On November 7, 1996, the Federal-State Joint Board on Universal Service ("Joint Board") issued a Recommended Decision to the Federal Communications Commission ("Commission") on Universal Service. Section 254 (h) of the Telecommunications Act of 1996, better known as the Snowe-Rockefeller Amendment, states that schools and libraries should have access to telecommunications services at discounted rates for educational purposes.

On November 18, the Commission issued a Public Notice asking for comments on a number of questions regarding Universal Service. The comment deadline was December 16 and the reply deadline was January 10, 1997. After the comments come in, the Commission will begin to write final rules for universal service.

Until January 10, 1997, the Commission accepted public comment on how the Recommended Decision should be refined or revised. Under the statute, the Commission has to complete its ruling by May 8, 1997.

Q: What did the Joint Board say about the Snowe-Rockefeller amendment in its Recommended Decision?

A: The Joint Board recommended that eligible schools and libraries be able to purchase any telecommunications services, internal connections, and access to the Internet at discounted rates.

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Q: How much weight will the Recommended Decision carry in the Commission's rulemaking process?

A: The Joint Board's Recommended Decision is only a recommendation as to how the Commission should structure universal service support mechanisms. The Commission will ultimately write the final rules, but must consider the Joint Board's Recommended Decision in that rulemaking process.

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Q: When can schools and libraries expect a decision from the Commission on how the universal support mechanism will be utilized?

A: The Commission expects support to be available in time for the 1997-98 school year. This depends on whether the Commission is able to implement universal service regulations on an expedited basis. Under the 1996 Act, the Commission is bound by law to complete its proceeding on May 8, 1997.

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Q: What services does the Joint Board include in the Recommended Decision?

A: The Joint Board recommended that schools and libraries be able to purchase at a discount all commercially available telecommunications services, Internet access, and internal connections. Because the Joint Board wanted to ensure that schools and libraries have the flexibility to purchase different packages of services at a discount, the Joint Board did not recommend a standard telecommunications package, but concluded that it would be more efficient to let schools and libraries determine what services they need and want. The Recommended Decision states that schools and libraries to choose from a wide array of telecommunication services and technologies, including wireless telecommunications.

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Q: What did the Joint Board recommend with respect to the Internet?

A: The Joint Board recommended that schools and libraries should receive discounts on services provided by Internet Service Providers (ISPs). Electronic mail would also be eligible for a discount. The Joint Board recommended that the fund should not subsidize access to the "content" that some information service providers, like America On-Line, bundle in a package with Internet access except when the most cost-effective conduit to the Internet. For example, under the Board's recommendation, schools would not receive discounted access to a subscription service like America On-Line unless the Internet gateway it provides is the most cost-effective way for the school to access the Internet.

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Q: Does the Joint Board address the cost of internal networking for schools and libraries?

A: Yes. The Joint Board recommended that discounts should cover internal connections, including such items as hubs, routers, network file servers, and wireless local area networks ("LANs"). The cost of computers, teacher training, and software would not, however, be eligible for discounts.

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Q: Who is eligible for support from the universal service fund based on the Joint Board's Recommended Decision?

A: The 1996 Act states that all public and non-public elementary and secondary schools, as defined in the Elementary and Secondary Education Act of 1965, that do not operate for profit and do not have endowments exceeding $50 million are eligible for discounted telecommunication services. Discounts will also be available to non-profit libraries eligible for funding under the Library Services Technology Act of 1996.

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Q: Based on the Joint Board's Recommended Decision, how will the pre-discount price be established for schools and libraries?

A: The Joint Board recommended that schools and libraries submit a technology plan that describes the telecommunication services they would like to the Administrator of the universal service fund for competitive bidding among telecommunications providers. Carriers and other providers, such as cable operators, wireless service providers, and electric utility firms, can submit bids based on the school technology plan and the school or library can contract with the best provider.

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Q: Does the Recommended Decision set a limit on the pre-discount price for schools and libraries?

A: Yes. The Joint Board recommended that carriers not be permitted to submit bids higher than the lowest price charged to similarly-situated non-residential customers ("lowest corresponding price"). In areas where there is no competition (i.e., only one provider), this lowest corresponding price would be the pre-discount price.

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Q: Has the Joint Board recommended that schools and libraries survey the market to find the lowest corresponding price?

A: No. The Joint Board recognized that schools and libraries may not have the means or the expertise to do this. The Joint Board recommended, however, that schools and libraries be required to submit their requests for services to the fund administrator, who will post the requests in a manner that will attract competing providers. Service providers themselves would then certify that they have offered the lowest corresponding price. Of course, it will be in the best interest of schools and libraries to become educated consumers of telecommunications services.

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Q: How does the Joint Board suggest resolving disputes over the lowest corresponding price that may arise between providers and schools or libraries?

A: The Joint Board recommended that schools or libraries should be allowed to appeal to the Commission if a complaint involves interstate rates, and to the state administrative agency if a complaint involves intrastate rates.

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Q: Will schools and libraries be allowed to aggregate when they apply for services?

A: Yes. The Joint Board encourages aggregation with other eligible and non-eligible institutions. Clearly, this will place a burden on the aggregators to keep careful records of their expenses so that only the eligible institutions receive the benefit of the discounts.

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Q: If they aggregate with eligible and/or non-eligible institutions, can schools and libraries take advantage of existing service contracts?

