Comprehensive Review of Universal Service Fund Management, Administration, and Oversight, 41658-41678 [05-14053]

Agencies

• FEDERAL COMMUNICATIONS COMMISSION

[Federal Register Volume 70, Number 138 (Wednesday, July 20, 2005)]
[Proposed Rules]
[Pages 41658-41678]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-14053]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[WC Docket No. 05-195, CC Docket No. 96-45, CC Docket No. 02-6, WC 
Docket No. 02-60, WC Docket No. 03-109, CC Docket No. 97-21; FCC 05-
124]


Comprehensive Review of Universal Service Fund Management, 
Administration, and Oversight

AGENCY: Federal Communications Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: In this document, the Commission initiates a broad inquiry 
into the management and administration of the Universal Service Fund 
(USF), as well as the Commission's oversight of the USF and the USF 
Administrator. We seek comment on ways to improve the management, 
administration, and oversight of the USF, including simplifying the 
process for applying for USF support, speeding the disbursement 
process, simplifying the billing and collection process, addressing 
issues relating to the Universal Service Administrative Company (USAC 
or the Administrator), and exploring performance measures suitable for 
assessing and managing the USF programs. We also seek comment on ways 
to further deter waste, fraud, and abuse through audits of USF 
beneficiaries or other measures, and on various methods for recovering 
improperly disbursed funds.

DATES: Comments are due on or before October 18, 2005. Reply comments 
are due on or before December 19, 2005.

[[Page 41659]]


ADDRESSES: You may submit comments, identified by WC Docket No. 05-195, 
CC Docket No. 96-45, CC Docket No. 02-6, WC Docket No. 02-60, WC Docket 
No. 03-109, CC Docket No. 97-21 and/or FCC 05-124, by any of the 
following methods:
     Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments.
     Federal Communications Commission's Web Site: https://
www.fcc.gov/cgb/ecfs/. Follow the instructions for submitting comments.
     Mail: Filings should be sent to the Commission's 
Secretary, Marlene H. Dortch, Office of the Secretary, Federal 
Communications Commission, 445 12th Street, SW., Washington, DC 20554.
     People with Disabilities: Contact the FCC to request 
reasonable accommodations (accessible format documents, sign language 
interpreters, CART, etc.) by e-mail: FCC504@fcc.gov or phone: 202-418-
0530 or TTY: 202-418-0432.
    For detailed instructions for submitting comments and additional 
information on this rulemaking process, see the SUPPLEMENTARY 
INFORMATION section of this document.

FOR FURTHER INFORMATION CONTACT: Warren Firschein, Attorney, Wireline 
Competition Bureau, Telecommunications Access Policy Division, (202) 
418-7400, TTY (202) 418-0484.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice 
of Proposed Rulemaking and Further Notice of Proposed Rulemaking in WC 
Docket No. 05-195, CC Docket No. 96-45, CC Docket No. 02-6, WC Docket 
No. 02-60, WC Docket No. 03-109 and CC Docket No. 97-21 released on 
June 14, 2005. The full text of this document is available for public 
inspection during regular business hours in the FCC Reference Center, 
Room CY-A257, 445 12th Street, SW., Washington, DC 20554.

