1919 - M Street, N.W.
Washington, D.C. 20554
Fax-On-Demand 202 / 418-2830
Internet: http://www.fcc.gov
ftp.fcc.gov
Released: March 5, 1998
Additional Frequently Asked Questions
on Universal Service for Rural Health Care Providers
CC Docket No. 96-45
On May 8, 1997, the Federal Communications Commission (Commission) released a Report and Order on Universal Service (May 8 Order) that implemented section 254 of the Communications Act of 1934 (the Act).(1) Section 254(h)(1)(A) of the Act requires that public and non-profit rural health care providers receive telecommunications services necessary for the provision of health care services at rates comparable to those paid for similar services in urban areas.(2) In addition, section 254(h)(2) articulates the principle that health care providers should have access to advanced telecommunications services.(3) On December 16, 1997, the Commission released a Third Order on Reconsideration that adjusted downward the rate of collections for the rural health care support mechanisms during the first six months of 1998.(4) Further, on December 30, 1997, the Commission released a Fourth Order on Reconsideration which addresses and clarifies issues pertaining to the universal service provisions designed to benefit rural health care providers that stem from the May 8 Order.(5) Each of these documents can be found on the Commission's website at <http://www.fcc.gov/ccb>.
In an effort to provide useful information to the public, the Commission has compiled this list of frequently asked questions. This information, along with the Frequently Asked Questions released on September 5, 1997, is presented in response to questions the Commission has received since release of the May 8 Order. These questions and answers should be considered in conjunction with the information contained in the September 5, 1997 Public Notice (September 5 PN), which can be found at <http://www.fcc.gov/healthnet/> or obtained by calling 1-888-CALL-FCC.
Application Process
1. Q: Are the application forms available now?
A: The applications are not yet available. The Rural Health Care Corporation (RHCC) is a not-for-profit entity that has been established to administer support for rural health care providers. The RHCC will distribute the applications and will have a toll-free telephone number that applicants can use to ask questions relating to the application process.
2. Q: How will the application process work?
A: All health care providers that seek to participate will be required to complete a form entitled "Description of Services Requested and Certification (FCC Form 465)." Health care providers will be required to certify that they meet the eligibility criteria and will indicate which telecommunications services they wish to obtain. This form will be returned to the RHCC; it may be submitted electronically or on paper.
If the health care provider does not have an existing contract for the telecommunications services for which it seeks support that is exempt from the competitive bidding requirements (see question 26, below), the RHCC will post the health care provider's completed Form 465 on its Internet website. This will permit eligible telecommunications service providers to review the requests for services and determine which health care providers in their service areas are requesting telecommunications services. Telecommunications carriers will then contact health care providers directly to negotiate the rates and conditions of providing the requested services. The health care provider shall consider all bids received from telecommunications carriers. The health care provider must wait 28 days from the day its request for service is posted before signing a contract for service. After a contract for services is signed, the health care provider and telecommunications carrier must submit information about their contract to the RHCC. Health care providers must complete a form entitled "Services Ordered and Certification (FCC Form 466)." This form informs the RHCC of the details of the contract, including which telecommunications services the health care provider ordered. At the same time, the telecommunications carrier must complete a form entitled "Telecommunications Service Providers Support Form (FCC Form 468)." This form lets the RHCC know the rates for which the telecommunications carrier and health care provider have contracted, and also requires the telecommunications carrier to certify that it is eligible to receive universal service support. Once the RHCC receives both Form 466 (from the health care provider) and Form 468 (from the telecommunications carrier), it will allocate, based the appropriate urban and rural rates for the services under contract, universal service support to the contract for the funding year. Forms 466 and 468 must be delivered together to the RHCC in paper copy.
If the health care provider has an existing contract for the telecommunications services that is exempt from the competitive bidding requirement (see question 26, below), it must still file a Form 465. The RHCC might establish guidelines regarding when health care providers with existing contracts can file Forms 466 and 468.
After the health care provider has begun to receive the telecommunications services for which it has contracted, it must submit to the RHCC a form entitled "Receipt of Service Confirmation (FCC Form 467)." This form tells the RHCC that the telecommunications carrier has begun providing services in accordance with the service contract. Once the RHCC receives this confirmation, it will instruct the Universal Service Administrative Company to provide support to the telecommunications carrier. Form 467 may be submitted electronically or on paper.
