of state or regional 

networks and (optionally) connect to a 

nationwide broadband network. These 

networks should be dedicated to health 

care, thereby connecting public and 

non-profit health care providers in rural 

and urban locations. The selected 

participants generally demonstrated 

how their proposals would result in 

new or expanded state or regional 

networks and connection to a 

nationwide broadband network 

dedicated to health care. For example, 

Wyoming Telehealth Network will 

connect more than 30 hospitals and 42 

community health centers, providing 

consortium health care professionals 

with access to a statewide network, and 

facilitating connection to Internet2 or 

NLR. West Virginia Telehealth 

Alliance’s proposed network will 

facilitate access in every region, health 

care market, and community in West 

Virginia, with particular focuses on 

medically underserved rural areas; 

health professional shortage areas; 

communities with high disease and 

chronic health condition disparities; 

and communities that demonstrate 

‘‘readiness for deployment.’’ Southwest 

Alabama Mental Health Consortium 

plans to establish a broadband network 

connecting 34 mental health providers 

in 16 counties in Southwest Alabama, 

and this network will connect to 

Internet2 thereby creating a large 

regional mental health care network that 

has access to the national backbone. 

28. Tribal Lands. A significant 

number of applicants plan to use Pilot 

Program funds to create or expand 

health care networks serving tribal 

lands. The Commission finds that 

network reach to tribal lands to be a 

positive use of Pilot Program funds; 

these areas traditionally have been 

underserved by health care facilities and 

reflect unique health care needs, 

particularly compared to non-tribal 

areas. In addition to inadequate access 

to health care, tribal lands suffer from 

relatively low levels of access to 

important telecommunications services. 

For example, Native American 

communities have the lowest reported 

levels of telephone subscribership in 

America. 

29. The Commission finds that these 

health care and telecommunications 

disparities between tribal lands and 

other areas of the country underscore 

the serious need for Pilot Program 

support of telemedicine and teleheath 

networks in tribal areas. Many selected 

participants plan to use Pilot Program 

support for networks on or near tribal 

lands. For example, Health Care 

Research & Education Network plans to 

construct a network that will serve a 

significant Native American population. 

According to the Health Care Research 

& Education Network, Native Americans 

report being uninsured at a rate of 37.1 

percent and North Dakota’s Indian 

population is 1.5 times as likely to die 

of heart disease, cancer, stroke, and 

influenza/pneumonia as those living on 

non-tribal lands. The Network seeks to 

alleviate some of these disparities 

through use of its planned network that 

will provide a link to improve 

educational opportunities, and will 

facilitate new and ongoing research in 

health care delivery to rural areas. 

30. In the first year of the Pilot 

Program, Western Carolina University 

(WCU) in collaboration with the Eastern 

Band of Cherokee Indians (EBCI) seeks 

to connect the WCU’s health care 

facilities to health care facilities on the 

reservation and in outlying areas so that 

patients can access critically needed 

medical specialists in a variety of 

practices without leaving their homes or 

their communities. In year two of the 

Pilot Program, WCU plans to connect 

the United South and Eastern Tribes, 

Inc. (USET), a non-profit, inter-tribal 

organization of 24 federally recognized 

tribes, to its network. The Commission 

finds that these and the other planned 

uses of Pilot Program funds to support 

network build-out to tribal lands will 

further our goal of bringing innovative 

health care services to those areas of the 

country with the most acute health care 

needs. 

31. Cost Estimates. In the 2006 Pilot 

Program Order, the Commission 

requested that applicants provide 

estimates of their network’s total costs 

for each year. Selected participants 

provided cost estimates or budgets. 

Several applicants provided significant 

cost and budget details, including 

Adirondack-Champlain Telemedicine 

Information Network whose budget 

includes a clear analysis of network 

costs with significant detail, including, 

e.g., cost per foot of fiber, cost of a pole 

installation, number of feet of fiber, and 

number of poles where fiber is installed. 

Alaska Native Tribal Health Consortium 

provides detailed cost estimates for each 

phase of its network, including 

deployment and services, and provides 

significant information about its 

revenue stream, operating expenses, and 

maintenance for five years. Although 

the Commission finds selected 

participants have satisfied this criterion, 

to ensure support is used for eligible 

costs, as part of the USAC application 

process, applicants must submit 

detailed network cost worksheets. 

32. Fair Share. To prevent improper 

distribution of Pilot Program funds, in 

the 2006 Pilot Program Order, the 

Commission instructed applicants to 

describe how for-profit network 

participants will pay their fair share of 

the network and other costs. In general, 

selected participants provided 

significant assurances that for-profit 

participants will be responsible for all of 

their network costs. Several applicants 

provided more detailed plans targeted to 

insuring that all for-profit participants 

pay their fair share of the costs. For 

instance, Northeast HealthNet states that 

its proposed network does not include 

for-profit entities and that, if for-profit 

entities are added to its network, they 

would be invoiced separately for each 

service item and USAC would receive 

invoice documentation that reflects only 

eligible rural health care providers. 

Similarly, Tennessee Telehealth 

Network notes that although it will not 

include for-profit participants in the 

first two years, for-profits will later be 

allowed to join and will be required to 

pay 100 percent of their actual costs. 

33. Funding Source. In the 2006 Pilot 

Program Order, the Commission 

instructed applicants to identify their 

source of financial support and 

anticipated revenues that will pay for 

costs not covered by the fund. To 

preserve the integrity of the Pilot 

Program, the Commission will continue 

to require selected participants to 

indicate how for-profit participants pay 

their fare share of network costs. 

Accordingly, selected participants must 

submit this information to USAC as part 

of their detailed line-item network costs 

worksheet submission and Pilot 

Program Participants Quarterly Data 

Reports. Generally, selected participants 

identified their source or sources of 

support for costs not covered by the 

Pilot Program. Several applicants 

provided the well-documented 

assurances that their costs not 

supported by the Pilot Program will be 

funded by reliable sources. For example, 

University Health Systems of Eastern 

Carolina states that it, the participating 

health care providers, and the North 

Carolina Office of Rural Health will 


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provide funding for their network costs 

not supported by Pilot Program funds. 

And, Wyoming Telehealth Network has 

received a commitment from the 

Wyoming Department of Public Health 

and Terrorism Preparedness Program to 

fund the Network’s costs not covered by 

the Program. 

34. 85 Percent Funding. The 

Commission also stated in the 2006 Pilot 

Program Order that no more than 85 

percent of their costs incurred by a 

participant will be funded to deploy a 

state or regional dedicated broadband 

health care network, and to connect that 

network to NLR or Internet2. Selected 

participants demonstrated their 

commitment to seeking no more than 85 

percent of their network costs from the 

Pilot Program. Michigan Public Health 

Institute, for example, explains that the 

Michigan Legislature has appropriated 

funds to cover a portion of its 15 percent 

share of costs. California Telehealth 

Network stated that it will receive its 15 

percent share from the California 

Emerging Technology Fund, which is 

operated by the California Public Utility 

Commission. Iowa Health System states 

that it plans to fund approximately 39 

percent of the total cost of extending its 

existing fiber backbone to 78 rural sites. 

35. Included Facilities. With respect 

to health care facilities, the Commission 

directed applicants in the 2006 Pilot 

Program Order: (1) To list the health 

care facilities that will be included in 

their networks; and (2) to demonstrate 

that they will connect more than a de 

minimis number of rural health care 

providers in their networks. All selected 

participants satisfied this request by 

providing the names and details of 

facilities to be included and by 

proposing to connect more than a de 

minimis number of rural health care 

facilities. Although some proposals 

include only a few rural health care 

providers, relative to the total number of 

facilities to be included in these 

networks, and recognizing the 

significant benefits these networks will 

confer on their rural populations, the 

Commission finds these small numbers 

of rural health care providers are more 

than de minimis when viewed in 

context. For example, Erlanger Health 

System’s proposed network in 

Tennessee and Georgia includes five 

rural health care providers out of a total 

of 11 facilities, and Puerto Rico Health 

Department’s proposed network 

includes six rural health care providers 

out of a total of 52 facilities. Considering 

the total number of health care 

providers to be included in these 

proposed networks, the Commission 

finds that the number of rural health 

care providers is more than de minimis. 

36. Prior Experience. To help ensure 

sufficient skill and competency of Pilot 

Program participants, in the 2006 Pilot 

Program Order the Commission asked 

whether applicants had previous 

experience in developing and managing 

telemedicine programs, and specifically 

whether applicants had successful track 

records in developing, coordinating, and 

implementing telehealth/telemedicine 

programs within their states or regions. 

In general, selected participants 

exhibited experience with telehealth/ 

telemedicine programs, and some 

exhibited significant, impressive 

experience in this area. Notably, 

University Health Systems of Eastern 

Carolina has been recognized as one of 

the nation’s ‘‘100 Most Wired 

Healthcare Organizations’’ five of the 

previous six years by Hospitals and 

Health Networks magazine, and 

connects regional hospitals via a highspeed fiber-optic network enabling 

telemedicine, teleradiology and 

telehealth services. University of 

Mississippi Medical Center’s 

TelEmergency program already provides 

real-time medical care to patients in 

rural emergency departments utilizing 

specially-trained nurse practitioners 

linked with their collaborating 

physicians. The Commission finds this 

experience, and the experiences cited in 

other applications, will further the goals 

of the 2006 Pilot Program Order by 

ensuring that applicants have the 

necessary experience to successfully 

implement telemedicine/telehealth 

programs within their states or regions. 

37. Project Management. To ensure 

proper network oversight and 

implementation, in the 2006 Pilot 

Program Order, the Commission 

instructed applicants to provide project 

management plans which outline 

leadership and management structures, 

work plans, schedules, and budgets. 

Selected participants provided project 

management plans that demonstrate a 

strong commitment to the success of 

their proposed networks. For example, 

Southwest Alabama Mental Health 

Consortium sets forth a detailed 

management structure, budget, and 

schedule, and its work plan provides 

for: Establishment of a legal partnership; 

selection of a service provider based on 

Commission requirements; installation 

of WAN and connection to Internet2; 

monthly project assessment meetings; 

implementation of telehealth and 

telemedicine services; implementation 

evaluation; and project continuation to 

achieve goals and objectives. Missouri 

Telehealth Network describes in detail 

the program manager’s responsibilities; 

provides a month-by-month project 

timeline; and lists specific funding 

amounts requested for network costs, 

equipment, connections, and operation. 

38. Coordination. To ensure 

efficiencies and avoid duplication of 

efforts or network facilities, in the 2006 

Pilot Program Order, the Commission 

instructed applicants to indicate how 

their proposed telemedicine program 

will be coordinated throughout the state 

or region. In general, selected 

participants sufficiently described such 

coordination. Notably, New England 

Telehealth Consortium (NETC) members 

represent 57 hospitals, three 

universities, 57 behavioral health sites, 

eight correctional facilities’ clinics, 81 

federally qualified health care centers, 

six health education sites, and two 

health research sites throughout Maine, 

Vermont and New Hampshire. Each 

NETC member, through its 

representation on the NETC Board of 

Directors, will be able to provide input 

into critical NETC decisions including 

network implementation priority among 

the various sites and telemedicine 

programs implemented as a result of 

this network. According to NETC, all 

members have agreed in writing that an 

Executive Committee will facilitate 

efficient management of the 

organization between meetings of the 

full Board. Rural Nebraska Healthcare 

Network (RNHN), a non-profit 

membership organization consisting of 

nine local hospitals and their associated 

clinics in the Panhandle of Nebraska, 

has coordinated health care efforts in 

the Panhandle since 1996. RNHN plans 

to utilize and enhance its existing 

regional coordination for programs and 

services by employing a system of 

Regional Leadership Teams that will 

draft regional priorities and be 

responsible for communication between 

all participants. The Regional 

Leadership Teams also will coordinate 

with the Board of Directors which 

includes the Chief Executive Officer of 

each member hospital. 

39. Self Sustainability. A primary goal 

of the Pilot Program is to ensure the 

long-term success of rural health care 

networks and to prevent wasteful 

allocation of limited universal service 

funds. Accordingly, in the 2006 Pilot 

Program Order, the Commission sought 

assurances from applicants that their 

proposed networks will be self 

sustaining once established. To the 

extent a network is not self sustainable 

once established, that may be an indicia 

of non-compliance with the terms of 

this Order and may be considered as 

part of any Pilot Program audits and 

oversight. Generally, selected 

participants provided sufficient 

evidence that their proposed networks 


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will be self sustaining by the completion 

of the Pilot Program. For example, 

Heartland Unified Broadband Network 

identifies three possible scenarios for 

network sustainability for Year Three 

and beyond, including: Reliance on the 

existing RHC support mechanism; 

reliance on fees from network partners; 

and reduction (not elimination) of 

bandwidth should full funding be 

unavailable. Wyoming Telehealth 

Network envisions some ongoing costs 

covered by the existing RHC support 

mechanism or state funding, and plans 

to use as a model Nebraska’s statewide 

telehealth network which is supported 

through a combination of existing RHC 

support mechanisms, state funding 

through the Nebraska universal service 

program, and minimal consortium fees. 

40. USAC Application Process. As 

described in detail above, the 

Commission finds that selected 

participants have sufficiently set forth 

how they will meet the overall Pilot 

Program’s goals and objectives, and how 

their networks will meet the detailed 

Program criteria set forth in the 2006 

Pilot Program Order. Although the 

Commission finds that the selected 

applications overall satisfy the criteria 

set forth in the 2006 Pilot Program 

Order, additional information will be 

needed from many applicants to ensure 

funds are disbursed and used consistent 

with section 254 of the 1996 Act, this 

Order, and the Commission’s rules and 

orders. Accordingly, as described more 

fully below, each selected participant 

will be required to comply with this 

Order, and to thoroughly and clearly 

provide all necessary information with 

its forms and other data through the 

USAC administrative process. These 

additional requirements will ensure that 

Pilot Program funds are appropriately 

disbursed and will prevent, to the extent 

possible, waste, fraud, and abuse. 

D. Denied Applications 

41. In this section, the Commission 

denies 12 applications because these 

applicants do not demonstrate that they 

overall satisfy the goals, objectives, and 

other criteria of the 2006 Pilot Program 

Order. Unlike the applications selected 

for participation above, the 12 

applications the Commission denies 

either have substantial deficiencies 

across the range of criteria established 

in the 2006 Pilot Program Order or seek 

funding for costs that are well beyond 

the scope of the 2006 Pilot Program 

Order. Accordingly, the Commission 

finds that these applications do not 

warrant further participation in the 

Rural Health Care Pilot Program. 

