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Before the
Federal Communications Commission
Washington, DC  20554

In the Matter of                   )
                                   )
Request for Review of the          )
Decision of the                    )
Universal Service Administrator by )
                                   )
Ozarks Unlimited Resources Cooperative  )
Harrison, Arkansas                 )
                                   )
On behalf of the Greenbrier School District  )    File No. SLD-49050
                                   )
Federal-State Joint Board on       )    CC Docket No.  96-45
Universal Service                  )
                                   )
Changes to the Board of Directors of the     )    CC Docket No. 97-21
National Exchange Carrier Association, Inc.  )

                             order

Adopted:  January 6, 2000               Released: January 7, 2000

By the Common Carrier Bureau:

1.     The Bureau has under consideration a Letter of Appeal filed by the Ozarks Unlimited
Resources Cooperative of Harrison, Arkansas (Ozarks) on April 12, 1999, seeking review of a
decision issued by the Schools and Libraries Division (SLD) of the Universal Service
Administrative Company (Administrator).  Ozarks seeks review of the SLD's denial of its
application on behalf of the Greenbrier School District for discounts under the schools and libraries
universal service support mechanism.  For the reasons set forth below, we deny the Letter of Appeal.
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 February 9, 1999, SLD denied Ozarks request for discount funding in
Year 1 of the schools and libraries universal service support mechanism, on the grounds that a
significant portion of Ozarks' request included a request for discounts on ineligible video/audio
control equipment.  By letter dated February 19, 1999, Ozarks appealed SLD's denial of discounts
for Ozarks' funding request.  In its letter, Ozarks stated that the ineligible equipment at issue was
customer premises equipment, which was not part of its funding request.  Rather, according to
Ozarks, its funding request was for telecommunications services for a video conferencing link, and
not for the ineligible video/audio control equipment.  By letter dated March 19, 1999, SLD again
denied Ozarks' request for discounts.  In its Decision on Appeal, SLD stated that Ozarks' funding
request included a request for discounts on ineligible products, specifically a video encoder/decoder
for the Greenbrier School District and a spare video encoder/decoder.
4.     On April 12, 1999, Ozarks filed with the Commission a Letter of Appeal seeking
review of SLD's Decision on Appeal.  Ozarks' letter to the Commission raises two questions: (1)
whether video encoding and decoding equipment used for interactive educational teleconferencing
services is eligible for discounts; and (2) whether the costs for such services less the portion
corresponding to the lease of such equipment is eligible for discount.  Ozarks' letter seeks full
discount eligibility for the high-bandwidth videoconferencing link for the Greenbrier School
District.  
5.     The leased video encoding and decoding equipment for which Ozarks seeks discounts is
ineligible for discounts.  Under the schools and libraries support mechanism, only
telecommunications services, Internet access, and internal connections are eligible for discounts. 
The function of Ozarks' leased video equipment is not to transmit information without change in
form or content, so it cannot constitute telecommunications service.  The function of the
equipment also is unrelated to Internet access.  Finally, the equipment does not constitute internal
connections, because it is not necessary to transport information.  Rather than transporting
information, the function of video encoding and decoding equipment is altering the content of
information delivered to it.  Consequently, the equipment for which Ozarks seeks discounts is
ineligible for support.  Consequently, we cannot make Ozarks' requested finding of full discount
eligibility for the high-bandwidth videoconferencing link for the Greenbrier School District.
6.     Finally, we conclude that Ozarks' request for discounts on the costs of teleconferencing
services less the portion reflecting the costs of Ozarks' leased video encoding and decoding
equipment also is denied.  Although Ozarks has submitted information to SLD concerning its
monthly aggregate costs to its teleconferencing services provider, it has not submitted any
information detailing a breakdown of these costs into those associated with eligible
telecommunications services versus those associated with ineligible products or services, such as
the costs of the ineligible video encoding and decoding equipment.  According to SLD's records
pertaining to Ozarks' funding application, SLD requested from Ozarks during the application
process a breakdown of its teleconferencing charges into eligible and ineligible services. Ozarks
apparently failed to provide SLD with the requested information.  Ozarks' Letter of Appeal to the
Commission presented it with another opportunity to provide a breakdown of its teleconferencing
charges that would distinguish the portion of those charges that is eligible for discounts from the
portion that is ineligible.  Despite these opportunities throughout the application and appeals
processes for Ozarks to offer a cost breakdown, this information has not been forthcoming. 
Without this information, SLD cannot determine the appropriate level of discount funding to which
Ozarks may be entitled.  Because Ozarks has failed to provide the requested information, no portion
of its request for discounts on teleconferencing services may be funded.  Therefore, we find that the
Administrator correctly denied Ozarks' request.
7.     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 Ozarks Unlimited Resources Cooperative on behalf of the Greenbrier School
District on April 12, 1999, IS DENIED.
                              FEDERAL COMMUNICATIONS COMMISSION



                              Yog R.Varma
                              Deputy Chief, Common Carrier Bureau