3. Q: Is there a deadline for applying?
A: There is no due date for applications. Applications will be accepted throughout the funding year, as long as monies earmarked for support remain. Although support will be awarded on a first-come, first-served basis, the RHCC has established a window period that will last 75 days from date the RHCC begins to accept requests for support. This date will be the date on which the RHCC is ready to post requests on the website. During this 75-day period, the RHCC will treat all requests for support as if they were received simultaneously. A "request for support" is defined as a submission of both a "Services Ordered and Certification Form (FCC Form 466)" and a "Telecommunications Service Providers Support Form (FCC Form 468)." Thus, because the initial "Description of Services Requested and Certification Form (FCC Form 465)" must be filed prior to the completion of Forms 466 and 468, all three forms must be received by the RHCC within the 75-day window in order for the health care provider's application to fall within the window period.
The window period will assist health care providers by permitting them more time to complete the forms and to consider bids offered by telecommunications carriers. After the first year, applications will be accepted beginning July 1st for the funding year beginning January 1st.
Eligibility of Telecommunications Carriers
4. Q: Does a telecommunications carrier have to be designated as "eligible" in order to receive support for serving rural health care providers?
A: In general, yes. Section 254(e) of the Act states that only eligible telecommunications carriers will receive universal service support for providing supported services to rural health care providers. There is only one exception to this rule: any telecommunications carrier that provides toll-free access to an Internet service provider to an eligible health care provider that cannot otherwise obtain toll-free access is entitled to receive the lesser of the toll charges incurred for 30 hours of access per month or $180 per month in toll charge credits. State Public Utilities Commissions, not the FCC, are responsible for designating eligible telecommunications carriers.
5. Q: Must a telecommunications carrier be capable of providing 1.544 Mbps service in order to be designated as "eligible"?
A: No. Section 214(e) of the Act requires that, in order to be designated as eligible, a telecommunications carrier (1) offer the services "supported by Federal universal service support mechanisms under section 254(c)" using at least some of its own facilities, and (2) advertise the availability of these services and the charges for these services using media of general distribution. The services supported under section 254(c) of the Act, described in section 54.101 of the Commission's rules, are: voice grade access to the public switched network; local usage; dual tone multi-frequency signaling or its functional equivalent; single-party service or its functional equivalent; access to emergency services; access to operator services; access to interexchange service; access to directory assistance; and toll limitation for qualifying low-income consumers. Thus, a telecommunications carrier need not be capable of offering 1.544 Mbps service. Rather, 1.544 Mbps is the maximum bandwidth service that can be supported for each rural health care provider; there will be no support for services transmitted at a rate in excess of 1.544 Mbps (see question 12, below).
6. Q: Must a telecommunications carrier be designated as "eligible" for the service area in which a rural health care provider is located in order to bid to receive support for serving that rural health care provider?
A: Yes. A telecommunications carrier must be designated as an eligible telecommunications carrier for the service area in which the rural health care provider is located in order to bid to serve a rural health care provider.
7. Q: If an eligible telecommunications carrier requires the assistance of other telecommunications carriers to complete the circuit from a rural health care provider with which it has contracted for service to the desired end location, how is universal service support allocated among the participating carriers?
A: A telecommunications carrier will often partner with one or more additional carriers to complete a telephone call outside of its service area. Telecommunications carriers usually have billing agreements with their partner carriers that are on file with the National Exchange Carrier Association. When an eligible telecommunications carrier providing supported services to a rural health care provider is assisted by other eligible carriers, the billing agreement will determine the percentage of support that should go to each carrier.
Generally, the customer -- in this case, the rural health care provider -- is unaware that more than one carrier is used to complete a call. The customer is normally billed by only one carrier, the carrier with which it has a service contract. In this situation, the carrier that has contracted with a rural health care provider will indicate on the worksheet it attaches to its FCC Form 468 the billing arrangements it has with its partner carriers (see question 2, above).
In some instances, each partner carrier is required by state law to sign a service agreement or contract with the customer. In these cases, the rural health care provider may be required to sign service contracts with each of the carriers that is required to complete its call. A rural health care provider will complete a "Description of Services and Certification Form" (FCC Form 465) (see question 2, above). After a rural health care provider accepts a bid for service from an eligible telecommunications carrier, that carrier will arrange for its partner carriers to submit contracts as well, if required by the law of the state in which service will be provided.