42. OpenCape Corporation 

Application. OpenCape fails to satisfy 

the goals and objectives of the 2006 Pilot 

Program Order because, among other 

things, its application seeks support 

focused not for a network dedicated to 

telehealth, but instead for a network for 

use by public schools, community 

colleges, and commercial firms. In fact, 

in the application, health care is only 

mentioned once and the letters of 

support and funding in the OpenCape 

application appear to be limited to 

school districts, community colleges, 

and the towns that would be served by 

the network. To the extent OpenCape 

seeks funding for schools, it may do so 

through the universal service support 

mechanism for schools and libraries (ERate program). Significantly, none of the 

seven members of the proposed board is 

affiliated with a health care provider; 

none of the 41 entities listed as 

supporting the network is a health care 

provider; and none of the six entities 

providing funds to cover the 15 percent 

minimum funding contribution is a 

health care provider. The seven board 

members primarily come from 

education backgrounds. OpenCape’s 

application is also deficient because it 

fails to provide adequate details of its 

costs. For example, the budget provided 

with OpenCape’s application provides 

information on tasks it will perform, but 

does not provide costs associated with 

those tasks. For instance, OpenCape 

states that it will perform a wireless 

engineering study and a topography 

study, but does not provide the costs 

associated with these studies. In 

addition, OpenCape does not adequately 

identify its source of the financial 

support and anticipated revenues that 

will pay for costs not covered by the 

Pilot Program, but instead merely 

indicates that it will pursue grants, 

donations and earmarks for capital 

funding of the full implementation. Not 

only does this show that OpenCape does 

not presently know who will pay for its 

share of the costs, the Commission 

cannot even determine from the 

application whether its expectations to 

obtain funding are realistic because 

OpenCape provides little to no evidence 

of its ability to secure funding from 

these sources. Rather, OpenCape merely 

explains that its federal and state 

legislative delegations generally (but not 

for its specific Pilot Program 

application) have shown an interest in 

expanding access to underserved 

regions of Massachusetts. Accordingly, 

the Commission denies OpenCape’s 

request to participate in the Pilot 

Program. 

43. North Link of Northern 

Enterprises, Inc. Application. North 

Link of Northern Enterprises, Inc. 

(North Link of Northern Enterprises) 

seeks $2.5 million in funding for a 

project generally described as 

connecting eight hospitals and medical 

centers to the regional fiber optic 

backbone to promote the use of a photo 

archiving system (PAS), virtual 

intensive care units, and 

teleconferencing. However, beyond the 

vague description of the project, North 

Link of Northern Enterprises does not 

provide sufficient information to 

determine how the project will advance 

the goals of the 2006 Pilot Program 

Order. Notably, like OpenCape’s 

application, North Link of Northern 

Enterprises fails to provide budget 

information that would permit the 

Commission to assess whether the 

application comports with program 

requirements including, in particular, 

whether the funding request is for 

eligible services. Additionally, the work 

plan submitted by North Link of 

Northern Enterprises fails to provide 

specific details on the phases of 

construction anticipated by Northern 

Enterprises. Instead, the work plan 

merely states that Phase I, which 

consists of laying 75 miles of the 400 

miles of fiber optics, will begin June 4, 

2007, with the balance of the project 

completed by 2009. The Commission 

therefore denies North Link of Northern 

Enterprises’ request for Pilot Program 

participation because it does not 

demonstrate it is qualified to be eligible 

for its broad request for funding. 

44. Illinois Hospital Association 

Application. The Commission also 

denies the application of Illinois 

Hospital Association because it seeks 

funding primarily for costs that are 

beyond the scope of the Pilot Program. 

In particular, Illinois Hospital 

Association states that it seeks over 

$800,000 for its proposed project to 

provide greater access to the existing 

state broadband network, Illinois 

Century Network, for rural health care 

providers to promote the use of 

telehealth and telemedicine throughout 

the state. The funding, however, is 

primarily for staff support and customer 

premises equipment, which are outside 

the scope of the Pilot Program. Thus, the 

Commission denies this application for 

participation in the Pilot Program. The 

Commission notes, however, that the 

Illinois Rural HealthNet Consortium and 

the Iowa Health System will be 

participants in the Pilot Program and 

will offer services in Illinois. The 

Commission also notes that the two 

main proposed recipients in Illinois 

Hospital Association’s application, 

University of Illinois College of 

Medicine at Rockford and Southern 


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Illinois School of Medicine, are also 

included in Illinois Rural HealthNet 

Consortium’s application. 

45. Institute for Family Health 

Application. Similarly, the Institute for 

Family Health in New York seeks $2.4 

million in funding for its proposed 

network that would extend its current 

electronic health records (EHR) and 

practice management system from its 

New York City-based urban network to 

rural health centers throughout the MidHudson Valley region. Of the requested 

Pilot Program funding, over 75 percent 

is for costs that are beyond the scope of 

the Pilot Program, including customer 

premises equipment such as personal 

computers and server hardware, 

personnel costs, and $1.5 million in 

funding for software licenses. 

Accordingly, the Commission declines 

to select Institute for Family Health to 

participate in the Pilot Program. 

46. Valley View Hospital Application. 

The Valley View Hospital in Colorado’s 

application also fails to qualify for 

participation in the Pilot Program 

because it seeks funding primarily for 

ineligible Pilot Program costs. 

Specifically, Valley View Hospital seeks 

$195,000 in funding for the rental of an 

RP–7 robotic system, which is a teleoperated, mobile robotic system that 

enables remote presence. As stated 

above, the Pilot Program funding will 

promote the utilization of dedicated 

broadband capacity to provide health 

care services. Valley View Hospital, 

however, seeks funding not for network 

design or build-out, but for medical 

equipment, which is specifically 

excluded from funding. The 

Commission finds, therefore, that 

participation in the Pilot Program by 

Valley View Hospital is not appropriate. 

47. Alabama Rural Health Network. 

The application submitted by the 

Alabama Department of Economic and 

Community Affairs (Alabama Rural 

Health Network) also seeks funding for 

ineligible Pilot Program costs. In 

particular, ADECA seeks $91,275 in 

funding, of which $45,000 is for a 

category simply labeled ‘‘contractual.’’

The rest of the funding is divided 

amongst personnel costs, travel, ‘‘fringe 

benefits,’’ and ‘‘indirect costs.’’ None of 

these costs are eligible costs for which 

Alabama Rural Health Network could 

receive reimbursement. Further, none of 

those costs appear to be associated with 

network design or deployment of 

infrastructure. Instead, Alabama Rural 

Health Network’s application appears to 

be seeking funding for a survey it will 

conduct of the state’s hospitals to 

determine their needs, and an 

evaluation of the state’s broadband 

providers to determine their 

capabilities. These deficiencies in 

Alabama Rural Health Network’s 

proposal warrant its exclusion from 

participation in the Pilot Program. 

48. Pioneer Health Network 

Application. Pioneer Health Network’s 

application states that it seeks to 

develop a health information system 

focusing on health information 

technology (such as patient level health 

and quality information exchange and 

establishing a health information 

environment that emphasizes security 

and privacy of patient data and that 

leverages technologies that are 

enhanced by the evolving 

interoperability standards) as opposed 

to telehealth and telemedicine 

applications. Beyond this general 

description, Pioneer Health Network 

does not provide any details concerning 

its proposal except to indicate the 

project involves software applications, 

as opposed to network infrastructure 

(which the applicant states will largely 

be provided by the existing statewide 

backbone). Because the Pilot Program 

does not fund medical software 

applications, the Commission declines 

to find Pioneer Health Network eligible 

for funding. 

49. Taylor Regional Hospital 

Application. Taylor Regional Hospital’s 

application is so vague in providing 

overall details about how it qualifies for 

participation in the Pilot Program that 

the Commission denies its application. 

In particular, Taylor Regional Hospital’s 

application fails to specify the amount 

of funding it seeks, specifying only that 

its proposed project would cost $7,200 

per year. In addition, Taylor Regional 

Hospital fails to provide any detail 

supporting its costs for the Commission 

to determine whether these costs are 

associated with network design or 

network costs. Taylor Regional 

Hospital’s stated objective is to use the 

funding to enhance its imaging 

distribution system, community-wide 

scheduling system, and its Laboratory 

Information System. It is unclear from 

the application whether such 

enhancements would require network 

upgrades or whether they are software 

application upgrades, which would be 

ineligible for support. Moreover, Taylor 

Regional Hospital does not identify the 

health care providers it seeks to 

connect. Instead, Taylor Regional 

Hospital states that the facilities that 

will be included in the network are 

‘‘Taylor Regional Hospital and all the 

affiliates associated with [it].’’ This 

omission on the part of Taylor Regional 

Hospital makes it impossible, among 

other things, to determine whether there 

will be a de minimis number of the rural 

health care providers; identify network 

configuration; and to ensure that the 

proposed project is consistent with the 

goals, objectives, and other criteria of 

the 2006 Pilot Program Order. Thus, the 

Commission denies this application. 

50. United Health Services 

Application. Similarly, United Health 

Services of New York (United Health 

Services) provides such inadequate 

detail of its network costs that it does 

not merit further participation in the 

Pilot Program. Notably, United Health 

Services provides no budget, but instead 

merely lists its monthly connectivity 

costs, without specifying whether the 

costs would support an existing network 

or construction of a new network. The 

Commission notes that United Health 

Services does include a management 

and work plan and schedule. However, 

without a budget, the Commission is not 

able to identify how United Health 

Services intends to allocate the funding 

for each phase of the plan. In addition, 

its application fails to include financial 

data or to detail in any meaningful way 

its proposed network build-out and 

costs. Consequently, the Commission 

finds Pilot Program participation by 

United Health Services would not be 

consistent with the 2006 Pilot Program 

Order. 

51. World Network Institutional 

Services Application. World Network 

Institutional Services (WNIS) also fails 

to detail its costs or almost any other 

aspect of its proposal in its cursory fourpage application to adequately assess its 

qualifications for participation in the 

Pilot Program. WNIS seeks $100 million 

in funding but fails to provide a budget 

breaking out its cost estimates. 

Additionally, WNIS does not provide 

any detail as to which health care 

facilities it would include in its 

network, preventing the Commission, 

among other things, from determining 

whether the network would serve more 

than a de minimis number of rural 

health care providers. Rather, WNIS 

states that a list will be provided in 

‘‘later correspondence’’ (which was 

never provided). Further, WNIS fails to 

provide specific information on how it 

will pay for its portion of the costs of 

the network. Instead, WNIS offers that 

its financial support will come from 

‘‘advertisers and users.’’ Based on these 

deficiencies and the overall vagueness 

of the application, the Commission 

declines to include WNIS as a 

participant in the Pilot Program. 

52. Hendricks Regional Health 

Application. Hendricks Regional Health 

(Hendricks), like WNIS, fails to provide 

a work plan that sufficiently details the 

management/leadership structure, work 

plan, or budget. In particular, Hendricks 

provides no budget information in its 


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application. The only estimate in its 

application is for the per mile cost of 

deploying the fiber optic cable it seeks, 

which is $50,000 per mile for 

approximately 58 miles. And, even this 

information is not accompanied by any 

specific detail or documentation. The 

Commission also has concerns about the 

work plan presented by Hendricks. 

Instead of providing detailed 

information, Hendricks provides a 

vague timeline with no additional 

information to support its assumptions 

on deployment of the fiber optic cable. 

Like Taylor, United Health, and WNIS, 

the deficiencies in Hendricks’s 

application do not warrant its 

participation in the Pilot Program. 

53. Southwest Pennsylvania Regional 

Broadband Health Care Network 

Application. Similarly, the application 

submitted by Southwest Pennsylvania 

Regional Broadband Health Care 

Consortium (Southwest Pennsylvania 

Regional Broadband Health Care 

Network) fails to provide information 

that sufficiently details its work plan or 

budget. Specifically, Southwest 

Pennsylvania Regional Broadband 

Health Care Network offers a budget that 

fails to provide any line-item details. 

Rather, Southwest Pennsylvania 

Regional Broadband Health Care 

Network indicates that it intends to 

build 180 miles of fiber optic cable and 

states that it will need $7.2 million in 

funding to do so. Southwest 

Pennsylvania Regional Broadband 

Health Care Network provides no detail 

on how it arrived at this figure or what 

it includes. SW Pennsylvania 

Consortium also provides no 

information regarding the on-going cost 

of operating its network. Because there 

are no details in its budget, the 

Commission is also not able to 

determine what network equipment 

Southwest Pennsylvania Regional 

Broadband Health Care Network intends 

to purchase. Additionally, Southwest 

Pennsylvania Regional Broadband 

Health Care Network’s fails to document 

its funding sources. It, instead, lists the 

facilities that would join the network 

and assigns an annual cost of $5,456.95 

to each facility for five years without 

providing detail on where the entities 

will get the additional money or 

providing letters of support from these 

entities. Moreover, like Hendricks, 

Southwest Pennsylvania Regional 

Broadband Health Care Network’s work 

plan represents nothing more than a 

timeline. Finally, the Commission notes 

that of the 99 facilities listed in its 

application, only five are eligible rural 

health care providers. Given the amount 

of funding requested, the lack of 

financial and other detail needed to 

justify funding, and the small 

percentage of rural health care providers 

that will be connected, the Commission 

finds Pilot Program participation would 

not be consistent with the 2006 Pilot 

Program Order. 

54. Finally, as noted above, in the 

2006 Pilot Program Order, one of the 

purposes of the Pilot Program was to 

encourage health care providers to 

aggregate their connection needs to form 

a comprehensive statewide or regional 

dedicated health care network. The 

applications that the Commission is 

approving in this Order have fulfilled 

that purpose and together will cover 42 

states and three United States territories. 

The Commission encourages those 

eligible health care providers that are 

part of the denied applications to 

pursue ways to be included in the 

approved consortia in their states or 

regions. The Commission also 

encourages the rural health care 

facilities in the denied applications to 

contact USAC to discuss their possible 

participation in the existing RHC 

support mechanism. In addition, after 

three years, the Commission intends to 

revisit its rules and determine how to 

improve the current program. The 

Commission encourages the denied 

applicants to participate in any 

subsequent proceedings and reapply at 

that time. 