I. Introduction

    1. In this Notice of Proposed Rulemaking and Further Notice of 
Proposed Rulemaking (NPRM) we initiate a broad inquiry into the 
management and administration of the Universal Service Fund (USF), as 
well as the Commission's oversight of the USF and the USF 
Administrator. In particular, we seek comment on ways to improve the 
management, administration, and oversight of the USF, including 
simplifying the process for applying for USF support, speeding the 
disbursement process, simplifying the billing and collection process, 
addressing issues relating to the Universal Service Administrative 
Company (USAC or the Administrator), and exploring performance measures 
suitable for assessing and managing the USF programs. In addition, we 
seek comment on ways to further deter waste, fraud, and abuse through 
audits of USF beneficiaries or other measures, and on various methods 
for recovering improperly disbursed funds.
    2. Our goal is to find ways to improve the program, both from the 
perspective of USF beneficiaries and from the perspective of 
safeguarding the fund itself. We recognize that some parties have 
raised concerns ranging from mismanagement to intentionally defrauding 
the program, and we take these concerns seriously. In this proceeding, 
we intend to address these concerns by finding constructive ways to 
continue meeting the needs of those who depend on the USF, while at the 
same time ensuring that the public is confident that the funds are used 
for their intended purpose. To accomplish this, we are seeking input 
from all interested parties, including experienced participants in the 
USF programs, on improving the management, administration, and 
oversight of the four universal service programs. We intend to 
determine whether any rule changes are necessary in order to manage and 
administer the USF programs more efficiently and effectively, while 
deterring waste, fraud, and abuse. We are interested in rule changes 
that can be applied, to the greatest extent possible, consistently 
across all programs. Furthermore, to the extent commenters' suggestions 
can be accomplished without rule changes, we may do so after evaluating 
the record in this docket.

II. Discussion

A. Management and Administration of the USF

    3. In this section, we broadly seek comment on measures the 
Commission can take to improve management and administration of the 
program. The effectiveness and efficiency of our management and 
administration of the USF is influenced by the organizational structure 
used to carry out the missions of the USF, the methods used to measure 
and evaluate program performance, and the program operations, including 
the application process, the contributions process, and the 
disbursement process. We encourage parties to comment on the 
Commission's past practices and submit proposals for improving the 
management and administration of the program. We also invite comments 
and suggestions on any aspect of this NPRM from USAC, including its 
views on its performance as Administrator.
1. Universal Service Fund Administrator
a. Background
    4. The Commission's rules provide for the appointment of a 
permanent Administrator of the USF. In 1998, the Commission appointed 
USAC the permanent Administrator of the federal universal service 
support mechanisms. Under the Commission's rules, the Administrator is 
responsible for administering each of the USF mechanisms. As part of 
its duties and subject to Commission rules and oversight, the 
Administrator bills contributors to the USF, collects USF 
contributions, disburses universal service support funds, recovers 
improperly disbursed USF moneys, submits periodic reports to the 
Commission (including quarterly reports on the disbursement of 
universal service support funds), maintains accounting records, 
conducts audits of contributors and beneficiaries, creates and 
maintains an Internet site, collects information, and provides access 
to information it collects to the Commission. Aggrieved parties may 
file appeals of actions taken by the Administrator. Under the 
Commission's rules, USAC is required to maintain its books of account 
in accordance with generally accepted accounting principles (GAAP) and 
to account for the financial transactions of the USF in accordance with 
government generally accepted accounting principles (GovGAAP). The 
Administrator must also maintain the accounts of the USF in accordance 
with the U.S. Government Standard General Ledger (USGSGL). Pursuant to 
Commission rules, the Administrator is prohibited from making policy, 
interpreting unclear provisions of the statute or the Commission's 
rules, or interpreting the intent of Congress, and may only advocate 
positions before the Commission and its staff on administrative 
matters.

B. USF Administrative Structure

    5. We seek comment on whether modifications to our rules are needed 
to ensure efficient, effective, and competitively neutral 
administration of the USF. The Commission appointed USAC the permanent 
Administrator ``subject to a review after one year by [the Commission] 
to determine that the Administrator is administrating the universal 
service support mechanisms