8. Q: What if one of the telecommunications carriers with which an eligible telecommunications carrier must partner in order to serve a rural health care provider is not an eligible telecommunications carrier?
A: Only eligible telecommunications carriers can receive universal service support for serving rural health care providers. If an eligible telecommunications carrier that signs a contract for service with a rural health care provider must partner with an ineligible telecommunications carrier to complete the circuit the rural health care provider has ordered, universal service support will not be allocated for that portion of the circuit that is served by an ineligible telecommunications service provider. The Rural Health Care Corporation will use the billing agreement between the eligible and ineligible telecommunications carriers to determine which segment of the circuit is supported.
9. Q: Can Internet Service Providers receive universal service support for providing toll-free access to an Internet Service Provider?
A: Not unless they are also telecommunications carriers. Only telecommunications carriers may receive the limited support amounts described in question 4, above, for providing a health care provider with access to an Internet Service Provider.
Eligibility of Health Care Providers
10. Q: Where can a health care provider obtain the Metropolitan Statistical Area and Goldsmith Modification information (see question 2, September 5 PN) to determine whether it is located in a rural area?
A: The MSA and Goldsmith Modification information will be posted on the Rural Health Care Corporation's website and can now be found on the National Exchange Carrier Association's website at <http://www.neca.org/curl.htm>. A health care provider located in a metropolitan county may obtain the tract numbers needed to determine whether its address falls within a region classified as rural by the Goldsmith Modification by using the Census Bureau's website at <http:/www.ffiec.gov>. Health care providers that do not have access to the Internet will be able to call the Rural Health Care Corporation to obtain paper copies of this information.
Services Eligible for Support
11. Q: Is the 1.544 Mbps (T-1) limitation a bandwidth limitation or a price limitation?
A: Both. An eligible rural health care provider may receive, for each separate site or location, support for the most cost-effective, commercially available telecommunications service with a bandwidth capacity up to and including 1.544 Mbps from the rural health care provider's location to the farthest distance on the jurisdictional boundary of the nearest city of 50,000 or more. Each rural health care provider is limited to one supported T-1 connection. The maximum distance that will be supported is the distance between the rural health care providers location and the nearest city of at least 50,000, minus the standard urban distance for that city (see question 22, September 5 PN). A rural health care provider may purchase more than one T-1 connections, but only one, within this distance limitation, will be supported by universal service funds.
If a rural health care provider chooses to subscribe to service with a lesser bandwidth, it may purchase more than one connection subject to universal service support, but the total annual support for these connections may not exceed the annual amount of support that would be available for one T-1 connection, which constitutes the maximum annual support amount.
12. Q: Will services with a bandwidth capacity that exceeds 1.544 Mbps (e.g., T-3 service) be supported up to the annual amount of support that would be available for a T-1 connection?
A: Telecommunications services with bandwidth capacity above 1.544 Mbps will not be supported. Section 54.601(c)(1) of the Commission's rules states "any telecommunications service of a bandwidth up to and including 1.544 Mbps . . . shall be eligible for universal service support . . . " [emphasis added].
13. Q: A rural health care provider signs contracts with, and receives supported services from, two eligible telecommunications carriers. The support available for a T-1 to the nearest city of at least 50,000 is different for each of these carriers because they have different rural rates for T-1 service. What is the maximum amount of supported services the rural health care provider can purchase?
A: The maximum amount of support available in this situation is the amount that would be supported if the health care provider bought T-1 service from the telecommunications carrier that offers the lowest rate for T-1 service from the rural health care provider's locations to the nearest city of at least 50,000.
14. Q: Will connections between two rural sites be supported?
A: Yes. Subject to certain distance limitations (see question 7, September 5 PN), an eligible rural health care provider may elect to use a supported connection to link to a site in a rural area. Support for distance-based charges is limited to the distance from the eligible rural health care provider's location and the point on the jurisdictional boundary of the nearest large city in the state with a population of 50,000 or more that is the most distant from the health care provider's location. If an eligible rural health care provider chooses to connect to a point beyond this maximum allowable distance, it must pay the appropriate unsupported rate for any distance-based charges incurred beyond the maximum allowable distance. There is no requirement, however, that the rural health care provider choose service that would connect it to the nearest urban area.
