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                            Before the
                Federal Communications Commission
                      Washington, D.C. 20554

                                   )         
In the Matter of                        )    
                                   )
Request for Review                      )
of the Decision of                      )
the Universal Service Administrator by  )
                                   )    
Gallup-McKinley County Schools               )                        
     Gallup, New Mexico                      )    File No. SLD-77079
                                   )
Federal-State Joint Board on Universal Service    )    CC Docket No. 96-45
                                   )    
Changes to the Board of Directors of the          )    CC Docket No. 97-21
National Exchange Carrier Association, Inc.  )
                                   

                                  ORDER


     Adopted:  October 20, 1999                    Released:  October 20, 1999

By the Common Carrier Bureau:

     1.   The Common Carrier Bureau has under consideration a Letter of Appeal, filed July
22, 1999, by the Gallup-McKinley County Schools (Gallup-McKinley), seeking review of a
decision issued by the Schools and Libraries Division (SLD) of the Universal Service
Administrative Company (USAC or Administrator).  Gallup-McKinley seeks review of the SLD's
denial of the application it filed for internal connections under the schools and libraries universal
service support mechanism.  For the reasons set forth below, we deny the Letter of Appeal and
affirm the SLD's denial of Gallup-McKinley's application for discounts for internal connections.

     2.   Under the schools and libraries universal service support mechanism, eligible
schools, libraries, and consortia that include eligible schools and libraries, may apply for discounts
for eligible telecommunications services, Internet access, and internal connections.  The window for the
filing of applications, such as Gallup-McKinley's, for the first funding year closed on April 15, 1998. 
     
     3.   By letter dated February 18, 1999, the SLD denied Gallup-McKinley's request for discounts for internal connections provided by IBM
because "[a] significant portion of the request includes a request for WAN [wide area network] connections, [a] Firewall Server, NetVista Servers and software
which are ineligible product(s) servic (sic)."  Gallup-McKinley appealed the SLD's decision by letter dated February 26, 1999.  On June 28, 1999, the SLD affirmed
its initial funding decision and denied Gallup-McKinley's appeal.  Specifically, the Administrator's Decision on Appeal explained that the internal connections
service to be provided by IBM contains "components, (such as NetVista, the firewall server and WAN cabling) which are ineligible for funding under the E-rate
program and other items for which we were unable to identify a qualified contract under the E-rate program."  Moreover, the Administrator noted that "[t]here
were differences, which appear to be substantial, between the documentation which was submitted during the initial application period and the documentation that
was submitted both with your appeal and in response to recent inquiries."

     4.   In its Letter of Appeal to the Commission, Gallup-McKinley challenges the SLD's denial of its request for internal connections discounts. 
Although Gallup-McKinley concedes that the original contract between Gallup-McKinley and IBM included the construction of a WAN, it claims that it rewrote the
IBM contract "with change order number 2 which was signed on or about April 7, 1999, removing the entire WAN from the IBM contract" and that "a new
contract with US West was signed April 7, 1998, to lease the WAN as per the change order from the FCC."  Gallup-McKinley's Form 471 application is dated
April 7, 1998.   

     5.   We have carefully reviewed Gallup-McKinley's application as well as the SLD's records relating to this application, and we conclude that
the SLD properly denied Gallup-McKinley's application for the discounts at issue here.  Gallup-McKinley asserts that it amended its IBM contract in response to the
Commission's Fourth Order on Reconsideration, which was published in the Federal Register on January 13, 1998, three months before the close of the application
filing window.  

     6.   Review of the SLD's records reveals, however, that the SLD received no documentation from Gallup-McKinley during the application
processing period reflecting a change in its contract with IBM to remove the purchase of the WAN.  According to the SLD, and as evidenced by the SLD's records,
reference to the Change Request #02 Gallup-McKinley refers to in its Letter of Appeal first appeared with its own initial appeal to the SLD, dated February 26,
1999.  While Gallup-McKinley did provide SLD with a copy of an April 6, 1998 letter from US West regarding potential leasing of the network, this letter only
documents that Gallup-McKinley and US West "intend to negotiate and execute an agreement" for the proposed network.  The letter further provides that if
negotiations were not complete by April 27, 1998, neither party was obligated for the services under negotiation.   Gallup-McKinley failed to provide SLD with any
further documentation to reflect an executed contract to lease a network from US West.  Thus, not only did SLD have no evidence that the contract for the purchase
of a WAN from IBM had been changed, but it also had no final contract reflecting a lease agreement with US West.  

     7.   We therefore conclude that the application that was before SLD contravened section 54.518 of the Commission's rules, which provides that
the purchase of WANs to provide telecommunications services is ineligible for universal service discounts.  In light of these findings, we conclude that, based on the
record, SLD correctly denied funding for Gallup-McKinley's internal connections request.

     8.   ACCORDINGLY, IT IS ORDERED, pursuant to authority delegated under sections 0.91, 0.291, and 54.722(a) of the Commission's
rules, 47 C.F.R.  0.91, 0.291, and 54.722(a), that the appeal filed by Gallup-McKinley County Schools on July 22, 1999, IS DENIED.

                              FEDERAL COMMUNICATIONS COMMISSION



                              Lisa M. Zaina
                              Deputy Chief, Common Carrier Bureau