[[Page 41660]]

in an efficient, effective, and competitively neutral manner.'' The 
Commission intended to review USAC's performance after one year; 
however, the one-year review did not take place. We therefore seek 
comment on USAC's performance since the inception of the USF program, 
as well as the Commission's management and oversight of USAC. We seek 
comment on whether USAC has administered the USF in an efficient, 
effective, and competitively neutral manner. In addition, we seek 
comment on whether additional rules or amendment of existing rules are 
needed to provide clarity to the scope and content of the 
Administrator's functions. Commenters should address USAC's successes 
as well as any weaknesses in USAC's performance or areas that need 
improvement.
    6. Administrative Structure. We take this opportunity to evaluate 
the current administrative structure to determine whether any changes 
are needed in order to enhance management of the USF. Commenters should 
discuss whether their experience in other government programs suggests 
a more effective mechanism for administering a subsidy program the size 
of the USF. We seek comment on whether we should replace the permanent, 
designated Administrator with another type of administrative structure 
or entity. For example, we could retain USAC as Administrator pursuant 
to a contract or subject to a Memorandum of Understanding. We could 
seek competitive bids for another entity to administer the USF, subject 
to replacement after a period of time. Alternatively, we could appoint 
a different entity or organization to permanently administer the USF 
instead of USAC, or we could retain the current structure for USF 
administration so that USAC would continue to administer the USF. If we 
retain the current structure for USF administration, how can we improve 
the Commission's oversight of the USF and management of the program? 
Commenters should address the pros and cons of a permanent 
administrative entity as well as the pros and cons of alternative 
administrative structures and arrangements. Commenters should discuss 
the advantages and disadvantages of competitive procurement and of 
having the same entity administer the USF programs over a lengthy 
period of time. We seek comment on whether USAC should apply, to the 
extent practicable, the policies and procedures embodied in the Federal 
Acquisition Regulation (FAR). Commenters should also discuss how 
Commission oversight would be implemented if alternative arrangements 
were adopted.
    7. In addition, we seek comment on whether using a not-for-profit 
corporation as the permanent Administrator of the USF has worked 
successfully. Commenters should address the pros and cons of using a 
not-for-profit entity as the USF Administrator. We note that the 
Commission has experience using contracts to administer certain 
programs. For example, section 251(e) of the Act directs the Commission 
to ``create or designate one or more impartial entities to administer 
telecommunications numbering and to make such numbers available on an 
equitable basis.'' The Commission concluded that it was free to select 
the National Pooling Administrator on a competitive basis, as it did in 
choosing the North American Numbering Plan administrator in 1997. The 
entities that administer telecommunications numbering and thousands 
block number pooling for the Commission do so pursuant to a contract 
and we believe that such contracts have provided certain cost benefits, 
such as the lower costs that can be achieved through the competitive 
bidding process.
    8. Part 54 of the Commission's rules are designed to promote 
universal service in a competitively neutral manner. The Commission's 
rules apply a number of requirements to the USF Administrator to ensure 
effective, efficient, competitively neutral administration. This 
ensures that support is made available on a technologically neutral 
basis to eligible service providers. The Commission concluded, when 
appointing USAC permanent administrator, that ``subject to the 
modifications set forth in this Order, USAC fairly represents all 
interested parties, including a broad range of industry, consumer, and 
beneficiary groups.'' We seek comment on how any proposals to change 
the current administrative structure would affect the independence and 
neutrality of the USF program administration. The Commission's rules 
provide for an experienced Board of Directors representing a balance of 
different interests. The Commission's rules describe the functions of 
USAC, which are limited to ``administering the schools and libraries 
support mechanism, the rural health care support mechanism, the high 
cost support mechanism, the low income support mechanism, the 
interstate access universal service support mechanism * * * and the 
interstate common line support mechanism.'' In addition, USAC is 
responsible for ``billing contributors, collecting contributions to the 
universal service support mechanisms, and disbursing universal service 
support funds.'' The rules also prohibit USAC from making policy or 
interpreting the intent of Congress, and bar USAC from lobbying on 
anything other than administrative issues. We seek comment on whether 
we should modify our rules to more clearly delineate USAC's 
administrative functions.
    9. We seek comment on whether we should modify our rules addressing 
meetings of the Administrator's Board of Directors. We seek comment on 
whether the current board composition results in effective, efficient, 
and competitively neutral management of the USF. Commenters should 
provide specific recommendations for modifying the composition of the 
Administrator's Board of Directors and describe the benefits of 
implementing such proposals. Section 54.705 of the Commission's rules 
requires USAC to have three committees: A Schools and Libraries 
Committee, a Rural Health Care Committee, and a High Cost and Low 
Income Committee. We seek comment on whether additional committees or 
fewer committees would be administratively efficient and useful. USAC 
also has an audit committee, an investment committee, and an executive 
committee, which are not required by our rules. We seek comment on 
whether we should revise the rules to clarify or specify the 
organizational structure of the Administrator's committees.
    10. We also seek comment on whether we should adopt rules to 
require the Administrator to implement ethics standards and procedures 
for addressing conflicts of interest, or if we should adopt specific 
rules governing the ethics standards and conflicts of interest for 
officers and/or employees of the Administrator. We seek comment on 
whether to adopt rules addressing the Administrator's procedure for 
handling confidential information, including confidential information 
related to the federal government. Finally, we seek comment on whether 
the Administrator's Board of Directors should be permitted to enter 
into closed sessions in which the Commission and members of the public 
are excluded. Although the Commission's rules state that all meetings 
of the Administrator's Board of Directors are to be public, there may 
be instances where a private meeting is warranted. Should we adopt 
procedures and rules to identify appropriate instances of when the 
Administrator's Board of Directors may