E. Pilot Program Administration 

55. In this section, the Commission 

discusses several issues related to the 

effective administration of the Pilot 

Program. The Commission first provides 

clarification regarding what entities are 

eligible health care providers for 

purposes of the Pilot Program, which 

services are eligible and ineligible for 

Pilot Program support, and which 

sources of funding are eligible and 

ineligible for selected participants’ 15 

percent minimum funding contribution. 

The Commission also provides specific 

guidance concerning selected 

participants’ compliance with the 

submission of program forms to the 

USAC. For example, in order to receive 

universal service support, selected 

participants must submit with the 

required USAC Forms, detailed 

worksheets concerning their proposed 

network costs, certifications 

demonstrating universal service support 

will be used for its intended purposes, 

letters of agency from each participating 

health care provider, and detailed 

invoices showing actual incurred costs 

of project build-out. As discussed 

below, selected participants that fail to 

comply with these procedures and the 

other program requirements the 

Commission discusses here will be 

prohibited from receiving support under 

the Pilot Program. Finally, the 

Commission addresses various requests 

for waiver of Commission rules filed by 

applicants. Among other things, the 

Commission denies waiver requests of 

the Commission’s rule requiring that 

Pilot Program selected participants 

competitively bid their proposed 

network projects. In doing so, the 

Commission reaffirms that the 

competitive bidding process remains an 

important safeguard to ensuring 

universal service support is used wisely 

and efficiently ensuring that the most 

cost effective service providers are 

selected by selected participants, and 

the Commission discusses the factors on 

which selected participants should rely 

in making their cost effectiveness 

determinations in the competitive 

bidding process. 

1. Eligible Health Care Providers 

56. As stated above, the existing RHC 

support mechanism utilizes the 

statutory definition of ‘‘health care 

provider’’ established in section 

254(h)(7)(b) of the 1996 Act. Excluded 

from the list of eligible health care 

providers are nursing homes, hospices, 

other long-term care facilities, and 

emergency medical service facilities. 

Although emergency medical service 

facilities are not eligible providers for 

purposes of the RHC Pilot Program, 

Pilot Program funds may be used to 

support costs of connecting emergency 

medical service facilities to eligible 

health care providers to the extent that 

the emergency medical services facility 

is part of the eligible health care 

provider. Additionally, pharmacies are 

excluded from the definition of health 

care providers. Accordingly, under the 

RHC Pilot Program, only eligible health 

care providers and consortia that 

include eligible health care providers 

may apply for and receive discounts. 

Additionally, applicants, as well as 

individual health care facilities 

included in an application, that have 

been convicted of a felony, indicted, 

suspended, or debarred from award of 

federal or state contracts, or are not in 

compliance with FCC rules and 

requirements shall not be eligible for 

discounts under the Pilot Program. To 

the extent that the applications the 

Commission selects herein contain 

ineligible health care providers, such 

providers may participate but must be 

treated by the applicant and by USAC 

as if the providers were for-profit 

entities and therefore are ineligible to 

receive any support associated with 

their portion of the Pilot Program 

network. Further, selected participants 


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or individual health care facilities that 

are part of the network of a selected 

participant that are delinquent in debt 

owed to the Commission shall be 

prohibited from receiving universal 

service Pilot Program support until full 

payment or satisfactory arrangement to 

pay the delinquent debt(s) is made. 

Also, selected participants or individual 

health care facilities included in the 

network of a selected participant that 

are barred by the General Services 

Administration (GSA) from receiving 

federal contracts, subcontracts, and 

certain types of federal assistance shall 

be prohibited from receiving universal 

service Pilot Program support until the 

GSA determines that they are eligible 

for federal contracts, subcontracts, and 

certain types of federal assistance. 

57. Participation of State 

Organizations and Entities as Consortia 

Members. State organizations and 

entities may apply for funding on behalf 

of consortia members, but cannot 

themselves receive funding for services 

under the Pilot Program unless they 

satisfy the statutory definitions for 

health care provider under section 

254(h)(7)(b) of the 1996 Act. In addition, 

state organizations or entities that 

provide eligible service offerings are 

eligible to be selected as a service 

provider by a Pilot Program selected 

participant through the competitive 

bidding processes. Notably, the 

Commission previously determined that 

the term ‘‘health care provider’’ should 

be interpreted narrowly and, in the past, 

excluded potential entities from the 

eligible health care provider definition 

when not explicitly included in the 

statutory definition by Congress. Despite 

the limitations of section 254(h)(7)(b), 

however, the Commission’s rules allow 

eligible health care providers to join 

consortia with other eligible health care 

providers; with schools, libraries, and 

library consortia eligible under Subpart 

F of 47 CFR part 54; and with public 

sector (governmental) entities to order 

telecommunications services. As state 

organizations or entities constitute 

‘‘public sector (governmental) entities,’’

they may join consortia under the 

Commission’s rules. 

58. Therefore, although state 

organizations and entities do not 

constitute eligible health care providers, 

the Commission finds they may apply 

on behalf of eligible health care 

providers as part of a consortium (e.g., 

as consortia leaders) to function, for 

example, in an administrative capacity 

for eligible health care providers within 

the consortium. In doing so, however, 

state organizations and entities are 

prohibited from receiving any funding 

from the Pilot Program. The 

Commission notes that in the E-Rate 

context, it has explicitly required state 

telecommunications networks that 

secure discounts under the universal 

service support mechanisms on behalf 

of eligible schools and libraries, or 

consortia that include an eligible school 

or library, to pass on these discounts to 

the eligible schools or libraries. The 

Commission clarifies here and makes 

explicit that any discounts, funding, or 

other program benefits secured by a 

state entity or organization or other 

ineligible entity functioning as a 

consortium leader under the Pilot 

Program must be passed on to consortia 

members that are eligible health care 

providers. In addition, the Commission 

also finds that, like state entities, other 

not-for-profit ineligible entities may 

apply on behalf of eligible health care 

providers as part of a consortium (i.e., 

as consortia leaders), and otherwise 

function in an administrative capacity 

for eligible health care providers within 

the consortium. Like state organizations 

and entities, these not-for-profit entities 

are prohibited from receiving any 

funding from the Pilot Program. 

2. Rural Health Care Pilot Program 

Network Components Eligible and 

Ineligible for Support 

59. In the 2006 Pilot Program Order, 

the Commission stated that funding 

provided under the Pilot Program would 

be used to support the costs of 

constructing dedicated broadband 

networks that connect health care 

providers in a state or region, and that 

connect such state and regional 

networks to the public Internet, 

Internet2, or NLR. The Commission 

explained that eligible costs include 

those for initial network design studies. 

The Commission stated in the 2006 Pilot 

Program Order that it would fund 

necessary network design studies for 

selected participants, as these studies 

would enhance access to advanced 

telecommunications and information 

services by enabling applicants to 

determine how best to deploy an 

efficient network that includes multiple 

locations and various technologies. 

Several applicants requested funding for 

network design studies. For example, 

Kentucky Behavioral Telehealth 

Network proposes to complete a 

network design study in Year One, and 

in Year Two build out the designed 

network to link the existing statewide 

network of regional behavioral health 

providers with rural health care 

providers to improve access to a full 

range of medical care. And, Penn State 

Milton S. Hershey Medical Center plans 

in Year One to connect several rural 

hospitals to the Medical Center and to 

conduct a comprehensive inventory and 

capacity analysis of additional facilities 

it seeks to add in Year Two. For 

purposes of the Pilot Program, the 

Commission clarifies that funding for 

network design studies includes costs 

paid to a consultant to analyze both 

technical and non-technical 

requirements and develop feasible 

network designs based on the analyses. 

The Commission further explained that 

eligible costs also include those for 

deploying transmission facilities and 

providing access to advanced 

telecommunications and information 

services, including non-recurring and 

recurring costs. The Commission notes 

that in the 2006 Pilot Program Order, it 

stated that authorized purposes include 

the costs of ‘‘advanced 

telecommunications and information 

services.’’ The Commission clarifies 

here that, consistent with the Act, 

authorized purposes include the costs of 

access to advanced telecommunications 

services. In light of the many 

applications the Commission received 

seeking funding and the wide range of 

network and related components for 

which support is sought, the 

Commission further clarifies the 

services eligible and ineligible for 

support to ensure that the Pilot Program 

operates to facilitate the goals of the 

2006 Pilot Program Order. The 

Commission thus clarifies that eligible 

non-recurring costs include those for 

design, engineering, materials and 

construction of fiber facilities or other 

broadband infrastructure, and the costs 

of engineering, furnishing (i.e., as 

delivered from the manufacturer), and 

installing network equipment. Recurring 

and non-recurring costs of operating and 

maintaining the constructed network are 

also eligible once the network is 

operational. Further, to the extent that a 

selected participant subscribes to 

carrier-provided transmission services 

(e.g., SONET, DS3s) in lieu of deploying 

its own broadband network and access 

to advanced telecommunications and 

information services, the costs for 

subscribing to such facilities and 

services are also eligible. 

60. Ineligible costs include costs that 

are not directly associated with network 

design, deployment, operations and 

maintenance. These ineligible costs 

include, but are not limited to: 

• Personnel costs (including salaries 

and fringe benefits), except for those 

personnel directly engaged in designing, 

engineering, installing, constructing, 

and managing the dedicated broadband 

network. Ineligible costs of this category 

include, for example, personnel to 

perform program management and 


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coordination, program administration, 

and marketing. 

• Travel costs. 

• Legal costs. 

• Training, except for basic training 

or instruction directly related to and 

required for broadband network 

installation and associated network 

operations. For example, costs for enduser training, e.g., training of health care 

provider personnel in the use of 

telemedicine applications, are 

ineligible. 

• Program administration or technical 

coordination that involves anything 

other than the design, engineering, 

operations, installation, or construction 

of the network. 

• Inside wiring or networking 

equipment (e.g., video/Web 

conferencing equipment and wireless 

user devices) on health care provider 

premises except for equipment that 

terminates a carrier’s or other provider’s 

transmission facility and any router/ 

switch that is directly connected to 

either the facility or the terminating 

equipment. 

• Computers, including servers, and 

related hardware (e.g., printers, 

scanners, laptops) unless used 

exclusively for network management. 

• Helpdesk equipment and related 

software, or services. 

• Software, unless used for network 

management, maintenance, or other 

network operations; software 

development (excluding development of 

software that supports network 

management, maintenance, and other 

network operations); Web server 

hosting; and Website/Portal 

development. 

• Telemedicine applications and 

software; clinical or medical equipment. 

• Electronic Records management 

and expenses. 

• Connections to ineligible network 

participants or sites (e.g., for-profit 

health care providers) and network costs 

apportioned to ineligible network 

participants. 

• Administration and marketing costs 

(e.g., administrative costs; supplies and 

materials (except as part of network 

installation/construction); marketing 

studies, marketing activities, or outreach 

efforts; evaluation and feedback 

studies). 

61. USAC may only fund eligible 

costs as described in this Order and is 

prohibited from funding ineligible costs 

or providing funding to ineligible 

participants. The Commission requires, 

as discussed below, Pilot Program 

participants to identify and detail all 

ineligible costs, including costs 

apportioned to for-profit and other 

ineligible network participants or sites, 

in their line-item network cost 

worksheets submitted to USAC with 

FCC Forms 465 and 466–A, and to 

clearly demonstrate that Pilot Program 

support amounts will not be used to 

fund ineligible costs. The Commission 

notes that some applicants sought 

waivers of the 2006 Pilot Program 

Order, if necessary, for certain costs. To 

the extent that these costs constitute 

ineligible costs, as described in this 

Order, selected participants may not 

request or receive Pilot Program funds 

to support these costs. Accordingly, the 

Commission denies these applicants’

requests to expand the scope of funding 

available under the 2006 Pilot Program 

Order. The Commission notes that if a 

product or service contains both eligible 

and 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 

to an eligible component, 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. 

3. Eligible Sources for 15 Percent of 

Non-Funded Costs 

62. The Commission finds that 

selected participants’ minimum 15 

percent contribution of eligible network 

costs must be funded by an eligible 

source as described in this Order. 

Selected participants are required to 

identify with specificity their source of 

funding for the minimum 15 percent 

contribution of eligible network costs in 

their submissions to USAC, as discussed 

below. The Commission emphasizes 

that selected participants’ 15 percent 

contributions must go towards eligible 

network costs only, as described in this 

Order. In order to ensure that the Pilot 

Program operates consistent with the 

goals and objectives of the 2006 Pilot 

Program Order and that funds are used 

to the benefit of public and non-profit 

health care providers, the Commission 

places limitations on from what source 

selected participants may derive their 

minimum 15 percent contribution of 

eligible network costs. Only funds from 

an eligible source will apply towards 

selected participants’ required 15 

percent minimum contribution. Eligible 

sources include the applicant or eligible 

health care provider participants; state 

grants, funding, or appropriations; 

federal funding, grants, loans, or 

appropriations except for RHC funding; 

and other grant funding, including 

private grants. The Commission stresses 

that participants who do not 

demonstrate that their 15 percent 

contribution comes from an eligible 

source or whose minimum 15 percent 

funding contribution is derived from an 

ineligible source will be denied funding 

by USAC. Ineligible sources include inkind or implied contributions; a local 

exchange carrier (LEC) or other telecom 

carrier, utility, contractor, or other 

service provider; and for-profit 

participants. Moreover, selected 

participants may not obtain any portion 

of their 15 percent contribution from the 

existing RHC support mechanism. The 

Commission finds that these limitations 

on sources are necessary to ensure that 

participating health care providers 

adequately invest in their network 

projects to ensure efficiency in both cost 

and design and to assume some minimal 

level of risk. Requiring participants to 

have a vested interest in the approved 

network project safeguards against 

program manipulation and protects 

against waste, fraud, and abuse. The 

Commission recognizes that some 

selected participants identified 

improper sources for their participant 

contribution in their Pilot Program 

applications; however, the Commission 

allows those selected participants to 

amend their project proposals in their 

submissions to USAC solely for the 

purpose of coming into compliance with 

the requirements of this Order. 

