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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 )
                                   )
Atlanta C-3 School District        )    File No. SLD-92325
Atlanta, Missouri                  )
                                   )
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:  May 16, 2000                  Released: May 17, 2000

By the Common Carrier Bureau:

1.      The Common Carrier Bureau has under consideration a Letter of Appeal filed on
May 18, 1999 by Atlanta C-3 School District (Atlanta), Atlanta, Missouri, seeking review of a
decision issued by the Schools and Libraries Division (SLD) of the Universal Service
Administrative Company (USAC or Administrator).  Atlanta seeks review of the SLD's denial
of a request for discounts for services under the schools and libraries universal service support
mechanism.  For the reasons set forth below, we grant Atlanta's appeal, and remand Atlanta's
funding application to the SLD for further determination in accordance with this order.
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 universal
service program has been administered to direct support toward the most economically
disadvantaged schools and libraries.  Under the program's discount matrix, the most
economically disadvantaged schools are eligible for the greatest levels of discount.  In the Fifth
Reconsideration Order, the Commission established new rules to govern how discounts would
be allocated when available funding is less than total demand and a filing window is in effect. 
These rules provide that requests for telecommunications and Internet access services for all
discount categories shall receive first priority for available funds (Priority One services), and
requests for internal connections shall receive second priority (Priority Two services).  Thus,
when total demand exceeds the total support available, the SLD is directed to give first priority
for available funding to telecommunications services and Internet access.  Any funding
remaining is allocated to the requests for support for internal connections, beginning with the
most economically disadvantaged schools and libraries, as determined by the schools and
libraries discount matrix.  Schools and libraries eligible for a 90 percent discount would receive
first priority for the remaining funds, which would be applied to their requests for internal
connections.  To the extent funds remain, the Administrator would continue to allocate funds for
discounts to applicants at each descending single discount percentage, e.g., eighty-nine percent,
eighty-eight percent, and so on.  During the first funding year (January 1, 1998 - June 30, 1999)
of the support mechanism, SLD granted all approved requests for discounts for
telecommunications services and Internet access and granted all approved requests for internal
connections down to the 70 percent discount level.
3.     By letter dated February 24, 1999, SLD denied Atlanta's application for discounts for
services.  Specifically, SLD denied Atlanta's request for internal connections, Funding Request
Number (FRN) 132190.  In the Funding Commitment Decision Letter, SLD explained that
requests for discounts for internal connections would not be provided for schools and libraries
with discount levels below 70 percent.  Because Atlanta's discount level was 67 percent, its
request for discounts for internal connections was denied.  On March 3, 1999, Atlanta filed a
letter of appeal with the Administrator, stating that SLD had erroneously categorized FRN
132190 as a request for discounts for internal connections, rather than one for
telecommunications services, as listed in Atlanta's FCC Form 471.  Upon review, SLD affirmed
its decision to deny FRN 132190.   SLD explained that, because FRN 132190 included internal
connection services within the request, the entire funding request was categorized as internal
connections in order to avoid the possibility of treating a Priority Two service (internal
connections) as a Priority One service (telecommunications services).  In response to the
Administrator's Decision on Appeal, Atlanta filed the instant Letter of Appeal, requesting
reconsideration of the telecommunications portion of FRN 132190.
4.     The record reflects that Atlanta filed its FCC Form 471 on April 14, 1998.  The
Commission, however, did not release the Fifth Reconsideration Order setting out the applicable
schools and libraries rules of priority until June 22, 1998.  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, applicants could not have been aware of
the need to segregate carefully their service requests.  Consequently, the Commission held that,
in appeals addressing such circumstances, applications should be remanded to SLD for
reprocessing, with Priority One and Priority Two services being considered separately on their
own merits.  We, therefore, remand Atlanta's application to SLD, and direct SLD to reconsider
Atlanta's FCC Form 471 and, if warranted, to issue a new funding commitment decision letter
providing discounts for all appropriate Priority One services request by Atlanta.
5.     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 Atlanta C-3 School District, Atlanta, Missouri, on May 18,
1999, IS GRANTED.
6.     IT IS FURTHER ORDERED that the Administrator IS DIRECTED to implement the
decision herein.
                              FEDERAL COMMUNICATIONS COMMISSION


                              Carol E. Mattey
                              Deputy Chief, Common Carrier Bureau