[[Page 41661]]

hold a closed sessions? If so, what should those instances be?
    11. Filing and Reporting Requirements. Under our rules, the 
Administrator must submit periodic reports to the Commission. Section 
54.702(g) of the Commission's rules requires USAC to submit an annual 
audit report. Section 54.709(a) of the Commission's rules requires USAC 
to submit, 60 days prior to the start of the quarter, financial and 
accounting data, including projected administrative expenses and 
projected program demand (i.e., amount of moneys USAC expects to 
disburse in the upcoming quarter for each USF mechanism). Section 
54.709(a) of the Commission's rules also requires USAC to submit, 30 
days prior to the start of each quarter, its estimate of contributor 
base. USAC prepares and submits additional reports, both to the 
Commission staff on an ad hoc basis and to its Board of Directors on a 
quarterly basis. We seek comment on whether we should revise the 
content or frequency of the Administrator's reports. For example, we 
could require these reports be filed on a monthly, quarterly, or annual 
basis. We seek suggestions from USF stakeholders about the appropriate 
types of publicly available information that we should require from 
USAC. For example, should we require publicly available, periodic 
performance measurement and financial reports?
    12. The Bureau calculates the proposed quarterly contribution 
factor, based on USAC's submissions, and announces it in a Public 
Notice fourteen days before the beginning of each quarter. This 
proposed contribution factor is deemed approved when the fourteen-day 
period ends, if the Commission takes no action to change the 
contribution factor. USAC uses the contribution factor to bill carriers 
on the sixteenth of each month during the quarter. USAC requires 
carriers to pay their invoices by the fifteenth of the following month. 
We seek comment on whether we should revise our rules to change any of 
these time periods or to modify the content of USAC's filings.
    13. Contributor Delinquency. We also seek comment on whether we 
should revise our rules to address the issue of a carrier's delinquent 
contributions. Should we adopt a rule on how a carrier's payments are 
assigned to current and delinquent amounts due the Administrator? The 
Administrator's practice is to apply partial payments to the oldest 
debt first, instead of the current billed amount. Should we direct USAC 
to modify this practice? We also seek comment on whether we should 
adopt rules to allow USAC to charge interest and assess penalties for a 
carrier's failure to file the FCC Form 499-A, Telecommunications 
Reporting Worksheet (Form 499-A).
    14. Borrowing Funds. Our rules currently provide that USAC ``shall 
request borrowing authority from the Commission to borrow funds 
commercially'' if contributions received in a given quarter are 
inadequate to meet the amount of universal service program payments and 
administrative costs for that quarter. We note that USAC has never 
requested such authority nor has the Commission authorized such 
borrowing. Is Sec.  54.709(c) of the Commission's rules, to the extent 
it authorizes borrowing of funds to pay for the USF, inconsistent with 
federal financial accounting rules that apply to the USF? We seek 
comment on whether we should eliminate this rule. We think it is 
unlikely that the Commission would be unable to meet program payment 
requirements and administrative costs in any quarter because we 
evaluate the program demand (including administrative expenses) before 
we establish the contribution factor and we can control to a large 
extent the amount of USF disbursements in a given quarter. 
Nevertheless, we believe that we should consider and account for that 
