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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

Winterset Community School District
Winterset, Iowa

Federal-State Joint Board on Universal
Service

Changes to the Board of Directors of the
National Exchange Carrier Association, Inc.


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SLD-201905


CC Docket No. 96-45


CC Docket No. 97-21


                             ORDER

   Adopted: November 21, 2000           Released: November 24, 2000

By the Common Carrier Bureau:

1.     The Common Carrier Bureau (Bureau) has under consideration a Letter of Appeal
filed by the Winterset Community School District (Winterset), Winterset, Iowa, on April 13,
2000, seeking review of a funding commitment letter issued by the Schools and Libraries Division
(SLD) of the Universal Service Administrative Company (the Administrator). Winterset disputes
SLD's denial of Winterset's application for discounts for telecommunications services under the
schools and libraries universal support mechanism.  For the reasons set forth below, we remand
Winterset's appeal to SLD for further consideration in light of 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
Commission's rules require that the applicant make a bona fide request for services by filing with
the Administrator an FCC Form 470, which is posted to the Administrator's website for all
potential competing service providers to review.  After the FCC Form 470 is posted, the
applicant must wait at least 28 days before entering an agreement for services and submitting an
FCC Form 471, which requests support for eligible services.  SLD reviews the FCC Forms 471
that it receives and issues funding commitment decisions in accordance with the Commission's
rules. 
3.     At issue here is SLD's denial of support to Winterset for the Year 2 funding year,
which began July 1, 1999, and ended on June 30, 2000.  On March 24, 1999, Winterset filed its
Form 471 with SLD.  In its Form 471, Winterset indicated that it would receive
telecommunication services for the Year 2 funding year, pursuant to a contract with Interstate 35
Telephone Company (Interstate), in the amount of $25,900.  In its Form 471 attachments,
Winterset included a bid from Interstate dated January 26, 1999, which begins with a "high school
quote" for $25,843.80, and then goes on to set out quotes for "the remaining schools," one in the
amount of $19,632 for networking equipment, and another in the amount of $6,200 for voice
mail, for a total of $25,832.00.  The  $19,632 quote included telephones and cable modems.
Telephones, cable modems, and voice mail service are ineligible for funding under program rules.  
4.     By letter dated October 12, 1999, SLD denied Winterset's two requests for discounts,
finding that 30 percent or more of these funding requests included a request for telephones,
modems, and voice mail, which are ineligible products and services based on program rules.  In
its Letter of Appeal, Winterset challenges SLD's findings in regards to one of the requests, stating
that SLD misconstrued the Interstate bid letter by considering the two elements of the bid for "the
remaining schools" as components of the $25,843.80 "high school" quote.  Winterset asserts
that in fact, the three quotes are mutually exclusive quotes, and the two lesser quotes are not parts
of the larger $25,843.80 quote.  Winterset argues that SLD may have been misled by the
coincidence that the two lesser "remaining schools" quotes add up to nearly the exact same
amount ($25,832.00) as the $25,843.80 "high school" quote.  Winterset argues that the two
"remaining schools" quotes should not have been factored into SLD's determination whether
Winterset had requested funding for an unallowable amount of ineligible services.  
5.     We find that the information submitted by Winterset suggests that SLD incorrectly
assumed that the two lesser "remaining schools" quotes presented by Interstate were components
of the larger "high school" quote for which Winterset sought universal service funding, and thus
erroneously concluded that Winterset sought funding for an impermissible amount of ineligible
services.  We find, therefore, that Winterset's appeal should be granted, and we remand this
appeal to SLD with the direction that SLD reconsider Winterset's funding request.  As a general
matter, in light of the thousands of applications that SLD reviews and processes each funding
year, it is administratively necessary to place on the applicant the responsibility of clearly
explaining the purposes to which the funding they request will be put.  In this case, however,
while the letter from Interstate submitted with Winterset's Form 471 was vague, we believe
nonetheless that it was unreasonable to assume that the two lesser "remaining schools" quotes
were components of the larger "high school" quote, especially when the letter from Interstate
stated that the lesser quotes were for "the remaining schools," implying that these were separate
quotes.  Because SLD incorrectly determined that the funding request from Winterset was for
ineligible services or products, Winterset's request for review is granted, and SLD is directed to
reconsider Winterset's funding request.



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 April 13, 2000, by Winterset Community School District,
Winterset, Iowa, IS GRANTED to the extent stated herein.
                         
                              FEDERAL COMMUNICATIONS COMMISSION
     


                              Carol E. Mattey
                              Deputy Chief, Common Carrier Bureau