A: Yes, if the contract permits aggregation.

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Q: Does the Recommended Decision address the amount that schools and libraries can receive from the universal service support mechanism?

A: The Joint Board recommended establishing a matrix that will provide discounts ranging from 20% to 90% on all telecommunications services, Internet access, and internal connections. The level of discount would be based on the level of economic disadvantage of a school's students and the cost of telecommunications services in the school's or library's region. Level of economic disadvantage may be measured by eligibility for the national school lunch program or some other measure. Thus, a school or library with a very poor student body in a high-cost region would qualify for the steepest discount.

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Q: How does the Recommended Decision address schools that do not participate in the national school lunch program? Will they be eligible for discounts under this program?

A: Yes. The Joint Board recommended that if the school lunch program is used as the measure of economic disadvantage, a school need not participate in the lunch program in order to receive discounts on telecommunications and other covered services. The Joint Board recommended that such schools should certify the percentage of students who would be eligible for the national school lunch program.

A Public Notice released by the Commission on November 18, 1996, asked for other measures that may be readily available to identify the level of economic disadvantage of schools. The Public Notice also asked what other type of information could be required that would be minimally burdensome for schools to submit.

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Q: What measurement does the Recommended Decision suggest be used to determine the level of economic disadvantage for libraries?

A: The Joint Board recommended that libraries' level of economic disadvantage be based on the economic wealth of the school districts in which they are located. This suggests that a library would be eligible to receive the level of discount representing the average discount offered to the school district in which it was located.

In a Public Notice released on November 18, 1996, the Commission sought additional information and comments on what measures of economic wealth are readily available to determine the economic status of libraries. The Commission also requested comment on what information could be required that would be minimally burdensome to libraries.

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Q: Does the Joint Board set a limit on how much money can be paid in to or out of the universal service support mechanisms in an fiscal year?

A: Yes. The Joint Board recommended that total expenditure for schools and libraries from the universal service support mechanisms have an annual cap of $2.25 billion. If less than that amount is spent in a year, the difference would be added to the next year's available total and could be spent without regard to the cap.

The Joint Board also recommended that whenever spending for schools and libraries in a given year reaches $2.0 billion, rules of priority would be triggered. The most economically disadvantaged schools and libraries that had not yet drawn from universal service support mechanisms would receive first priority, while other economically disadvantaged schools and libraries would receive second priority for support. All other eligible schools and libraries would be granted funding contingent on the availability of funds. Precisely how such rules of priority would be managed is currently being considered by the Commission.

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Q: In the event that universal service support mechanisms for schools and libraries acquires a surplus from one fiscal year to the next, how does the Joint Board address this issue?

A: The Joint Board recommended that the surplus from the previous year would be spent first. This means that the cap would remain at $2.25 billion from year to year.

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Q: Why didn't the Joint Board adopt an "e-rate" or free rate for telecommunications services for the neediest schools and libraries?

A: Under the matrix proposed by the Joint Board, the neediest institutions will receive very significant discounts on the services most needed for connectivity -- a maximum discount of 90%; those with less need are eligible for a 20% discount. The Joint Board recommended that any universal service funding mechanism also promote competition in the telecommunications industry. The Joint Board stated that competition ultimately will deliver multiple benefits to consumers, including lower rates, greater choice, and improved services, which will benefit schools and libraries in the future.

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Q: Does the Recommended Decision outline a process for schools and libraries to apply funds from the universal service fund?

A: The Joint Board recommended that schools and libraries be required to comply with three self-certification requirements when ordering services eligible for discounts.

These requirements are:

1.) to certify that they have adopted a technology plan to ensure that

they have the ability to use the services once they have them;

2.) to submit a description of the services they want to the fund

administrator, so that the requests can be posted in a manner that will

attract competing service providers.

3.) to submit a written request for services eligible for discounts to the

fund administrator and their chosen service providers; to attest,

under oath, that their institutions meet the relevant requirements.

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Q: Does this mean that the Joint Board is asking schools and libraries to prove they need and will use advanced telecommunication services?

A: No. The Joint Board recommended self-certification for schools and libraries to ensure that only eligible entities receive universal service support. And, so that no institution would have to wait for evaluation before it could receive services.

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Q: Does the Recommended Decision establish who will draw universal service support, the school, the library, or the telecommunication service provider?

A: The Joint Board did not resolve this issue. The Commission is now working to design the actual procedures that will govern the discount process once this system is operational.

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Q: Many schools and libraries have already contracted for the services that will be covered by this program. Does the Recommended Decision address the issue of whether the discounts will apply anyway to these services? And if so, will these institutions be required to undergo the same procedures to determine pre-discount price?

A: The Joint Board recommended that schools and libraries receive no retroactive discounts for money spent under the contract prior to the effective date of the Commission's rules establishing the discount program. The Recommended Decision would allow for the discount schedule to apply for each year remaining under the contract, with the contract price serving as the pre-discount price.

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Q: The Recommended Decision stated that the universal service support provides reimbursement for intrastate as well as interstate services, but some states already provide discounts for intrastate services. How does the Joint Board intend to incorporate the state discounts with the federal discount program?

A: The Joint Board felt strongly that a unified system of state and federal discounts would substantially simplify the planning process for schools and libraries and recommended that states adopt an intrastate discount matrix at least as generous as the discount matrix of the Commission.

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For further information contact James S. Rubin, (202) 418-1700.