Applicants so amending their 

applications are prohibited from using 

this opportunity to increase in any way 

the amount of support they are seeking. 

4. Cost Effectiveness 

63. Consistent with existing rules and 

requirements, selected participants must 

comply with the competitive bidding 

process to select a service provider for 

their proposed projects. As part of this 

requirement, the Commission reiterates 

that each selected participant is 

required to certify to USAC that the 

service provider it chooses is, to the best 

of the applicant’s knowledge, the most 

cost-effective service or facility provider 

available. The Commission has defined 

‘‘cost effective’’ for purposes of the 

existing RHC support mechanism as 

‘‘the method that costs the least after 

consideration of the features, quality of 

transmission, reliability, and other 

factors that the health care provider 


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deems relevant to * * * choosing a 

method of providing the required health 

care services.’’ In selecting the most 

cost-effective bid, in addition to price, 

the Commission requires selected 

participants to consider non-cost 

evaluation factors that include prior 

experience, including past performance; 

personnel qualifications, including 

technical excellence; management 

capability, including solicitation 

compliance; and environmental 

objectives (if appropriate). The 

Commission has previously concluded 

that non-price evaluation factors, such 

as prior experience, personnel 

qualifications, and management 

capability, may form a reasonable basis 

on which to evaluate whether a bid is 

cost effective. Because designing and 

constructing a new network or building 

upon an existing network represents a 

substantial undertaking that requires 

technical expertise, training, and skills 

of a different level than those services 

supported by the existing RHC support 

mechanism, the Commission makes 

consideration of these factors mandatory 

for selected participants. 

64. The existing RHC support 

mechanism, unlike the schools and 

libraries universal service support (ERate) program, does not require 

participants to consider price as the 

primary factor in selecting service 

providers. The Commission has stated 

that applicants to the RHC support 

mechanism should not be required to 

use the lowest-cost technology because 

factors other than cost, such as 

reliability and quality, may be relevant 

to fulfill their telemedicine needs. This 

rationale remains appropriate for the 

Pilot Program. Thus, selected 

participants are not required to select 

the lowest bid offered, and need not 

consider price as the sole primary factor 

in selecting bids for construction of 

their broadband networks and the 

services provided over those networks. 

The applications selected for 

participation in the Pilot Program serve 

a variety of telemedicine and telehealth 

needs and entail complex network 

design, as well as infrastructure 

planning and construction. In 

developing a telemedicine network 

infrastructure, selected participants may 

find non-cost factors to be as or more 

important than price. For example, 

selected participants may find technical 

excellence and personnel qualifications 

particularly relevant in determining 

how to best meet their health care and 

telemedicine needs. Requiring 

applicants to use the lowest cost 

technology available could result in 

selected participants being relegated to 

using obsolete or soon-to-be retired 

technology. In addition, initially higher 

cost options may prove to be lower in 

the long-run, by providing useful 

benefits to telemedicine in terms of 

future medical and technological 

developments and maintenance. Thus, 

the Commission does not require 

selected participants to make price the 

sole primary factor in bid selection, but 

it must be a primary factor. 

5. Network Modifications 

65. Selected participants shall follow 

the network design plan outlined in 

their applications. Nevertheless, the 

Commission recognizes that selected 

participants may find it necessary or 

desirable to modify the network design 

plans set forth in their Pilot Program 

applications. For example, less 

expensive network components that 

may be available since applications 

were compiled may permit selected 

participants to acquire higher capacity 

at lower prices. Alternatively, selected 

participants may be able to add health 

care providers to their network within 

the available maximum support 

amounts. Although network 

modifications may deviate from a 

selected participant’s initial application, 

to the extent a modification results in a 

supported network only connecting a de 

minimis number of rural health care 

providers, the modification may result 

in adjustment of available support or 

denial of participation in the Pilot 

Program for a selected participant. 

Therefore, to the extent a selected 

participant wishes to upgrade, replace 

technology, or add eligible health care 

providers to its proposed network prior 

to commencing and completing the 

competitive bidding process, it may 

receive support to do so as long as that 

support does not exceed the maximum 

available support amount and the 

support is used for eligible expenses. 

The Commission also notes that selected 

participants, including health care 

provider consortium members, may 

decline to participate in the Pilot 

Program, if they choose, subject to the 

restrictions noted in this Order. 

However, once a service provider is 

selected and an FCL is issued by USAC, 

selected participants’ support will be 

capped at the FCL amount, and the 

selected participant may only modify 

the network within that support 

amount. Any modifications that would 

increase the amount of support needed 

above the maximum available support 

amount for the selected participant in 

this Order will not be funded by the 

Pilot Program. After the issuance of the 

FCL, selected participants must 

complete the project for which funding 

is awarded. 

6. Public Safety and Coordination for 

Emergencies 

66. In 2004, the President issued an 

Executive Order calling for the 

development and implementation of a 

national interoperable health 

information technology infrastructure. A 

key element of this plan is the NHIN 

initiative which promotes a ‘‘network of 

networks,’’ where state and regional 

health information exchanges and other 

networks that provide health 

information services work together, 

through common architecture (services, 

standards, and requirements), processes 

and policies to securely exchange 

information. In response to the Pilot 

Program, HHS has identified ways the 

Pilot Program and the NHIN can 

advance the provision of critical patient 

information to clinicians at the point of 

care to enable vital links for disaster 

preparedness and emergency response, 

improve healthcare, population health, 

and prevention of illness and disease. 

67. The Commission agrees with HHS 

that the Pilot Program can advance the 

goals of the NHIN initiative. 

Accordingly, selected participants shall 

use Pilot Program funding in ways to 

ensure their funded projects are 

consistent with HHS’s health IT 

initiatives in several areas: Health IT 

standards; certification of electronic 

health records (EHRs), personal health 

records (PHRs), and networks; the NHIN 

architecture; the National Resource for 

Health Information Technology; and the 

Public Health Information Network 

(PHIN). In particular, where feasible, 

selected participants shall: (1) Use 

health IT systems and products that 

meet interoperability standards 

recognized by the HHS Secretary; (2) 

use health IT products certified by the 

Certification Commission for Healthcare 

Information Technology; (3) support the 

NHIN architecture by coordinating 

activities with the organizations 

performing NHIN trial implementations; 

(4) use resources available at HHS’s 

Agency for Healthcare Research and 

Quality National Resource Center for 

Health Information Technology; (5) 

educate themselves concerning the 

Pandemic and All Hazards Preparedness 

Act and coordinate with the HHS 

Assistant Secretary for Public Response 

as a resource for telehealth inventory 

and for the implementation of other 

preparedness and response initiatives; 

and (6) use resources available through 

HHS’s Centers for Disease Control and 

Prevention PHIN to facilitate 

interoperability with public health and 

emergency organizations. In addition, as 


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part of the Pilot Program quarterly 

reporting requirements, selected 

participants shall inform the 

Commission whether or how they have 

complied with these initiatives. The 

Commission finds that expecting 

selected participants to comply with 

these HHS initiatives likely will result 

in more secure, efficient, effective, and 

coordinated use of Pilot Program 

funding and the supported networks. 

Finally, selected participants shall 

coordinate in the use of their health care 

networks with HHS and, in particular, 

with CDC in instances of national, 

regional, or local public health 

emergencies (e.g., pandemics, 

bioterrorism). In such instances, where 

feasible, selected participants shall 

provide access to their supported 

networks to HHS, including CDC, and 

other public health officials. 

7. Forms and Related Program 

Requirements 

68. Selected participants are required 

to follow the normal RHC support 

mechanism procedures. USAC currently 

provides funds directly to the 

telecommunications service providers, 

not to the applicant. The Commission 

reminds selected participants and 

service providers that universal service 

support received by service providers 

must be distributed to or credited 

against the portion of the project 

approved for eligible health care 

providers only. In instances where 

credits cannot be issued to a service 

provider, selected participants may 

receive payment directly from USAC, 

provided the selected participant 

complies with the administrative 

requirements in this Order. Under the 

current program, to obtain discounted 

telecommunications services, applicants 

must file certain forms with USAC. The 

Commission notes that all selected 

participants must obtain FCC 

registration numbers (FRNs). An FRN is 

a 10-digit number that is assigned to a 

business or individual registering with 

the FCC. This unique FRN is used to 

identify the registrant’s business 

dealings with the FCC. Selected 

participants may obtain an FRN through 

the Commission’s Web site. Selected 

participants may obtain a single FRN for 

the entire application or consortium 

(i.e., each health care provider does not 

need a separate FRN). First, applicants 

file FCC Form 465 with USAC to make 

a bona fide request for supported 

services. FCC Form 465 is the means by 

which an applicant requests bids for 

supported services and certifies to 

USAC that the applicant is eligible to 

benefit from the RHC support 

mechanism. USAC posts the completed 

FCC Form 465 on its Web site and an 

applicant must wait at least 28 days 

from the date on which its FCC Form 

465 is posted on USAC’s the Web site 

before making commitments with the 

selected service provider(s). Next, after 

the 28 days have expired, an applicant 

submits FCC Form 466 and/or 466–A. 

These forms are used to indicate the 

type(s) of service ordered by the 

applicant, the cost of the ordered 

service, information about the service 

provider(s), and the terms of the service 

agreement(s). Each applicant must 

certify, on the FCC Form 466 and 

466–A, that the applicant has selected 

the most cost-effective method of 

providing the selected service(s). FCC 

Form 467 is the next and final form an 

applicant submits. FCC Form 467 is 

used by the applicant to notify USAC 

that the service provider has begun 

providing the supported service. An 

applicant must submit one FCC Form 

467 for each FCC Form 466 and or 466–

A that the applicant submitted to USAC. 

FCC Form 467 is also used to notify 

USAC when the applicant has 

discontinued the service or if the service 

was or will not be turned on during the 

funding year. The Commission reminds 

selected participants that all health care 

providers participating in the RHC Pilot 

Program must maintain documentation 

of their purchases of service for five 

years from the end of the funding year, 

which must include, among other 

things, records of allocations for 

consortia and entities that engage in 

eligible and ineligible activities. Upon 

request, beneficiaries must make 

available all documents and records that 

pertain to them, including those of 

contractors and consultants working on 

their behalf, to the Commission’s Office 

of Inspector General, to USAC, and to 

their auditors. This record retention 

requirement also applies to service 

providers that receive support for 

serving rural health care providers. 

69. The Commission recognizes that 

due to the unique structure of the Pilot 

Program, selected participants may have 

difficulty in preparing the required RHC 

forms to be submitted to USAC. The 

Commission therefore finds it necessary 

to provide guidance regarding how 

these forms should be completed to 

minimize the possibility of 

unintentional error on the part of 

selected participants. The Commission 

also takes this opportunity to provide 

further guidance on Pilot Program 

requirements and additional data that 

must be submitted with the FCC RHC 

forms. In addition, the Commission 

directs USAC to conduct a targeted 

outreach program to educate and inform 

selected participants on the Pilot 

Program administrative process, 

including the various filing 

requirements and deadlines, in order to 

minimize the possibility of making 

inadvertent ministerial, or clerical errors 

in completing the required forms. 

70. FCC Form 465 Process. To ensure 

a fair and transparent bidding process, 

the Commission directs selected 

participants to clearly identify, on form 

Line 29 (description of Applicant’s 

telecommunications/Internet needs) of 

the FCC Form 465, the bids the 

applicant is requesting for the network 

it intends to construct under the threeyear Pilot Program. The Commission 

reiterates that selected participants 

cannot receive support that exceeds the 

amount designated in Appendix B. For 

selected participants seeking funding in 

the first year of the Pilot Program 

(Funding Year 2007), they should 

indicate that Funding Year 2007 is the 

year for which they are seeking support 

in Line 26 of the FCC Form 465. 

Selected participants should also 

indicate if they will be seeking funding 

for Year Two (Funding Year 2008) and/ 

or Year Three (Funding Year 2009) of 

the Pilot Program in Line 29 of FCC 

Form 465 in their filings in Year One. 

Selected participants should also 

indicate the Year(s) for which each 

health care provider is seeking funding 

in the FCC Form 465 attached 

spreadsheet, discussed further below. 

71. Selected participants are not 

required to submit multiple FCC Forms 

465 for each participating health care 

provider, although they may choose to 

do so. The Commission notes that 

vendors or service providers 

participating in the competitive bid 

process are prohibited from assisting 

with or filling out a selected 

participants’ FCC Form 465. 

Specifically, for purposes of 

administrative efficiency, selected 

participants may submit one master FCC 

Form 465, provided the information 

contained in the FCC Form 465 

identifies each eligible health care 

provider participating in the Pilot 

Program and is included in an attached 

Excel or Excel compatible spreadsheet. 

Appendix E of this Order provides a 

spreadsheet for selected participants. 

The Commission notes also that 

Southern Ohio Healthcare Network 

requests a waiver of the number of 

locations permitted per FCC Form 465. 

Because the Commission permits 

selected participants to submit a single 

master FCC Form 465 with attachment 

that identifies each eligible health care 

provider participating, it denies this 

waiver request as moot. The 

Commission also requires selected 


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participants to provide a brief 

explanation for each health care 

provider participating in the network, 

identifying why each health care 

provider is eligible under section 254 of 

the 1996 Act and the Commission’s 

rules and orders. This information 

should be included in an attachment to 

the FCC Form 465 submitted to USAC. 

The Commission notes also that FCC 

Form 465 requires applicants to certify 

that the health care provider is located 

in a rural area. As described above, the 

Pilot Program is open to all eligible 

public and non-profit health care 

providers. Therefore, the Commission 

clarifies that a participating non-rural 

eligible health care provider need not 

certify that it is located in a rural area. 

Consistent with USAC procedures, 

electronic signatures are permissible for 

purposes of the FCC Form 465 

attachment. Selected participants that 

anticipate competitively bidding out 

their entire approved network project 

need only submit FCC Form 465 and the 

attached spreadsheet in Year One (or the 

first year they intend to competitively 

bid the project). Selected participants 

that anticipate competitively bidding 

their network project each Funding Year 

of the Pilot Program (e.g., Year One, 

Year Two, and Year Three) shall submit 

a new FCC Form 465 within the 

appropriate Funding Year window(s) 

and requisite attachments for each stage. 