contingency.
    15. Moreover, we note that to the extent we modify our rules to 
permit other entities to administer the USF, there may be a need to 
permit borrowing under certain circumstances, e.g., for administrative 
expenses or other non-program reasons and without jeopardizing program 
funds. We therefore seek comment on what process to establish, in lieu 
of the existing borrowing authority in Sec.  54.709(c) of the 
Commission's rules, to address situations in which the amount of 
available USF is insufficient to accommodate program demand and 
administrative expenses. For example, we could maintain a cash reserve 
that would be used only in that event. At the same time, given the 
relatively low risk of the occurrence, we question whether it would be 
prudent to tie up funds for that purpose. We seek comment on what an 
appropriate reserve level would be. We have no rules regarding 
interfund borrowing. Should we adopt a rule prohibiting or allowing 
interfund borrowing? We seek comment on whether to establish 
limitations or constraints on the Administrator's ability to borrow 
funds in permissible circumstances and in a manner consistent with 
federal law. We seek comment on other ways to ensure that universal 
service funds are sufficient to cover costs and administrative 
expenses. For example, in the event that funds are insufficient to 
cover costs and administrative expenses, should we seek to collect 
additional funds and postpone payments until sufficient funds have been 
received? We also seek comment on the potential impact that any such 
proposal could have on fund beneficiaries. Finally, we seek comment on 
whether the Commission should adopt rules or requirements governing the 
investment practices and policies of the Administrator. For example, 
should we adopt requirements restricting USAC investments to non-
interest bearing accounts or Treasury bills?
    16. Administrative Procedures. We seek comment on whether we should 
codify certain USAC administrative procedures in the Commission's 
rules. In the Schools and Libraries Fifth Report and Order, 69 FR 
55097, September 13, 2004, we directed USAC to identify all Schools and 
Libraries program procedures and we are currently evaluating USAC's 
list. As we discussed in the Schools and Libraries Fifth Report and 
Order, we are concerned about recovery of funds disbursed after 
applicants failed to follow USAC administrative procedures. Certain 
USAC procedures have since been incorporated into the Commission's 
rules. This issue has not yet been raised in the context of 
administrative procedures related to contributions or in the context of 
the High Cost, Low Income, and Rural Health Care programs. Under the 
Commission's rules, the Administrator may not ``make policy, interpret 
unclear provisions of the statute or rules, or interpret the intent of 
Congress.'' To assist our analysis, we will require USAC to file a list 
of its administrative procedures for the contributions process and the 
High Cost, Low Income, and Rural Health Care programs as an ex parte 
filing in this proceeding, by September 19, 2005. USAC's administrative 
procedures may involve collection or disbursement policies and 
practices that affect beneficiaries and service providers. We believe 
that there is a fundamental difference between ministerial errors and 
intentional fraud, and that greater clarity in USAC's rules and 
procedures will help reduce ministerial errors. We seek comment on how 
a beneficiary's compliance or lack of compliance with USAC non-codified 
administrative procedures should be treated in the auditing context. We 
are seeking proposals from commenters as to whether any of USAC's 
procedures or policies should be codified. We anticipate that it will 
be useful to