15. Q: If the distance to the nearest city of 50,000 is very great, and, thus, the maximum support amount for a rural health care provider is high, can that provider choose to order multiple T-1 connections to closer rural locations if the amount of support allocated for such purchases is below the support amount that would be allocated to the rural health care provider if it ordered T-1 service to the nearest city of 50,000?
A: The rural health care provider is limited to one supported T-1 connection. Section 54.613(b) of the Commission's rules states "[t]he rural health care provider may substitute any other service or combination of services with transmission capacities of less than 1.544 Mbps transmitted over the same or a shorter distance, so long as the total annual support amount for all such services combined . . . does not exceed what the support amount would have been for [one T-1 to the farthest point on the jurisdictional boundary of the nearest city] [emphasis added]."
16. Q: If 1.544 Mbps service is not available in a rural health care provider's location, how will the total annual support amount be calculated?
A: If the eligible health care provider is located in a rural area in which a service with a bandwidth capacity of 1.544 Mbps is not commercially available -- and, thus, the rate for such a service is therefore unavailable -- the maximum amount of support available form service using a bandwidth of 1.544 Mbps shall be the difference, if any, between the urban rate and the rural rate, using the rural rate for a service of that capacity in another area of the state.
17. Q: Will universal service support be available for long distance charges?
A: No support will be available for toll charges, with the exception of support for toll charges incurred by accessing an Internet service provider (See question 8, September 25 PN). The Commission's rules define distance-based charges as mileage-based charges, rather than inter-LATA or toll charges.
18. Q: What if a telecommunications network is used for multiple purposes, some of which are not related to the provision of health care services or instruction?
A: Pursuant to section 54.615(c)(4) of the Commission's rules, a health care provider must certify that supported telecommunications service will be used solely for the purposes of the provision of health care services or instruction related to those services. Telecommunications services that are used for purposes other than health care cannot be supported. A health care providers that shares supportable telecommunications services with a school or library may, however, allocate the costs among the eligible entities. The Schools and Libraries Corporation and the Rural Health Care Corporation will be issuing guidelines for allocating costs in such situations.
19. Q: Assume that a rural health clinic currently subscribes to a T-1 connection for video conferencing and permits other community organizations to use its video conferencing facilities if they reimburse the clinic for its expenses. Can this relationship with organizations in its community continue if the rural health clinic applies for universal service support for its T-1 connection?
A: Section 254(h)(3) of the Act prohibits supported telecommunications services from being "sold, resold, or otherwise transferred . . . in consideration for money or any other thing of value" (see question 26, September 5 PN). Therefore, a health care provider may not continue to charge community groups to use its T-1 connection if that connection is supported by universal service mechanisms. In some instances, however, the rural health care provider may determine that it is most beneficial to forego universal service support for such a connection and to continue to subsidize the cost of its connection with fees paid by other users. Another option would be to apply for universal service support as part of a consortium that consists of the health care provider and the entities in its community that wish to use its telecommunications connection (see question 23, below). Under this scenario, the health care provider might still be able to purchase the T-1 connection at the urban rate, depending upon whether the other entities are eligible health care providers, public sector governmental entities (such as schools and libraries), or private sector entities, and whether the consortium pays the tariffed rate for the T-1 service (see question 23, below).
Calculating Rates
20. Q: Section 54.607 of the Commission's rules states that the rural rate will be calculated by averaging the rates charged to commercial customers, other than health care providers, for identical or similar services provided by the telecommunications carrier that serves the rural area in which the eligible health care provider is located. How is the "rural area" that is used to calculate the rural rate determined?
A: For purposes of determining the rural rate (see question 19, September 5 PN), a "rural area" is defined using the same MSA and Goldsmith Modification approach as is used for determining whether a health care provider is located in a rural area. Thus, to calculate the rural rate, the average of the rates charged in the non-metropolitan county or Goldsmith Modification area in which the rural health care provider is located will be used.
21. Q: Will the urban and rural rates remain the same for purposes of calculating support even if tariff rates change during the funding year?
