May 7, 1997 FCC Universal Service Order
Section X (regarding Schools and Libraries).
FCC 97-157.
Federal-State Joint Board on Universal Service, CC Docket No. 96-45, Report and Order.
12 FCC Rcd 8776 (1997).

Source: FCC.  This document does not include footnotes from the original.

X. Schools and Libraries

A. Overview.

B. Telecommunications Carrier Functionalities and Services Eligible for Support.

C. Discount Methodology.

D. Restrictions Imposed on Schools and Libraries.

E. Funding Mechanisms for Schools and Libraries.

F. Access to Advanced Telecommunications and Information Services.

G. Sections 706 and 708 of the 1996 Act.

H. Initiation.

E.  Funding Mechanisms for Schools and Libraries

1. Background

583. Section 254(d) provides that "[e]very telecommunications carrier that provides interstate telecommunications services shall contribute, on an equitable and nondiscriminatory basis, to the specific, predictable, and sufficient mechanisms established by the Commission to preserve and advance universal service." Section 254(h)(1)(B) states that a telecommunications carrier providing services to schools and libraries shall:

(i) have an amount equal to the amount of the discount treated as an offset to its obligation to contribute to the mechanisms to preserve and advance universal service, or

(ii) . . . receive reimbursement utilizing the support mechanisms to preserve and advance universal service.

584. In the Recommended Decision, the Joint Board recommended that the universal service administrator distribute support for schools and libraries from the same funds used to support other services under section 254, and that the administrator maintain separate accounting categories. The Joint Board also concluded that section 254(h)(1)(B) requires that a telecommunications carrier providing services to schools and libraries be permitted either to apply the amount of the discount afforded to schools and libraries as an offset to its universal service obligations or to be reimbursed for that amount from the universal service support mechanism.

2. Discussion

585. Separate Funding Mechanisms. We concur with the Joint Board's recommendation that the universal service administrator distribute support for schools and libraries from the same source of revenues used to support other universal service purposes under section 254 because we agree with the Joint Board's conclusion that establishing separate funds would yield minimal, if any, improvement in accountability, while imposing unnecessary administrative costs. We share Ameritech's concern that we must ensure proper accountability for and targeting of the funds for schools and libraries. We agree with the Joint Board that this goal is achievable if the fund administrator maintains separate accounting categories.

586. Offset versus Reimbursement. Section 254(h)(1)(B) requires that a telecommunications carrier providing services to schools and libraries shall either apply the amount of the discount afforded to schools and libraries as an offset to its universal service contribution obligations or shall be reimbursed for that amount from universal service support mechanisms. We agree with the Joint Board's conclusion that section 254(h)(1)(B) requires that service providers be permitted to choose either reimbursement or offset. Consistent with EDLINC's suggestion, we reject GTE's proposal to permit service providers to demand full payment from schools and libraries, which would require the institutions to secure direct reimbursement from the administrator. We conclude that requiring schools and libraries to pay in full could create serious cash flow problems for many schools and libraries and would disproportionately affect the most disadvantaged schools and libraries. For purposes of administrative ease, we conclude that service providers, rather than schools and libraries, should seek compensation from the universal service administrator. Many telecommunications carriers will already be receiving funds from the administrator for existing high cost and low-income support, and the administrator would often be dealing with the same entities for the schools and libraries program. To require schools and libraries to seek direct reimbursement would also burden the administrator because of the large number of new entities that would be receiving funds. The GTE proposal would likely lead to monthly disbursements to tens of thousands of schools, school districts, and library systems, without yielding lower costs to either the support programs or schools or libraries.

Go to Section F. Access to Advanced Telecommunications and Information Services.