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continue to evaluate whether other USAC administrative procedures 
should be codified into our rules. We ask that commenters consider 
whether any proposal for the Commission to codify USAC administrative 
procedures, or other proposals in this NPRM, would facilitate or 
restrict the ability of the administrator to perform its duties in a 
flexible and responsive way.
    17. Continuity of Operations. Federal agencies are required to 
develop continuity of operations (COOP) plans to ensure that essential 
services will be available in emergency situations. Disruptions from a 
variety of sources, including severe weather conditions, can result in 
interruptions in services. We seek comment on whether we should adopt a 
rule to require USAC to develop and maintain a COOP plan for dealing 
with emergency situations. We also seek comment on whether any 
modifications to our rules are needed to ensure that the Administrator 
can continue to perform its mission-critical functions in the event of 
an incident or emergency situation. Commenters should describe the pros 
and cons of any proposals.
2. Performance Measures
    18. We recognize that effective program management requires the 
implementation of meaningful performance measures. Clearly articulated 
goals and reliable performance data allow the Commission and other 
stakeholders to assess the effectiveness of the USF programs and to 
determine whether changes are needed. The Commission is in the process 
of compiling USF performance measures, particularly for the Schools and 
Libraries program and the High Cost program, in order to comply with 
the Office of Management and Budget (OMB) Program Assessment Rating 
Tool (PART) requirements. We seek comment on additional performance 
measures and goals that we can use to track progress and efficiency for 
all the universal service programs. Proposed performance measures 
should be highly relevant in measuring program value, accomplishments, 
and results. We also seek comment on whether we should establish 
specific performance goals or targets for the Administrator or for 
participants in the USF programs. We must be careful to measure only 
the goals of the program and not stray beyond our jurisdiction. Under 
the Act, universal service is defined as an ``evolving level of 
telecommunications services'' that includes advanced services. For the 
various USF programs, we should focus on measuring access to an 
evolving level of telecommunications services in the performance 
measure context.
    19. The OMB's PART guidance sets forth three types of performance 
measures: (1) outcome measures, (2) output measures, and (3) efficiency 
measures. Outcome measures ``describe the intended result from carrying 
out a program or activity.'' Output measures describe the level of 
activity, such as applications processed, number of housing units 
repaired, or number of stakeholders served by a program. Efficiency 
measures capture a program's ability to perform its function and 
achieve its intended results relative to the resources expended. These 
performance measurements should be intrinsically linked to the purpose 
of the program and the strategic goal to which it contributes. The GAO 
has also published a number of reports addressing the use of 
performance measures in the management of government programs. We seek 
comment on establishing the most useful and valid outcome, output, and 
efficiency measures for the USF and each of its mechanisms, as well as 
the administration of the program. Commenters should address the 
objectives of any recommended performance measurements and goals. 
Commenters should also discuss whether we should revise our information 
collection process, including any of the forms applicable to the USF 
mechanisms, in order to collect sufficient information to measure the 
performance of the programs and identify potential areas for program 
improvement.
    20. E-Rate. We seek comment on suitable outcome, output, and 
efficiency measures for the E-rate program. In the past, the Commission 
used the percentage of public schools connected to the Internet as a 
measure of the impact of the E-rate program and its success, and we 
seek comment on continuing to use connectivity as a measurement. As 
prescribed in section 254(h) of the Communications Act, the statutory 
goal of the E-rate program is to provide discounts to eligible schools 
and libraries for educational purposes. The Commission used this goal 
in developing and submitting its prior PART analysis to the OMB. We 
seek comment on the value of continuing to use this goal for the 
purposes of measuring the impact of the E-rate program. We seek comment 
on whether we should also measure the connectivity of libraries or 
private schools. We seek comment on whether alternative or supplemental 
goals may be more appropriate than connectivity. Universal service is 
an ``evolving level of telecommunications services'' that includes 
advanced services. We seek comment on how we can take the evolving 
level of services into account in adopting performance measures. We 
also seek comment on ways to measure the extent to which broadband 
services have been deployed to classrooms, through the E-rate program. 
One possibility for measuring the impact of E-rate moneys on schools 
and libraries would be to collect data on the use of E-rate supported 
services. For example, we could measure the number or percentage of 
students that access the Internet or the number or percentage of 
teachers using supported services in their classrooms. Likewise, we 
could measure the number or percentage of library patrons who use 
supported services during a library visit. We seek comment on relevant 
performance measures for the E-rate program. We note that the 
Department of Education already collects information on the use of the 
Internet in classrooms, but does not collect information on broadband. 
We do not want to expend resources for a repetitious inquiry. We 
therefore seek comment on how we should design performance measurements 
to measure broadband connectivity. Commenters should also propose 
definitions of ``broadband'' for our performance measurements. We also 
seek comment on how we can be sure to measure only schools and 
libraries that get support from the program, rather than measuring all 
schools and libraries. Furthermore, we seek comment on how the 
Commission can determine which schools currently have no connectivity 
at all so that we can improve the program by reaching these unconnected 
schools.
    21. We note that the U.S. Department of Education uses performance 
measures to evaluate the implementation of the Enhancing Education 
Through Technology (EETT) program. The EETT program funds initiatives 
that are designed to integrate technology into classrooms in ways to 
improve the academic achievement of students. These performance 
measures allow the Department of Education to respond to Government 
Performance and Results Act (GPRA) reporting requirements. We seek 
comment on whether these measures are instructive for E-rate purposes.
    22. We also seek comment on meaningful ways to distinguish the 
impact of E-rate funds from other governmental and non-governmental 
programs that support services or facilities similar to the E-rate 
program. Is there an effective way to isolate and