A: The urban rate, which is calculated by the RHCC, will remain in effect throughout the funding year. The RHCC may review annually the urban rates to ensure they are accurate.
The rural rate, which is calculated by the telecommunications carrier, is based on the average of rates charged to commercial customers, other than health care providers, for similar services in the same rural area in which the rural health care provider is located. Once a rural health care provider and an eligible telecommunications carrier inform the RHCC that they have executed a service contract (by filing forms 466 and 468) (see question 2, above), the RHCC will allocate support for that contract for the duration of the funding year. If tariffed rates change during the funding year, parties may re-file forms 466 and 468 to reflect the new rates for their contract. Parties who re-submit these forms would be allocated new support amounts based on their new contract rates only if there were universal service monies remaining for allocation during that funding year. Otherwise, the original contract rates filed by the parties will continue to be used for purposes of calculating support during the remainder of the funding year.
22. Q: If there is more than one tariffed or publicly available rate in an urban area, which rate will the Rural Health Care Corporation use for purposes of determining support amounts?
A: Section 54.605(a) of the Commission's rules states that the urban rate shall be "no higher than the highest tariffed or publicly available rate charged to a commercial customer for a similar service. . . . " The RHCC will use the highest tariffed or publicly available urban rates as the urban rate. Telecommunications carriers are then permitted to bid to provide service to rural health care providers at lower than the urban rate, but the urban rate designated by the RHCC will be used to calculate support.
Applying as Part of a Consortium
23. Q: What are the restrictions on applying for supported services as part of a consortium?
A: Any eligible health care provider applying for supported services as part of a consortium is required to disclose the identities of all entities that comprise the consortium to ensure that ineligible entities do not benefit from universal service support. In addition, health care providers should retain their own records of use, in addition to those records telecommunications carriers serving consortia are required to maintain.
Whether a health care provider may apply to receive supported telecommunications services as part of a consortium depends upon: (1) the type of entities that are also members of the consortium and (2) the rates paid by the consortium. Eligible health care providers may form consortia with other eligible health care providers or with public sector entities such as schools, libraries, and governmental entities. Universal service support targeted for rural health care providers will be available for the portion of services used by eligible health care providers. The eligible health care provider will pay the urban rate for that portion of services purchased by the consortium that the health care provider uses.
If an eligible health care provider applies for supported service as part of a consortium that includes private sector entities (e.g., banks, private hospitals, or other commercial institutions), the health care provider may not receive universal service support unless the consortium is purchasing services at tariffed rates. If the consortium is purchasing service at the tariffed rate, an eligible health care provider may apply to purchase its share of services ordered by the consortium at the urban rate. Generally, however, entities form a consortium to aggregate their demand and negotiate for lower than tariffed rates from the telecommunications carrier. An eligible health care provider that is enjoying below-tariff rates by virtue of its membership in a consortium that includes private sector entities is not permitted to benefit from universal service support. An eligible health care provider that is a member of a consortium that includes private sector entities should determine whether the rates it enjoys as a member of that consortium are lower than the urban rates it could obtain if it were to apply for universal service support to purchase its services independent of that consortium.
24. Q: May a group of rural health care providers apply as a consortium if they are located in more than one state?
A: Yes. A consortium may consist of eligible health care providers from different states. The rates for each eligible health care provider will be calculated separately, based on the nearest city with a population of 50,000 or more in the same state as that eligible health care provider (See questions 7, 22, & 25, September 5 PN).
25. Q: How will the application process work for a consortium that consists of rural health care providers and schools and libraries?
A: Rural health care providers may form consortia with schools and libraries. Schools, libraries and health care providers may wish to form consortia to aggregate their demand for service or otherwise benefit mutually. The universal service program for rural health care providers varies from that for schools and libraries, however. Therefore, a consortium consisting of both eligible rural health care providers and eligible schools and/or libraries must file application forms with both the Rural Health Care Corporation and the Schools and Libraries Corporation. Eligible schools and libraries will receive discounts on telecommunications services, access to the Internet, and internal connections based primarily on their economic need, while eligible rural health care providers will be able to purchase certain telecommunications services at rates available in urban areas.
Existing Contracts and Contract Modifications
26. Q: If an eligible rural health care provider has a contract for telecommunications services from an eligible telecommunications carrier must it participate in the competitive bid process in order to benefit from universal service support?
