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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       )                        
               )
Yelm Community Schools                  )    File No. SLD-109156
Yelm, WA                           )
                                   )
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 Common Carrier Bureau has under consideration a Letter of Appeal from
Yelm Community Schools (Yelm), dated June 21, 1999, seeking review of a decision issued by
the Schools and Libraries Division (SLD) of the Universal Service Administrative Company
(Administrator).  Yelm 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 described 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 26, 1999, the SLD denied Yelm's request for discounts. 
Yelm appealed the SLD's decision by letter dated February 19, 1999.  On May 24, 1999, the SLD
affirmed its initial funding decision.  The Administrator's Decision on Appeal indicated that
services listed by Yelm as Internet access included some internal connection services.  It further
indicated that where a particular funding request included some internal connections, the entire
funding request was recategorized by SLD as internal connection services so as to "avoid the
possibility of treating priority two services (Internal Connections) as priority one services
(Telecommunications, Dedicated and Internet Access services)." Because internal connections are
funded only when a discount level of 70 percent or above has been shown, these services could
not be supported for this funding period.  

     4.   Yelm maintains that the service at issue that was reclassified as internal
connections by SLD is a bundled service consisting of copper T1 service.  As such, Yelm claims it
should properly be reclassified as a telecommunications service. 

     5.    We agree with Yelm that, for the purpose of obtaining universal service discounts,
copper T1 service is generally classified as telecommunications service unless it is dedicated to
Internet access.  We note that, in Williamsburg-James City,  the Commission determined that, in
cases where, as here, an FCC Form 471 was submitted before the establishment of the
Commission's rules of priority in the Fifth Reconsideration Order, appeals involving applications
that were denied because of the inclusion of some internal connections should be remanded to
SLD for reprocessing so that priority one and priority two services could be considered separately
on their own merits. We, therefore, remand Yelm's application and direct SLD to issue a new
funding commitment decision letter based on the originally submitted FCC Form 471 and any
further consultations with the applicant that may be necessary.  We further direct the SLD to
determine the extent to which the T1 service at issue should be reclassified.

     6.   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 Yelm Community Schools on June 21, 1999 IS
GRANTED to the extent provided herein. 

     7.   IT IS FURTHER ORDERED that the Administrator IS DIRECTED to implement
this decision.                     
     
                         FEDERAL COMMUNICATIONS COMMISSION

                         
                         Yog R. Varma
                         Deputy Chief, Common Carrier Bureau