Selected participants whose network 

projects include both an initial network 

design study and network construction 

based on that initial network design 

study are required to competitively bid 

the network construction portion of the 

project separate from the initial network 

design study. To the extent that a 

selected participant seeks to add, 

remove, or substitute a health care 

provider in its proposed network after a 

funding commitment has been made by 

USAC, the selected participant must file 

an amended FCC Form 465 Attachment 

providing any new FCC Form 465 

information in order to allow USAC to 

determine its statutory eligibility. The 

Commission notes, however, once 

USAC has issued an FCL, program 

support for the relevant Pilot Program 

Funding Year is capped at that amount. 

In addition, along with its FCC Form 

465 and related spreadsheet, each 

selected participant must also submit a 

copy of the most recent record version 

of its application previously submitted 

to the Commission as of the release date 

of this Order (as modified by, or 

consistent with, this Order, if 

applicable). Selected participants must 

also provide sufficient information to 

define the scope of the project and 

network costs to enable an effective 

competitive bidding process. The 

Commission notes that selected 

participants may not pre-qualify service 

providers for the competitive bidding 

process. 

72. Finally, the Commission requires 

each applicant to include with its FCC 

Form 465 a Letter of Agency (LOA) from 

each participating health care facility to 

authorize the lead project coordinator to 

act on its behalf, to demonstrate that 

each health care provider has agreed to 

participate in the selected participant’s 

network, and to avoid improper 

duplicate support for health care 

providers participating in multiple 

networks. The Commission has affirmed 

USAC’s requirement that an applicant 

applying as a consortium in the E-Rate 

program must submit an LOA from each 

of its members expressly authorizing the 

applicant to submit an applicant on its 

behalf. LOAs should include, at a 

minimum: The name of the entity filing 

the application (i.e., lead applicant or 

consortium leader); name of the entity 

authorizing the filing of the application 

(i.e., the participating health care 

provider/consortium member); the 

relationship of the facility to the lead 

entity filing the application; the specific 

timeframe the LOA covers; the 

signature, title and contact information 

(including phone number, physical 

address, and e-mail address) of an 

official who is authorized to act on 

behalf of the health care provider/ 

consortium member; signature date; and 

the type of services covered by the LOA. 

For health care providers located on 

tribal lands, LOAs must also be signed 

by the appropriate management 

representative of the health care facility. 

In most cases, this will be the director 

of the facility. If the facility is a contract 

facility that is run solely by the tribe, 

the appropriate tribal leader, such as the 

tribal chairperson, president, or 

governor, shall also sign the LOA, 

unless the health care responsibilities 

have been duly delegated to another 

tribal government representative. The 

Commission notes that a number of 

selected participants have included 

health care provider participants in 

their networks that are also participating 

in another selected participant’s 

proposed network. Although the 

Commission does not prohibit a health 

care provider from participating in more 

than one selected participant’s 

supported project, it is prohibited from 

receiving support for the same or similar 

services. Specifically, network costs for 

participation in one project must be 

separate and distinct from network costs 

resulting from participation in any other 

project. 

73. SPIN Requirement. All service 

providers that participate in the RHC 

Pilot Program are required to have a 

Service Provider Identification Number 

(SPIN). SPINs must be assigned before 

USAC can authorize support payments; 

therefore, all service providers 

submitting bids to provide services to 

selected participants will need to 

complete and submit a Form 498 to 

USAC for review and approval if 

selected by a participant before funding 

commitments can be made. Only service 

providers that have not already been 

assigned a SPIN by USAC will need to 

complete and submit a Form 498. Form 

498 can be found on the USAC Web site 

on its forms page. 

74. FCC Form 466–A Process. Selected 

participants should submit an FCC 

Form 466–A to indicate the type(s) of 

network construction ordered, the cost 

of the ordered network construction, 

information about the service 

provider(s), and the terms of the service 

agreements. To the extent a selected 

participant files an FCC Form 466 

instead of an FCC Form 466–A, USAC 

may permit the selected participant to 

amend its filing by submitting an FCC 

Form 466–A to replace the FCC Form 

466. The Commission notes that 

although the title of this Form is 

‘‘Internet Services Funding Request and 

Certification Form,’’ selected 

participants should use the FCC Form 

466–A for all eligible funding requests 

under the Pilot Program because it is 

suitable for Pilot Program purposes. 

Selected participants are not required to 

submit multiple FCC Forms 466–A for 

each participating health care provider 

location, although they may choose to 

do so. Specifically, for purposes of 

administrative efficiency, selected 

participants may submit one master FCC 

Form 466–A, provided the information 

contained in the FCC Form 466–A 

identifies the location of each health 

care provider participating in the Pilot 

Program and is included in an attached 

Excel or Excel compatible spreadsheet. 

Appendix F of this Order provides a 

spreadsheet for selected participants. 

Consistent with USAC procedures, 

electronic signatures are permissible for 

purposes of the FCC Form 466–A 

attachment. Selected participants 

seeking funding for Year One of the 

Pilot Program (Funding Year 2007) 

should indicate this in Line 16. For 

selected participants that seek to receive 

support under Year One of the Pilot 

Program, the due date is June 30, 2008, 

consistent with Commission rules. 

Thereafter, the due date for each year of 

the Pilot Program corresponds with the 


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existing RHC support mechanism 

deadline. Thus, the FCC Form 466–A is 

due on June 30, and the FCC Form 465 

is due 28 days prior, on June 2. Selected 

participants seeking funding for Year 

Two (Funding Year 2008) and/or Year 

Three (Funding Year 2009) of the Pilot 

Program should indicate the applicable 

Funding Years in their description in 

Box 17. In addition, on Line 18 of FCC 

Form 466–A, upon request, selected 

participants should provide 

documentation to allow USAC to clearly 

identify allocated eligible costs related 

to the provision of services for each 

health care provider. 

75. Along with its FCC Form 466–A, 

a selected participant must submit to 

USAC a copy of the contracts or service 

agreements with the selected service 

provider(s). Selected participants shall 

also include a detailed line-item 

network costs worksheet that includes a 

breakdown of total network costs (both 

eligible and ineligible costs). Selected 

participants choosing to submit 

multiple FCC Forms 466–A need only 

submit one master network costs 

worksheet. Selected participants’

network costs worksheet submissions 

shall demonstrate how ineligible (e.g., 

for-profit) participants will pay their fair 

share of network costs. Selected 

participants shall identify these costs 

with specificity in their network costs 

worksheet submissions. USAC may 

reject line-item worksheets that lack 

sufficient specificity to determine that 

costs are eligible under this Order or the 

1996 Act. Selected participants shall 

also identify in their network costs 

worksheet Pilot Program the applicable 

maximum funding amounts pursuant to 

this Order. In addition, each selected 

participant must identify with 

specificity its source of funding for its 

15 percent contribution of eligible 

network costs in its line-item network 

costs worksheet submitted to USAC. A 

network costs worksheet for submission 

to USAC is attached to this Order at 

Appendix G. Selected participants must 

use this worksheet when submitting 

their funding requests to USAC. 

76. A selected participant requesting 

funds for a multi-year contract (e.g., 

Year One and Year Two, or Year One, 

Two, and Three) should indicate this in 

its initial network costs worksheet 

submissions. Although a selected 

participant may utilize a multi-year 

contract, USAC may commit funding for 

only a single year in that year’s FCL for 

the participant, i.e., USAC shall issue a 

separate FCL upon receiving the FCC 

Form 466–A and related attachments on 

an annual basis for the applicable 

funding year. A participant using multiyear contracts is not required to re-bid 

the contract in subsequent Pilot Program 

funding years, but it must submit a 

network costs worksheet and FCC Form 

466–A to USAC for commitment 

approval for each funding year it 

participates in the Pilot Program. A 

selected participant who seeks funding 

for a multi-year agreement may only 

modify its network (including adding, 

deleting, or substituting health care 

providers) to the extent that funding 

does not exceed the funding year 

amount listed in the selected 

participant’s initial network costs 

worksheet for the applicable funding 

year. 

77. Selected participants alternatively 

may choose to competitively bid their 

projects in phases (e.g., Year One—

network design study; Year Two—

network construction and installation) 

for each year that they participate in the 

Pilot Program, in which case selected 

participants shall submit FCC Forms 

465 and 466–A and the requisite 

attachments, as described in this Order, 

for each year they participate. Selected 

participants that elect to request funding 

for a single year (e.g., Year One), but 

intend to request funding for additional 

Pilot Program Years (e.g., Year Two or 

Year Three) should submit a detailed 

line-item network costs worksheet for 

the additional Pilot Program Years for 

which it intends to request funding in 

Year One. 

78. The Commission requires selected 

participants and participating service 

providers (once selected through the 

competitive bidding process) to file a 

certification with their FCC Form 466–

A with the Commission and with USAC 

stating that all federal RHC Pilot 

Program support provided to selected 

participants and participating service 

providers will be used only for the 

eligible Pilot Program purposes for 

which the support is intended, as 

described in this Order, and consistent 

with related Commission orders, section 

254(h)(2)(A) of the 1996 Act, and 

§ 54.601 et seq. of the Commission’s 

rules. For selected participants, 

certifications shall be filed by the lead 

applicant, as well as the legally and 

financially responsible organization, if 

not the same entity. Pilot Program 

support amounts shall only be 

committed by USAC to the extent that 

the requisite certification has been filed. 

The certification must be filed with both 

the Office of the Secretary of the 

Commission, clearly referencing WC 

Docket No. 02–60, and with USAC in 

the form of a sworn affidavit executed 

by a corporate officer attesting to the use 

of the Pilot Program support for the 

approved Pilot Program purposes for 

which support is intended. Selected 

participants and participating service 

providers must also send a courtesy 

copy of their certifications to Antoinette 

Stevens, (202) 418–7387, 

antoinette.stevens@fcc.gov in the 

Telecommunications Access Policy 

Division, Wireline Competition Bureau, 

Federal Communications Commission, 

445 12th Street, SW., Washington, DC 

20554. Failure to certify will result in 

suspension of processing of the selected 

participant’s forms and support. Upon 

receipt and approval of a selected 

participant’s FCC Form 466–A, USAC 

will then issue a FCL for each Pilot 

Program funding year. USAC shall also 

provide the lead project coordinator 

with a copy of an FCL concerning any 

funding request for which it is the lead 

project coordinator. 

79. FCC Form 467 Process. The 

Commission also finds that it is 

necessary to provide selected 

participants with guidance regarding 

how to fill out FCC Form 467 for 

reimbursement. In the third box of 

Block 3 on FCC Form 467, selected 

participants are asked to indicate, 

among other things, whether ‘‘service 

was not (or will not be) turned on 

during the funding year.’’ Selected 

participants should leave the third box 

of Block 3 blank. Instead, the 

Commission directs selected 

participants to notify USAC and the 

Commission, in writing, when the 

approved network project has been 

initiated within 45 calendar days of 

initiation. Selected participants must 

file a copy of this notice with the 

Commission in WC Docket No. 02–60. 

Selected participants must also send a 

courtesy copy of this notification to 

Antoinette Stevens, (202) 418–7387, 

antoinette.stevens@fcc.gov in the 

Telecommunications Access Policy 

Division, Wireline Competition Bureau, 

Federal Communications Commission, 

445 12th Street, SW., Washington, DC 

20554. If the selected participant’s 

network build-out has not been initiated 

within six months of the FCL sent by 

USAC to the selected participant and 

service provider(s) approving funding, 

the selected participant must notify 

USAC and the Commission within 30 

days thereafter explaining when it 

anticipates that the approved network 

project will be initiated. Upon receipt 

and approval of a selected participant’s 

FCC Form 467, USAC will then issue a 

Health Care Provider Support Schedule 

to the health care provider and the 

service provider. The purpose of the 

support schedule is to provide a 

detailed report of the approved 

service(s) and support information for 

each health care provider and service 


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provider. The service provider uses the 

support schedule to determine how 

much credit the health care provider 

will receive each month. Once the 

service provider receives the schedule, 

the provider must start applying 

program discounts to the health care 

provider during the next possible billing 

cycle based on the schedule. Selected 

participants must complete build-out of 

the networks funded by this Pilot 

Program within five years from the date 

of the initial FCL, after which the 

funding commitments made in this 

Order will no longer be available. It is 

appropriate to allow five years for 

selected participants to build out their 

Pilot Program networks. Unlike the ERate program and the existing RHC 

support mechanism which does not 

have deadlines for submitting invoices 

to USAC, the Pilot Program, in keeping 

with its limited scope, imposes a fiveyear invoicing deadline. The 

Commission finds this time period 

sufficient for network build-outs. 

Further, selected participants may not 

receive any Pilot Program support after 

the expiration of the invoice deadline, 

which is five years from receipt of their 

initial FCL for all Pilot Program funding 

years. To the extent that a Pilot Program 

participant fails to meet this build-out 

deadline, the Commission intends also 

to require the applicant repay any Pilot 

Program funds already disbursed. In 

addition, selected participants shall also 

notify the Commission and USAC in 

writing upon completion of the pilot 

project construction and network 

buildout. Selected participants must file 

a copy of this notice with the 

Commission in WC Docket No. 02–60. 

Selected participants must also send a 

courtesy copy of this notification to 

Antoinette Stevens, (202) 418–7387, 

antoinette.stevens@fcc.gov in the 

Telecommunications Access Policy 

Division, Wireline Competition Bureau, 

Federal Communications Commission, 

445 12th Street, SW., Washington, DC 

20554. 

80. USAC Outreach. In addition to the 

filing requirements discussed above, 

each selected participant shall provide 

to USAC within 14 calendar days of the 

effective date of this Order the name, 

mailing address, e-mail address, and 

telephone number of the lead project 

coordinator for the Pilot Program project 

or consortium. Within 30 days of the 

effective date of this Order, USAC shall 

conduct an initial coordination meeting 

with selected participants. USAC shall 

further conduct a targeted outreach 

program to educate and inform selected 

participants on the Pilot Program 

administrative process, including 

various filing requirements and 

deadlines, in order to minimize the 

possibility of selected participants 

making inadvertent ministerial, or 

clerical errors in completing the 

required forms. The Commission also 

directs USAC to notify selected 

participants when each funding year 

begins. The Commission expects that 

these outreach and educational efforts 

will assist selected participants in 

meeting the Pilot Program’s 

requirements. Further, the Commission 

believes such an outreach program will 

increase awareness of the filing rules 

and procedures and will improve the 

overall efficacy of the Pilot Program. 