[[Page 41663]]

measure the impact of the E-rate program on schools and libraries?
    23. We also seek comment on ways to measure the efficiency and 
effectiveness of the E-rate program. For example, we could implement a 
measurement to capture the cost in E-rate funds disbursed per student 
or library patron. We note that the timing of the Commission's and 
USAC's processes may be critical to schools and libraries. Lengthy 
intervals for processing or reviewing applications could have a 
disruptive effect on the budget or procurement schedule for schools or 
libraries. Delay can complicate the USAC application process for 
schools and libraries, leading to ministerial errors on subsequent 
applications, complicating auditing, and undermining our ability to 
combat waste, fraud, and abuse. We seek comment on timing issues that 
need improvement. Commenters should discuss particular deadlines that 
should be modified. Should we create new deadlines for Commission or 
USAC action in various phases of the E-rate process? Should we set 
deadlines for progressing from the completion of an application to the 
funding commitment decision letter (FCDL), or for completion of 
appeals? In submitting their responses and proposals, commenters should 
focus on the need, if any, to modify our information collection 
processes, and the burden any such modification would place on 
stakeholders in the program, particularly small entities.
    24. High Cost, Rural Health Care, and Low Income. We also seek 
comment on adopting meaningful outcome, output, and efficiency measures 
for the High Cost, Rural Health Care, and Low Income programs. Because 
these mechanisms have different goals and purposes than the E-rate 
program, we expect to adopt different performance measures and goals 
for each program. We note that participants in each USF mechanism may 
receive support from other sources (e.g., loans from the Department of 
Agriculture's Rural Utility Service or the Department of Education) or 
may seek USF support for only a portion of their telecommunications 
needs. We seek comment on whether and how we should account for these 
factors in crafting performance measurements for each of the mechanisms 
so we can evaluate the impact of each USF dollar disbursed. Commenters 
should suggest measures for each of the statutory goals listed in 
section 254(b)(3) of the Communications Act: ``Consumers in all regions 
of the Nation, including low-income consumers and those in rural, 
insular, and high cost areas, should have access to telecommunications 
and information services, including interexchange services and advanced 
telecommunications and information services, that are reasonably 
comparable to those services provided in urban areas and that are 
available at rates that are reasonably comparable to rates charged for 
similar services in urban areas.'' We also seek comment on ways to 
measure the efficiency of each support mechanism. How do we best 
determine whether the programs are accomplishing the statutory goals in 
a cost-effective manner? Relevant performance measures for the Low 
Income program may include the percentage of eligible households that 
receive low income support and telephone subscribership rates for low 
income consumers. We seek comment on these suggestions and we request 
commenters to submit alternative proposals for performance measures. 
Suitable performance measures for the High Cost program may include 
telephone subscribership in rural areas (and comparing such rates to 
telephone subscribership in urban areas) or the comparability of rural 
and urban rates. We seek comment on these possibilities and request 
parties to submit alternative proposals for performance measures. 
Relevant performance measures for the Rural Health Care program may 
determine the comparability of rural and urban rates, the number or 
percentage of eligible rural health care providers receiving USF 
support, and the number of patients served by rural health care 
