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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       )                        
               )
Our Lady of Mercy School                )    File No. SLD 53690       
Hicksville, New York                    )                   
                                   )
Federal-State Joint Board on Universal Service    )    CC Docket No. 96-45
                                   )
Changes to the Board of Directors            )    CC Docket No. 97-21
of the National Exchange Carrier             )    
Association, Inc.                       )
                                   
                                
                             ORDER

Adopted:  November 16, 1999                  Released:  November 16, 1999
                    
By the Common Carrier Bureau:

     1.   The Bureau has under consideration a Letter of Appeal filed by Our Lady of
Mercy School (Our Lady of Mercy) on June 1, 1999, seeking review of a decision issued by the
Schools and Libraries Division (SLD) of the Universal Service Administrative Company
(Administrator).  Our Lady of Mercy seeks review of the SLD's denial of its application for
discounts under the schools and libraries universal service support mechanism.  For the reasons
set forth below, we grant the Letter of Appeal to the extent provided herein.

     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.  


     3.   By letter dated January 19, 1999, the SLD denied Our Lady of Mercy's request for
discounts.  Our Lady of Mercy appealed the SLD's decision by letter dated January 27, 1999.  In
its letter, Our Lady of Mercy indicated that, although the services for which funding was denied
were listed as internal connections on its FCC Form 471, in fact these services are shared
telecommunications and Internet access services.  On May 3, 1999, the SLD affirmed its initial
funding decision.  The Administrator's Decision on Appeal upheld that original decision and stated
that the denied funding request was categorized as internal connections for which Our Lady of
Mercy was not entitled to discounts because it did not have a discount level of at least 70 percent. 
It further indicated that SLD policy does not allow alteration of funding requests. 

     4.   In its request for review of the SLD's decision that is now before us, Our Lady of
Mercy explains that it inadvertently mischaracterized the services and again requests that it
receive discounts for services that are categorized accurately as Internet access and
telecommunications services.

     5.    In Williamsburg-James City, the Commission considered SLD's policy of
reclassifying priority one services in circumstances where they were combined in the same funding
request number (FRN) with priority two services.  This reclassification resulted in funding denials
for services that, but for the fact that they were commingled with priority two services, would
have been eligible for universal service discounts.  The Commission held that, in cases where an
FCC Form 471 was submitted before the establishment of the Commission's rules of priority in the
Fifth Reconsideration Order, applicants could not have been aware of the need to segregate
carefully their service requests.  The Commission determined that, in appeals involving such
circumstances, applications should be remanded to SLD for reprocessing, with priority one and
priority two services being considered separately on their own merits. 

     6.   We believe that the same reasoning applies in this case.  Our Lady of Mercy's
application was filed before the release of the Fifth Reconsideration Order.  Consequently, it
could not have known of the importance of accurately classifying services as either
telecommunications and Internet access (priority one) or as internal connections (priority two).
Prior to the release of the Fifth Reconsideration Order, applicants reasonably expected to receive
discounts for all eligible services, no matter how they were classified.  Thus, Our Lady of Mercy
was not on notice that an error on its FCC Form 471 with respect to this classification could
result in its being denied discounts for services for which it would otherwise have been eligible. 
We agree with SLD that funding requests generally cannot substantively be altered after the close
of the filing window.  Here, however, Our Lady of Mercy did not seek to make any substantive
changes to its request.  According to the school, the services for which it seeks discounts are, and
always have been, telecommunications services.  Our Lady of Mercy merely requests that it be
allowed to designate them as such. 

     7.   But for its mistake in labelling its originally requested services as internal
connections, it appears to us that Our Lady of Mercy may well have been entitled to discounts for
the services listed in the three FRN's in dispute in this case.  We, therefore, remand Our Lady of
Mercy's application to SLD and direct SLD to issue a new funding commitment decision letter
based on the applicant's corrected FRN classifications and any further consultations with the
applicant that may be necessary.       
     
     8.   To effectuate the decision above, we recognize that it may be necessary to waive
section 54.507(b)(2) of the Commissions rules.  This rule provides that schools and libraries may
receive discounts on nonrecurring services only through September 30, 1999.  To the extent
necessary, we hereby waive this rule for a period of 180 days from the date of issuance of a
Funding Commitment Letter by the Administrator pursuant to this order.  

     9.   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 Letter of Appeal filed by Our Lady of Mercy School on June 1, 1999 IS
GRANTED to the extent provided herein. 

     10.  IT IS FURTHER ORDERED, pursuant to sections 0.91 and 0.291 of the
Commission's rules, 47 C.F.R.  0.91, 0.291, that section 54.507(b)(2) of the Commission's
rules, 47 C.F.R. 54.507(b)(2), IS WAIVED for a period of up to 180 days following the date of
issuance of a Funding Commitment Letter by the Administrator pursuant to this order.

     11.   IT IS FURTHER ORDERED that the Administrator IS DIRECTED to
implement the decision herein.                    
                              
               
                              FEDERAL COMMUNICATIONS COMMISSION


                              

                              Yog. R. Varma
                              Deputy Chief, Common Carrier Bureau