The Commission also encourages 

selected participants to contact USAC 

with questions prior to filing their FCC 

forms. The direction the Commission 

provides USAC will not lessen or 

preclude any of its review procedures. 

Indeed, the Commission retains its 

commitment to detecting and deterring 

potential instances of waste, fraud, and 

abuse by ensuring that USAC 

scrutinizes Pilot Program submissions 

and takes steps to educate selected 

participants in a manner that fosters 

appropriate Pilot Program participation. 

81. As part of its outreach program, 

USAC shall also conduct educational 

efforts to inform selected participants of 

which network components are eligible 

for RHC Pilot Program support in order 

to better assist selected participants in 

meeting the Pilot Program’s 

requirements. When USAC has reason 

to believe that a selected participant’s 

funding request includes ineligible 

network components or ineligible health 

care providers, USAC shall: (1) Inform 

the selected participant promptly in 

writing of the deficiencies in its funding 

request, and (2) permit the selected 

participant 14 calendar days from the 

date of receipt of notice in writing by 

USAC to revise its funding request to 

remove the ineligible network 

components or facilities for which Pilot 

Program funding is sought or allow the 

selected participant to provide 

additional documentation to show why 

the components or facilities are eligible. 

To the extent a selected participant does 

not remove ineligible network 

components or facilities from the 

funding request, USAC must deny 

funding for those components or 

facilities. The 14-day period should 

provide sufficient time for selected 

participants to modify their funding 

requests to remove ineligible services. 

82. Selected participants must submit 

complete and accurate information to 

USAC as part of the application and 

review process. Selected participants, 

however, will be provided the 

opportunity to cure ministerial and 

clerical errors on their FCC Forms and 

accompanying data submitted to USAC 

pertaining to the Pilot Program. USAC 

shall inform selected participants 

within 14 calendar days in writing of 

any and all ministerial or clerical errors 

that it identifies in a selected 

participant’s FCC Forms, along with a 

clear and specific explanation of how 

the selected participants can remedy 

those errors. USAC shall also inform 

selected participants within this same 

14 calendar days in writing of any 

missing or incomplete certifications. 

Selected participants will be presumed 

to have received notice five days after 

such notice is postmarked by USAC. 

USAC shall, however, continue to work 

beyond the 14 days with selected 

participants attempting in good faith to 

provide documentation. Selected 

participants shall have 14 calendar days 

from the date of receipt of notice in 

writing by USAC to amend or re-file 

their FCC Forms for the sole purpose of 

correcting the ministerial or clerical 

errors identified by USAC. Selected 

participants shall not be permitted to 

make material changes to their 

applications. Selected participants 

denied funding for errors other than 

ministerial or clerical errors are 

instructed to follow USAC’s and the 

Commission’s regular appeal 

procedures. Selected participants that 

do not comply with the terms of this 

Order, section 254 of the 1996 Act, and 

Commission rules and orders will be 

denied funding in whole or in part, as 

appropriate. 

83. Disbursement of Pilot Program 

Funds. USAC will disburse Pilot 

Program funds based on monthly 

submissions (i.e., invoices) of actual 

incurred eligible expenses. The 

Commission notes that several 

applicants requested that awarded funds 

be distributed in a specific manner, 

departing from established USAC 

precedents. For the reasons explained 

herein, Pilot Program funds will be 

distributed as described in this Order. 

Service providers are only permitted to 

invoice USAC for eligible services 

apportioned to eligible health care 

provider network participants. Service 

providers shall submit detailed invoices 

to USAC on a monthly basis for actual 

incurred costs. This invoice process will 

permit disbursement of funds to ensure 

that the selected participants’ network 

projects proceed, while allowing USAC 

and the Commission to monitor 

expenditures in order to ensure 

compliance with the Pilot Program and 

prevent waste, fraud, and abuse. USAC 

shall respond to service provider 


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invoices in accordance with its current 

invoicing payment plan. USAC follows 

a bi-monthly invoicing cycle. Invoices 

received from the 1st through the 15th 

of the month will be processed by the 

20th of the month. Invoices received 

from the 16th through the 31st of the 

month will be processed by the 5th of 

the following month. The Commission 

directs USAC to modify its current 

sample ‘‘RHCD Service Provider 

Invoice’’ for purposes of the Pilot 

Program to ensure consistency with this 

Order. In doing so, USAC shall ensure 

that invoices reflect total incurred 

eligible costs, including those eligible 

costs for which selected participants 

will be responsible, to enable USAC to 

adjust disbursements to service 

providers to 85 percent or less of 

eligible incurred costs. All invoices 

shall also be approved by the lead 

project coordinator authorized to act on 

behalf the health care provider(s), 

confirming the network build-out or 

services related to the itemized costs 

were received by each participating 

health care provider. The lead project 

coordinator shall also confirm and 

demonstrate to USAC that the selected 

participant’s 15 percent funding 

contribution has been provided to the 

service provider for each invoice. 

Further, the Commission expects USAC 

to review data submitted by Pilot 

Program participants to ensure that 

participants’ data submissions are 

consistent with invoices submitted as 

well as to ensure that network 

deployments are proceeding according 

to the approved dedicated network 

plans. Finally, the Commission directs 

USAC to conduct random site visits to 

selected participants to ensure support 

is being used for its intended purposes, 

as well as to conduct site visits as 

necessary and appropriate based on 

USAC’s review of the selected 

participants’ data submissions. If 

funding is disbursed to any service 

provider and the approved network 

project is abandoned or left incomplete, 

the Commission permits USAC to 

pursue recovery of funds from the 

selected participant’s financially and 

legally responsible organization, eligible 

health care providers, or service 

provider, as appropriate. In addition, as 

discussed infra, the Commission may 

seek recovery of funds, assess 

forfeitures, or impose fines if it 

determines that Pilot Program support 

has been used in violation of 

Commission rules or orders, or section 

254 of the 1996 Act. 

8. Waivers 

84. In the 2006 Pilot Program Order, 

the Commission indicated that, after 

they are selected, the selected 

participants would work within the 

confines of the existing RHC support 

mechanism, including the requirement 

‘‘to comply with the existing 

competitive bidding requirements, 

certification requirements, and other 

measures intended to ensure funds are 

used for their intended purposes.’’ The 

Commission indicated, however, that it 

would waive additional program rules if 

such waivers are necessary for the 

successful operation of the Pilot 

Program. After reviewing the 

applications and the requested rule 

waivers, the Commission finds that 

selected participants have not 

demonstrated good cause exists to 

warrant waiving certain Commission 

rules, including the competitive bidding 

rules and the rule prohibiting resale of 

telecommunications services or network 

capacity. Among other reasons, the 

Commission finds requiring selected 

participants to comply with these rules 

will further the goals and principals of 

the 2006 Pilot Program Order and 

protect against waste, fraud, and abuse. 

For the reasons discussed below, 

however, the Commission finds good 

cause to waive the program application 

deadline and to clarify other 

administrative rules related to 

participation in the Pilot Program. 

a. Competitive Bidding 

85. Pursuant to §§ 54.603 and 54.615 

of the Commission’s rules, each eligible 

health care provider must participate in 

a competitive bidding process and 

follow any additional applicable state, 

local, or other procurement 

requirements to select the most costeffective provider of services eligible for 

universal service support under the 

RHC support mechanism. The 

Commission previously granted a 

limited waiver of the rural health care 

program’s competitive bidding and costeffectiveness rules to allow selected 

participants to pre-select Internet2 or 

NLR. The Commission clarifies that this 

waiver only applies to pre-selecting 

Internet2 or NLR and that selected 

participants must follow the 

competitive bidding rules for all other 

service requests. To satisfy the 

competitive bidding requirements, 

selected participants must submit an 

FCC Form 465 that includes a 

description of the services for which the 

health care provider is seeking support 

and wait at least 28 days from the date 

on which this information is posted on 

the USAC’s website before making 

commitments with the selected service 

provider. After selecting a service 

provider, the participant must certify 

that it selected the most cost-effective 

method of providing service. A selected 

Pilot Program participant may select a 

service provider(s) that may be part of 

a pre-existing contract(s), provided that 

the selection of the provider(s) complies 

with the terms of this Order, including 

the Commission’s competitive bidding 

rules. Construction or services 

completed prior to compliance with the 

competitive bidding requirements are 

not eligible for Pilot Program funding. 

Various selected participants request a 

waiver of these competitive bidding 

requirements. The majority of these 

selected participants argue that waivers 

are necessary because they have preselected their preferred service provider 

or would like to select service providers 

without the burden or uncertainty of the 

competitive bidding process. Other 

selected participants argue that waivers 

are necessary because they have already 

contracted with service providers. For 

the reasons discussed below, the 

Commission does not find selected 

participants have demonstrated good 

cause exists for waiving the competitive 

bidding rules. 

86. In establishing the competitive 

bidding process, the Commission 

determined that a competitive bidding 

requirement was necessary to ‘‘help 

minimize the support required by 

ensuring that rural health care providers 

are aware of cost-effective alternatives’’

and ‘‘ensure that the universal service 

fund is used wisely and efficiently.’’

The selected participants requesting 

waivers identify service providers they 

would like to provide service or those 

that are already providing service but 

give no assurance that they are aware of 

other alternatives or that the identified 

providers offer the most cost-effective 

method of providing service. For 

example, Rural Nebraska Healthcare 

Network claims that the competitive 

bidding process is unnecessary because 

Mobius Communications Company is 

‘‘uniquely positioned to bury fiber and 

maintain the system in western 

Nebraska’’ but does not demonstrate 

that Mobius is the most cost-effective 

choice because it does not explain 

whether it sought bids from, or even 

considered providers other than 

Mobius. Similarly, Rural Wisconsin 

Health Cooperative requests a waiver of 

the competitive requirements because it 

has ‘‘identified Charter Communications 

as the optimal provider’’ but does not 

explain if it considered or is aware of 

other providers or why Charter 

Communications is superior to other 

potential providers. The competitive 

bidding requirements are not unduly 

burdensome because, if the service 

provider the selected participant 


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identified in its application is the most 

cost-effective, the selected participant 

can select that service provider after 

completing the competitive bidding 

process; if this service provider is not 

the most cost-effective, then the 

competitive bidding process may 

identify more cost-effective solutions. In 

using the competitive bidding process, 

selected participants will thus have an 

opportunity to identity and select the 

most cost-effective service provider to 

build-out their proposed network 

projects. The competitive bidding 

requirements also will not create any 

unreasonable delays for selected 

participants because the selected 

participant must wait only 28 days from 

the date its service request is posted on 

USAC’s website to select the most costeffective method of providing service. 

Accordingly, the Commission finds 

selected participants have not 

demonstrated that special circumstances 

warrant deviation from §§ 54.603 and 

54.615 of the Commission’s rules. 

87. Requiring all selected participants 

to strictly comply with the competitive 

bidding process is in the public interest 

because the competitive bidding process 

is vital to the Commission’s effort to 

ensure that universal service funds 

support services that satisfy the exact 

needs of an institution in the most costeffective manner. The competitive 

bidding requirements ensure that 

selected participants are aware of the 

most cost-effective method of providing 

service and ensures that universal 

service funds are used wisely and 

efficiently, thereby providing safeguards 

to protect against waste, fraud, and 

abuse. Additionally, the competitive 

bidding rules are consistent with section 

254(h)(2)(A) of the 1996 Act because 

competitive bidding furthers the 

requirement of ‘‘competitively 

neutrality’’ by ensuring that universal 

service support does not disadvantage 

one provider over another, or unfairly 

favor or disfavor one technology over 

the other. The Commission finds that it 

is in the public interest and consistent 

with the 2006 Pilot Program Order to 

require all participants to participate in 

the competitive bidding process. None 

of the selected participants that seek a 

waiver of the competitive bidding 

process offer persuasive evidence to the 

contrary. Accordingly, the Commission 

does not find good cause exists to waive 

the Commission’s competitive bidding 

rules. 

88. Heartland Unified Broadband 

Network seeks a waiver of § 54.611 of 

the Commission’s rules to allow it to be 

reimbursed for equipment that it has 

already ordered. The Commission 

denies this waiver as moot because, as 

explained above, all selected 

participants are required to comply with 

the competitive bidding requirements 

that require soliciting bids prior to 

entering into agreements with providers. 

The Commission also denies this waiver 

because it is inconsistent with the Pilot 

Program goal to only fund the 

construction of new broadband 

facilities. 

89. To further prevent against waste, 

fraud, and abuse, the Commission 

requires participants to identify, when 

they submit their Form 465, to USAC 

and the Commission any consultants, 

service providers, or any other outside 

experts, whether paid or unpaid, who 

aided in the preparation of their Pilot 

Program applications. Pilot Program 

participants must also retain records 

and make available all document and 

records that pertain to them, including 

those of contractors and consultants 

working on their behalf, to the 

Commission’s OIG, to the USF 

Administrator, and to their auditors. 

The Commission also notes that 

sanctions, including enforcement 

action, are appropriate in cases of waste, 

fraud, and abuse. For example, Rocky 

Mountain HealthNet identifies service 

provider participants and a consultant 

who helped prepare its application. 

Also, Northeast HealthNet identifies a 

consultant who helped prepare its 

applications. Identifying these 

consultants and outside experts could 

facilitate the ability of USAC, the 

Commission, and law enforcement 

officials to identify and prosecute 

individuals that may seek to manipulate 

the competitive bidding process or 

engage in other illegal acts. To ensure 

selected participants comply with the 

competitive bidding requirements, they 

must disclose all of the types of 

relationships explained above. 

b. Restriction on Resale 

90. Section 254(h)(3) of the 1996 Act 

provides that ‘‘[t]elecommunications 

services and network capacity provided 

to a public institutional 

telecommunications user under this 

section may not be sold, resold, or 

otherwise transferred by such user in 

consideration for money or any other 

thing of value.’’ The Commission 

interpreted this section to restrict the 

resale of any services purchased 

pursuant to the section 254(h) discount 

for services under the RHC support 

mechanism. Rural Nebraska Healthcare 

Network seeks a waiver, if necessary, of 

the resale prohibition set forth in 

§ 54.617(a) of the Commission’s rules. 