A: Whether a rural health care provider that has a contract for telecommunications services must comply with the competitive bid requirement set out in Section 54.603 of the Commission's rules depends upon when the service contract was signed.(6) An eligible rural health care provider is not required to comply with the competitive bid requirement for any contract for eligible telecommunications services that it signed on or before July 10, 1997, regardless of the duration of that contract. Contracts signed after July 10, 1997, but before the website operated by the RHCC is operational, are exempt from the competitive bidding requirement for services received through December 31, 1998. All contracts signed after the RHCC's website is operation are subject to the competitive bid requirements.
27. Q: May a rural health care provider purchase supported services from a master contract that has been negotiated with a telecommunications carrier by a third party?
A: Eligible rural health care providers may purchase supported telecommunications services from a master contract negotiated by a third party such as a consortium or governmental entity. Unless the contract is exempt from the competitive bid requirement (see question 26, above), the third party must have complied with the competitive bid process set forth in section 54.603 of the Commission's rules in order for the health care provider to benefit from universal service support.
28. Q: If a rural health care provider wishes to modify its service contract, for example, by adding additional lines, must it obtain competitive bids for the new services it seeks to add to the contract?
A: Eligible rural health care providers will not be required to undergo an additional competitive bid process for minor modifications, such as adding a few additional lines to an existing contract that has already been approved for funding by the RHCC. A rural health care provider is not, however, guaranteed that services stemming from a contract modification will be supported. Support for such additional services might exceed the maximum support amount available for that rural health care provider (see question 11, above), or the RHCC may have already allocated the total amount of support available for the year.
In order to determine whether a proposed contract modification would be considered minor, and therefore exempt from the competitive bidding process, eligible rural health care providers must look to state or local procurement laws. If a proposed modification would be exempt from state or local bid requirements, the rural health care provider likewise would not be required to undertake an additional competitive bid process in connection with the contract modification. Similarly, if a proposed modification would have to be rebid under state or local competitive bid requirements, then the rural health care provider also would be required to comply with the Commission's universal service competitive bid requirements before entering into an agreement adopting the modification.
Where state and local procurement laws are silent or are otherwise inapplicable, the "cardinal change" doctrine will be used to determine whether the contract modification requires rebidding.(7) In general terms, the "cardinal change" doctrine looks at whether the modification is essentially the same as that called for under the original contract. If a proposed modification is not a cardinal change, there is no requirement to undertake the competitive bid process again.
29. Q: How will a rural health care provider inform the RHCC that it seeks to modify its service contract?
A: An eligible rural health care provider seeking to modify a contract without undertaking a competitive bid process should file a "Service Ordered and Confirmation Form" (FCC Form 466) with the RHCC indicating the value of the proposed contract modification. The rural health care provider must also indicate on Form 466 that the modification is within the original contract's change clause or is otherwise a minor modification that is exempt from the competitive bid process (see question 28, above). The rural health care provider's justification for exemption from the competitive bid process will be subject to audit. As discussed in question 28, above, a commitment of funds by the RHCC for an initial FCC Form 466 does not ensure that additional funds will be available to support any additional services that are the subject of a contract modification.
For additional information, please contact: Frances Downey, Common Carrier Bureau at (202) 418-7400.
1. Federal-State Joint Board on Universal Service, CC Docket No. 96-45, Report and Order, 12 FCC Rcd at 9113 (1997).
2. 47 U.S.C. § 254(h)(1)(A).
3. 47 U.S.C. § 254(h)(2).
4. Federal-State Joint Board on Universal Service, CC Docket No. 96-45, Third Order on Reconsideration, Report and Order, FCC 97-411 (rel. Dec. 16, 1997) (Third Order on Reconsideration).
5. Federal-State Joint Board on Universal Service, CC Docket Nos. 96-45, 96-262, 94-1, 91-213, 95-72, Fourth Order on Reconsideration in CC Docket No. 96-45, Report and Order in CC Docket Nos. 96-45, 96-262, 91-213, 95-72, FCC 97-420 (rel. Dec. 30, 1997) (Fourth Order on Reconsideration).
6. See Fourth Order on Reconsideration at paras. 211-221.
7. See Fourth Order on Reconsideration at paras. 226-228.