Rural Nebraska Healthcare Network 

argues that this rule should not be 

interpreted to prohibit the provision of 

capacity to for-profit entities or to the 

fiber strands ownership plan detailed in 

its application. 

91. As an initial matter, the 

Commission notes that although the 

Commission has authority to waive 

regulatory requirements, it does not 

have authority to waive a requirement 

imposed by statute. Although Rural 

Nebraska Healthcare Network couches 

its request as one of waiver of the 

Commission’s rules, it is actually 

requesting a waiver of the statute. The 

implementation of rule 54.617(a) flowed 

directly from the plain meaning of the 

statute. Thus, regardless of whether the 

Commission were to waive the rule, the 

statutory prohibition on resale would 

still remain. The Commission 

concludes, because rule 54.617(a) is 

based on a statute, it cannot be waived. 

92. The Commission further notes 

that, the prohibition on resale does not 

prohibit for-profit entities, paying their 

fair share of network costs, from 

participating in a selected participant’s 

network. Section 254(h)(3) of the 1996 

Act and § 54.617(a) of the Commission’s 

rules are not implicated when for-profit 

entities pay their own costs and do not 

receive discounts provided to eligible 

health care providers. A selected 

participant cannot sell its network 

capacity supported by funding under 

the Pilot Program but could share 

network capacity with an ineligible 

entity as long as the ineligible entity 

pays its fair share of network costs 

attributable to the portion of network 

capacity used. To the extent participants 

connect to for-profit entities they may 

do so as long as they comply with 

§ 54.617 and any other applicable 

Commission rules. 

93. To prevent against violation of the 

prohibition on resale of supported 

services and to further prevent against 

waste, fraud, and abuse, the 

Commission requires participants to 

identify all for-profit or other ineligible 

entities, how their fair share of network 

costs was assessed, and proof that these 

entities paid or will pay for their costs. 

Specifically, as part of their reporting 

requirements in Appendix D of this 

Order, selected participants must: 

Provide project contact and 

coordination information; identify all 

health care facilities included in the 

network; provide a network narrative; 

provide a diagram of the planned 

network indicating those facilities 

currently in place; identify the nonrecurring and recurring costs; describe 

how costs have been apportioned and 

the sources of the funds to pay them; 

identify any technical or non-technical 

requirements or procedures necessary 

for ineligible entities to connect to the 


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participant’s network; provide an 

update on the project management plan; 

provide information on the network’s 

self sustainability; and provide detail on 

how the supported network has 

advanced telemedicine benefits. 

c. Eligibility 

94. Texas Health Information Network 

Collaborative and Virginia Acute Stroke 

Telehealth Project request that the 

Commission expand the list of facilities 

eligible for support. Section 254(h)(7)(b) 

of the 1996 Act defines health care 

providers. The Commission adopted 

§ 54.601 of its rules based on a plain 

reading of the statute. In the 2006 Pilot 

Program Order, the Commission 

explained that it would use the 

definition of health care provider found 

in § 54.601 of the Commission rules to 

determine what facilities are eligible for 

support. As explained above, the 

Commission does not have authority to 

waive a requirement imposed by statute. 

The Commission concludes, because 

§ 54.601 is based on a statutory 

requirement, the Commission cannot 

waive § 54.601 and expand the types of 

health care facilities that are eligible for 

support under the Pilot Program. The 

Commission finds however, although 

emergency medical service facilities 

themselves are not eligible providers for 

purposes of the RHC Pilot Program, 

Pilot Program funds may be used to 

support costs of connecting emergency 

medical service facilities to eligible 

health care providers to the extent that 

the emergency medical services facility 

is part of the eligible health care 

provider. 

d. Service Eligibility 

95. The Missouri Telehealth Network 

and Iowa Health System seek a waiver 

of § 54.601(c) of the Commission’s rules 

to ensure that funding under the Pilot 

Program is not restricted to funding 

available under the existing RHC 

support mechanism. Section 54.601 of 

the Commission’s rules identifies which 

services are supported under the 

existing RHC support mechanism. 

Because the Pilot Program provides 

funding to cover the costs associated 

with different facilities and services 

than does the existing support 

mechanism, the Commission finds that 

it is necessary to waive this section of 

our rules. Specifically, Pilot Program 

funding is not limited to the provision 

of telecommunications services and 

Internet access, but rather includes 

funding of infrastructure deployment 

and network design studies, as well. 

Accordingly, the Commission finds 

good cause exists to waive § 54.601(c) of 

the Commission’s rules to enable 

selected participants to receive support 

for the eligible support described above. 

e. Filing Deadline 

96. The deadline for receipt of Pilot 

Program applications was May 7, 2007. 

A number of applicants filed their 

applications one day after the deadline 

on May 8, 2007. Some of these 

applicants filed petitions with the 

Commission seeking a waiver of the 

May 7, 2007, filing deadline. For 

example, Texas Health Information 

Collaborative seeks a waiver because it 

contends it attempted to file its 

application electronically before the 

deadline but, due to technical 

difficulties, its application was received 

at 12:02 a.m. on May 8, 2007. Also, 

Western Carolina University contends it 

should be granted a waiver because 

technical difficulties prevented it from 

timely filing its application. 

97. The Commission finds that good 

cause exists to accept late filed 

applications because the applicants 

provide information and seek funding 

for projects that further the goals of the 

Pilot Program to stimulate deployment 

of innovative telehealth, and in 

particular, telemedicine services to 

those areas of the country where the 

need for those benefits is most acute. 

Furthermore, the late filed applications 

will help further the goals of the Pilot 

Program because they provide the 

Commission with information about 

how to revise the existing RHC support 

mechanism. Accepting these 

applications has not caused any delay; 

indeed, the Commission finds it 

significant that none of the applicants 

missed the filing deadline by more than 

one day. Moreover, many of the late 

applications were mailed before the 

deadline but received after the deadline, 

while other applicants tried 

unsuccessfully to file their applications 

electronically before the deadline. 

Accordingly, the Commission waives 

the May 7, 2007, deadline and accepts 

the applications filed after the deadline. 

The Commission waives this request for 

all applicants that filed late. This 

waiver, however, is not an ongoing 

waiver. The Commission will not 

consider applications that have yet to be 

filed. Further, the Commission clarifies 

that in supra Part D, the Commission 

denies United Health Services’

application based on a review of its 

application, not because it was received 

after the filing deadline. 

f. Distributing Support 

98. Section 54.611 of the 

Commission’s rules sets forth how a 

telecommunications service provider 

may receive universal service support 

for providing service to an eligible 

health care provider. Pursuant to 

§ 54.611, a telecommunications carrier 

providing services eligible for rural 

health care universal support shall 

offset the amount eligible for support 

against its universal service obligation. 

If the total amount of support owed to 

the carrier exceeds its universal service 

payment obligation, calculated on an 

annual basis, the carrier is entitled to 

receive the differential as a direct 

reimbursement. Any reimbursement due 

a carrier, however, shall be made after 

the offset is credited against the carrier’s 

universal service obligation. Any 

reimbursement shall be submitted to a 

carrier no later than the first quarter of 

the calendar year following the year in 

which the costs for the services were 

incurred. 

99. Some selected participants have 

requested a waiver of § 54.611. These 

selected participants claim that a 

different type of distribution process is 

needed for the Pilot Program. For 

example, Rural Nebraska Healthcare 

Network argues that a waiver is 

necessary because the offset provision 

cannot be applied to nontelecommunications carriers and 

support must be distributed in a manner 

that allows for the buildout of the 

proposed networks to proceed 

immediately. Similarly, the California 

Healthcare Network argues that § 54.611 

should be waived to allow nontelecommunications carriers to receive 

funding under the Pilot Program and to 

allow ‘‘USAC to pay vendor(s) monthly 

based on invoiced amounts.’’

100. The Commission finds good 

cause exists to waive § 54.611 of the 

rules, as described herein. The 

Commission agrees with those 

applicants that argue that a waiver is 

necessary for non-telecommunications 

carriers seeking funding. As explained 

above, section 254(h)(2)(A) does not 

limit support to only eligible 

telecommunications carriers. Because 

the rule is drafted to apply to eligible 

telecommunications carriers only, the 

Commission finds it necessary and in 

the public interest to waive it for noneligible telecommunications carriers 

selected to participate in the Pilot 

Program. 

101. The Commission also finds that 

good cause exists to waive this rule to 

permit both telecommunications 

carriers and non-telecommunications 

carriers to be distributed support in the 

same manner. Because § 54.611 requires 

USAC to reimburse carriers the first 

quarter of the calendar year following 

the year in which costs were incurred, 

providers receiving support under the 

Pilot Program could be owed millions of 


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dollars by the time they are reimbursed 

in full. Such a delay in reimbursement 

could jeopardize the timely deployment 

of selected participants’ broadband 

networks, which would be contrary to 

the goals of the Pilot Program to 

stimulate deployment of broadband 

infrastructure necessary to support 

telemedicine services to those areas of 

the country where the needs for those 

benefits is most acute. Additionally, 

§ 54.611 could produce an inequitable 

result by depriving providers of the 

funding flow needed to continue to 

perform their service contracts with 

selected participants because, among 

other things, service providers may 

potentially be unable to meet their 

payment obligations to vendors without 

finding other means of financial 

support. Waiving § 54.611 also serves 

the public interest because it promotes 

the goals of section 254 of the 1996 Act 

to enhance access to advanced 

telecommunications and information 

services for health care providers. 

Accordingly, the Commission finds 

good cause exists to waive § 54.611 and 

instructs all participants, service 

providers, and USAC to follow the 

support distribution method outlined in 

this Order. 

g. Funding Year 2006 Deadline 

102. Selected participants also request 

that the Commission waive the Funding 

Year 2006 deadline. Section 54.623(c)(3) 

of the Commission’s rules establishes 

June 30 as the deadline for all required 

forms to be filed with USAC for the 

funding year that begins on the previous 

July 1. Therefore, for funding year 2006, 

the deadline is June 30, 2007. Although 

participants were selected after the June 

30, 2007 deadline, a waiver of § 54.623 

is not necessary because, as detailed in 

supra section III.B, Funding Year 2006 

Pilot Program support will be rolled 

over to Funding Year 2007, and Year 

One of the RHC Pilot Program will begin 

in Funding Year 2007. The Commission 

therefore, finds these waiver requests 

are moot. 

h. Other Waiver Requests 

103. The Pilot Program is broader in 

scope than the existing RHC support 

mechanism because it provides funding 

for up to 85 percent of eligible costs 

associated with the construction of 

dedicated broadband health care 

network capacity that connects health 

care providers in a state and region. In 

contrast, the existing RHC support 

mechanism is designed to ensure that 

rural health care providers pay no more 

than their urban counterparts for their 

telecommunications needs. Because the 

Pilot Program and existing RHC support 

mechanism support different network 

connections related to rural health care, 

many of the rules that apply to the 

existing program may not apply to the 

Pilot Program. Various participants note 

that the Commission’s rules for the 

existing RHC support mechanism are 

either inapplicable or should be waived 

to achieve the goals of the Pilot 

Program. In particular, participants 

request waivers of and specific 

deviation from Commission rules to 

allow: (1) Funding for services supplied 

by providers who are not 

telecommunications carriers or Internet 

service providers; (2) non-rural eligible 

entities to directly request funding 

under the Pilot Program; (3) selected 

participants to receive funding for 

services that exceed the maximum 

supported distance for rural health care 

providers and not base support on the 

difference between the urban and rural 

rate; and (4) support to be based on 

actual costs, not the difference between 

the urban and rural rate. The 

Commission agrees with these 

commenters that many of these rules 

may be inapplicable to the Pilot 

Program but, to the extent any rule is 

inapplicable, selected participants must 

follow the eligibility requirements 

detailed in this Order and section 254 

of the 1996 Act. 

104. First, funding under the Pilot 

Program is not limited to 

telecommunications providers. As 

discussed above, the Commission 

established the Pilot Program under the 

authority of section 254(h)(2)(A) of the 

1996 Act, which does not limit support 

to only eligible telecommunications 

carriers. In the 2006 Pilot Program 

Order, the Commission explained that 

eligible health care providers may 

choose any technology and provider of 

supported services and may utilize any 

currently available technology. 

Accordingly, service providers who 

participate in the competitive bidding 

process do not need to be eligible 

telecommunications carriers to receive 

Pilot Program funds. For example, a 

selected participant may choose to have 

the network design studies done by a 

non-telecommunications carrier. If a 

service provider is not a 

telecommunications carrier, certain 

rules providing support only to 

telecommunications carriers are 

inapplicable to the extent they do not 

contemplate funding to nontelecommunications carriers for the 

purpose of the Pilot Program. 

105. Second, funding under the Pilot 

Program is not limited to rural health 

care providers. Consistent with the 

mandate provided in section 

254(h)(2)(A) and general principles of 

universal service, in the 2006 Pilot 

Program Order, the Commission opened 

participation in the Pilot Program to all 

eligible public and non-profit health 

care providers to promote the Pilot 

Program goal of stimulating the 

deployment of innovative telehealth 

networks that will link rural health care 

facilities to urban health care facilities 

and provide telemedicine services to 

rural communities. Applicants, 

however, were instructed to include in 

their proposed networks public and 

non-profit health care providers that 

serve rural areas. Accordingly, eligible 

non-rural health care providers may 

receive funding under the Pilot Program 

order. To the extent the rules that 

govern the existing RHC support 

mechanism do not contemplate funding 

eligible non-rural health care providers, 

they are inapplicable. Non-rural eligible 

health care providers should follow the 

steps detailed supra, section II.E.7. 

106. Third, the existing RHC support 

mechanism limits support to a 

maximum supported distance. The Pilot 

Program differs because it explicitly 

provides funding for deploying 

dedicated broadband capacity that 

connects health care providers in a state 

or region and does not set maximum 

supported distances. Specifically, the 

‘‘purpose of the pilot program is to 

encourage health care providers to 

aggregate their connections needs to 

form a comprehensive statewide or 

regional dedicated health care 

network.’’ Accordingly, to the extent 

distance limitation rules conflict with 

the goals of the Pilot Program to create 

state and regional networks, the rules 

are inapplicable. 

107. Fourth, the Pilot Program 

provides funding for up to ‘‘85% of an 

applicant’s costs of deploying a 

dedicated broadband network, 

including any necessary network design 

studies, as well as the costs of advanced 

telecommunications and information 

services that will ride over the 

network.’’ The Commission recognized 

that the funding percentage under the 

Pilot Program exceeds the funding 

percentages under the existing RHC 

support mechanism. Unlike the existing 

RHC support mechanism, the Pilot 

Program does not use the difference 

between the urban rate and the rural 

rate to calculate support. Accordingly, 

the rules for calculation of support do 

not apply to Pilot Program participants. 

9. Other Administrative Issues 

108. The Commission also clarifies 

that selected participants may not 

receive funds for the same services 

under the Pilot Program and either the 

existing universal service programs—


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which consist of the RHC support 

mechanism, the E-Rate program, the 

High-Cost program, and the Low Income 

program—or other federal programs, 

including, e.g., federal grants, awards, or 

loans. For example, funds received by 

Pilot Program selected participants as 

part of their participation in the existing 

RHC support mechanism may not be 

used by selected participants to offset 

costs for the same services incurred as 

a result of participation in the Pilot 

Program. The Commission, the Wireline 

Competition Bureau (Bureau), and 

Office of Inspector General (OIG), 

maintain the authority to investigate 

and enforce program violations, 

including against selected participants 

who violate this prohibition, and to 

recover funds used for unauthorized 

purposes. 

109. The Commission also seeks the 

timely and effective implementation of 

the three-year Pilot Program. To 

expedite implementation, and 

consistent with §§ 0.91 and 0.291 of the 

Commission’s rules, the Commission 

delegates to the Bureau the authority to 

waive the relevant sections of subpart G 

of part 54 of the Commission’s rules for 

selected participants to the extent they 

prove unreasonable or inconsistent with 

the sound and efficient administration 

of the Pilot Program. In instances where 

a selected participant, including a 

consortium, is unable to participate in 

the Pilot Program for the three-year term 

due to extenuating circumstances, a 

successor may be designated by the 

Bureau upon request. 

III. Oversight of the Pilot Program 

110. The Commission is committed to 

guarding against waste, fraud, and 

abuse, and ensuring that funds 

disbursed through the Pilot Program are 

used for appropriate purposes. In 

particular, the Commission intends to 

conduct audits of all selected 

participants and service providers and, 

if necessary, investigations of any 

selected participants and service 

providers to determine compliance of 

selected participants with the Pilot 

Program, Commission rules or orders, 

and section 254 of the 1996 Act. The 

beneficiary or service provider will be 

required to comply fully with the 

requirements of the audits including, 

but not limited to, providing full access 

to accounting systems and its reports, 

source documents, employees, 

contractors, and internal and external 

audit reports that are involved in whole 

or in part in the administration of this 

Pilot Program. This includes presenting 

personnel to testify, under oath, at a 

deposition if requested by of the Office 

of Inspector General. Such audits or 

investigations may provide information 

showing that a beneficiary or service 

provider failed to comply with the 1996 

Act or Commission rules, and thus may 

reveal instances in which Pilot Program 

awards were improperly distributed or 

used. The Commission also delegates 

authority to the Bureau to revoke 

funding awarded to any selected 

participant making unapproved material 

changes to the network design plan set 

forth in their initial Pilot Program 

application. The Commission reiterates 

that payment may be suspended if the 

project appears not to be consistent with 

the approved network plan. To the 

extent the Commission finds that funds 

were distributed and/or used 

improperly, the Commission will 

require USAC to recover such funds 

though its normal processes, including 

adjustment of support amounts by 

selected participants or service 

providers in other universal service 

programs from which they receive 

support. The Commission intends that 

funds disbursed in violation of a 

Commission rule that implements 

section 254 or a substantive program 

goal will be recovered. Sanctions, 

including enforcement action, are 

appropriate in cases of waste, fraud, and 

abuse, but not in cases of clerical or 

ministerial errors. If a selected 

participant or service provider fails to 

comply with Commission rules, orders, 

or mandatory filings, the Commission 

also has the authority to assess 

forfeitures for violations of Commission 

rules and orders. In addition, selected 

participants and service providers that 

willfully make false statements can be 

punished by fine or forfeiture under 

sections 502 and 503 of the 

Communications Act, or fine or 

imprisonment under Title 18 of the 

United States Code. Further, the 

Commission has found that ‘‘debarment 

of applicants, service providers, 

consultants, or others who have 

defrauded the USF is necessary to 

protect the integrity of the universal 

service programs.’’ Therefore, the 

Commission intends to suspend and 

debar parties from the Pilot Program 

who are convicted of or held civilly 

liable for the commission or attempted 

commission of fraud and similar 

offenses arising out of their 

participation in the Pilot Program or 

other universal service programs. The 

Commission emphasizes that the 

Commission retains the discretion to 

evaluate the uses of monies disbursed 

through the RHC Pilot Program and to 

determine on a case-by-case basis 

whether waste, fraud, or abuse of 

program funds occurred and whether 

recovery is warranted. The Commission 

remains committed to ensuring the 

integrity of the program and will 

aggressively pursue instances of waste, 

fraud, and abuse under the 

Commission’s procedures and in 

cooperation with law enforcement 

agencies. In doing so, the Commission 

intends to use any and all enforcement 

measures, including criminal and civil 

statutory remedies, available under law. 

The Commission will also monitor the 

use of awarded monies and develop 

rules and processes as necessary to 

ensure that funds are used in a manner 

consistent with the goals of the Pilot 

Program. Finally, the Commission 

reminds selected participants that 

nothing in this Order relieves them of 

their obligations to comply with other 

applicable federal laws and regulations. 

IV. Reporting Requirements 

111. Upon completion of the Pilot 

Program, the Commission intends to 

issue a report detailing the results of the 

program, its status, and recommended 

changes. In addition, the Commission 

intends to incorporate any information 

gathered as part of the Pilot Program in 

the record in any subsequent proceeding 

to reform the rural health care 

mechanism. To assist the Commission 

in this task, the Commission requires 

selected participants to submit to USAC 

and the Commission quarterly reports 

containing data listed in Appendix D of 

this Order. These data will serve as a 

guide for further Commission action by 

informing the Commission’s 

understanding of cost-effectiveness and 

efficacy of the different state and 

regional networks funded. These data 

will also enable the Commission to 

ensure RHC program funds are being 

used in a manner consistent with 

section 254 of the 1996 Act, this Order, 

and the Commission’s rules and orders. 

In particular, collection of this data is 

critical to the goal of preventing waste, 

fraud, and abuse by ensuring that 

funding is flowing through to its 

intended purpose. Also, we note that 

selected participants will be subject to 

audit oversight as discussed and, as 

such, the Commission will evaluate the 

allocation methods selected by selected 

participants in the course of its audit 

activities to ensure program integrity 

and to ensure that providers are 

complying with the program’s 

certification requirements. The 

certification requirements for rural 

health care providers are set forth at 47 

CFR 54.615(c). 

112. The first quarterly report shall be 

due after two full quarters have passed 

following the effective date of this Order 

and shall include responsive data from 


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1See 47 CFR 0.111(a)(14), 54.521. 

2Letter from Hillary S. DeNigro, Chief, 

Investigations and Hearings Division, Enforcement 

Bureau, Federal Communications Commission, to 

Mrs. Evelyn Myers Scott, Notice of Suspension and 

Initiation of Debarment Proceedings, 22 FCC Rcd 

18613 (Inv. & Hearings Div., Enf. Bur. 2007) 

(Attachment 1). 

3 72 Fed. Reg. 62477 (November 5, 2007). 

4See Notice of Suspension, 22 FCC Rcd at 18614–

15. 

5See 47 CFR 54.521(e)(3) and (4). That date 

occurred no later than December 5, 2007. See supra 

note 3. 

the effective date of the Order to the 

then-most recent month. These reports 

will be due on the 30th day of the 

month beginning each quarter and 

include data for the prior three months. 

Thus, reports will be due as appropriate 

on January 30 (including responsive 

data for the prior October to December), 

April 30 (including responsive data for 

the prior January to March), July 30 

(including responsive data for the prior 

April to June), and October 30 

(including responsive data for the prior 

July to September). Reports will be 

required for a 72-month period 

following the initial due date unless the 

Bureau extends this deadline. Quarterly 

reports shall also have responsive data 

separated by month. 

113. Failure to provide the data will 

result in either the elimination of the 

selected participant from the Pilot 

Program, loss or reduction of support, or 

recovery of prior distributions. In 

accordance with § 54.619 of the 

Commission’s rules, health care 

providers and selected participants 

must also keep supporting 

documentation for these reports for five 

years and present that information to 

the Commission or USAC upon request. 

V. Procedural Matters 

A. Paperwork Reduction Act Analysis 

114. This document contains new or 

modified information collection 

requirements subject to the Paperwork 

Reduction Act of 1995 (PRA), Public 

Law 104–13. It will be submitted to the 

OMB for review under section 3507(d) 

of the PRA. OMB, the general public, 

and other federal agencies are invited to 

comment on the new information 

collection requirements contained in 

this proceeding. 

VI. Ordering Clause 

115. Pursuant to the authority 

contained in sections 1, 4(i), 4(j), 10, 

201–205, 214, 254, and 403 of the 

Communications Act of 1934, as 

amended, 47 U.S.C. 151, 154(i), 154(j), 

10, 201–205, 214, 254, and 403, this 

Order is adopted. The information 

collection contained in this Order will 

become effective following OMB 

approval. The Commission will publish 

a document at a later date establishing 

the effective date. 

Federal Communications Commission. 

Marlene H. Dortch, 

Secretary. 

[FR Doc. 08–684 Filed 2–13–08; 8:45am] 

BILLING CODE 6712–01–P 

FEDERAL COMMUNICATIONS 

COMMISSION 

[DA 08–49] 

Notice of Debarment; Schools and 

Libraries Universal Service Support 

Mechanism 

AGENCY: Federal Communications 

Commission. 

ACTION: Notice. 

SUMMARY: The Enforcement Bureau (the 

‘‘Bureau’’) debars Mrs. Evelyn Myers 

Scott from the schools and libraries 

universal service support mechanism 

(or ‘‘E-Rate Program’’) for a period of 

three years based on her conviction of 

conspiracy to defraud the United States 

in connection with her participation in 

the program. The Bureau takes this 

action to protect the E-Rate Program 

from waste, fraud and abuse. 

DATES: Debarment commences on the 

date Mrs. Evelyn Myers Scott receives 

the debarment letter or February 14, 

2008, whichever date comes first, for a 

period of three years. 

FOR FURTHER INFORMATION CONTACT: 

Diana Lee, Federal Communications 

Commission, Enforcement Bureau, 

Investigations and Hearings Division, 

Room 4–C330, 445 12th Street, SW., 

Washington, DC 20554. Diana Lee may 

be contacted by phone at (202) 418–

0843 or e-mail at diana.lee@fcc.gov. If 

Ms. Lee is unavailable, you may contact 

Ms. Vickie Robinson, Assistant Chief, 

Investigations and Hearings Division, by 

telephone at (202) 418–1420 and by 

e-mail at vickie.robinson@fcc.gov. 

SUPPLEMENTARY INFORMATION: The 

Bureau debarred Mrs. Evelyn Myers 

Scott from the schools and libraries 

universal service support mechanism 

for a period of three years pursuant to 

47 CFR 54.521 and 47 CFR 0.111(a)(14). 

Attached is the debarment letter, DA 

08–49, which was mailed to Mrs. Evelyn 

Myers Scott and released on January 9, 

2008. The complete text of the notice of 

debarment is available for public 

inspection and copying during regular 

business hours at the FCC Reference 

Information Center, Portal II, 445 12th 

Street, SW., Room CY–A257, 

Washington, DC 20554. In addition, the 

complete text is available on the FCC’s 

Web site at http://www.fcc.gov. The text 

may also be purchased from the 

Commission’s duplicating inspection 

and copying during regular business 

hours at the contractor, Best Copy and 

Printing, Inc., Portal II, 445 12th Street, 

SW., Room CY–B420, Washington, DC 

20554, telephone (202) 488–5300 or 

(800) 378–3160, facsimile (202) 488–

5563, or via e-mail http:// 

www.bcpiweb.com. 

Federal Communications Commission. 

Trent B. Harkrader, 

Deputy Chief, Investigations and Hearings 

Division, Enforcement Bureau. 

The debarment letter, which attached 

the suspension letter, follows: 

January 9, 2008 

[DA 08–49] 

VIA CERTIFIED MAIL 

RETURN RECEIPT REQUESTED FACSIMILE 

(404–261–2842) 

Mrs. Evelyn Myers Scott, 

c/o Charles M. Abbott, Esq., 

C. Michael Abbott, P.C., 

3127 Maple Drive, NE., 

Atlanta, GA 30305–2503, 

E-Mail: michael@michaelabbottlaw.com 

Re: Notice of Debarment, File No. EB–07–IH– 

7305 

Dear Mrs. Scott: 

Pursuant to section 54.521 of the rules of 

the Federal Communications Commission 

(the ‘‘Commission’’), by this Notice of 

Debarment you are debarred from the schools 

and libraries universal service support 

mechanism (or ‘‘E-Rate program’’) for a 

period of three years.1

On October 18, 2007, the Enforcement 

Bureau (the ‘‘Bureau’’) sent you a Notice of 

Suspension and Initiation of Debarment 

Proceedings (the ‘‘Notice of Suspension’’).2

That Notice of Suspension was published in 

the Federal Register on November 5, 2007.3

The Notice of Suspension suspended you 

from the schools and libraries universal 

service support mechanism and described 

the basis for initiation of debarment 

proceedings against you, the applicable 

debarment procedures, and the effect of 

debarment.4

Pursuant to the Commission’s rules, any 

opposition to your suspension or its scope or 

to your proposed debarment or its scope had 

to be filed with the Commission no later than 

thirty (30) calendar days from the earlier date 

of your receipt of the Notice of Suspension 

or publication of the Notice of Suspension in 

the Federal Register.5 The Commission did 

not receive any such opposition. 

As discussed in the Notice of Suspension, 

you pled guilty to and were convicted of 

conspiracy to defraud the United States, in 

violation of 18 U.S.C. 371, for activities in 

connection with your participation in the ERate program involving the Atlanta Public 


rwilkins on PROD1PC63 with NOTICES