providers participating in the program. We seek comment on these 
possibilities and request parties to submit alternative proposals for 
performance measures.
    25. USF Administration. Finally, we seek comment on establishing 
suitable performance measurements for evaluating the administration of 
the USF program. Under the Commission's rules, the Administrator is 
responsible for performing certain functions under the Commission's 
oversight. In particular, the Administrator bills contributors, 
collects USF contributions, disburses USF moneys, and administers the 
USF's accounts and transactions. When the Commission appointed the 
permanent Administrator, we noted our expectation that the 
Administrator would perform its duties in an efficient, effective, 
competitively neutral manner. Although the Commission adopted various 
reporting requirements applicable to the Administrator, it did not 
adopt metrics to measure the Administrator's performance of its duties. 
Relevant performance measures may include the number of applications 
for USF support processed within a particular period of time, the 
percentage of applications rejected by the Administrator for errors or 
other reasons, the average number of days required to process an 
application, the accuracy of bills issued to contributors, or the 
number of errors made in disbursing funds to USF beneficiaries. We seek 
comment on these possibilities and request that commenters submit 
alternative proposals. We also seek comment on ways of measuring how 
cost-effectively the Administrator operates.
3. Program Management
    26. We seek comment from all interested parties on ways we can 
improve the management, administration, and oversight of the USF 
programs, including the billing and collection process and the process 
of disbursing funds. We welcome input from service providers, 
beneficiaries, and others who have had experience with the USF 
programs. We also seek comment from other agencies and governmental 
entities about their experiences with program administration and 
management that may offer guidance in the context of the USF programs. 
We seek comment on the accessibility of our applications and 
disbursement processes for persons with disabilities. We recognize that 
our efforts to improve USF management may entail an administrative 
burden on USF program participants, and we invite comment on ways to 
achieve more efficient administration and management, while continuing 
our efforts in deterring waste, fraud, and abuse.
    27. We seek comment on whether the E-rate and Rural Health Care 
distribution processes should more closely track those of the High Cost 
and Low Income programs. For example, we could change our rules to use 
a formula to distribute funds directly to schools and libraries 
according to their size and allow funds to be used in a more flexible 
way, e.g., for communications-related services and equipment, or 
training on how best to use such service and equipment, rather than 
requiring applications that identify needed services and equipment and 
their cost. Would such a formulaic approach further the goals of the 
program? Would it create substantial additional challenges? We believe 
that any changes should not disadvantage stakeholders, including 
private, parochial, rural, and economically-challenged schools or 
libraries. We seek comment on whether a formulaic approach would

[[Page 41664]]

disadvantage stakeholders of these programs. We also seek comment on 
whether a formulaic approach would make detecting waste, fraud, and 
abuse more difficult.
a. Application Process
(i) E-Rate
    28. Under the Schools and Libraries program, eligible schools, 
libraries, and consortia that include eligible schools and libraries, 
may receive discounts for telecommunications services, Internet access, 
and internal connections. The schools and libraries support mechanism 
is capped at $2.25 billion annually; however, annual requests for funds 
frequently exceed the annual cap. Applicants may receive discounts 
ranging from 20 to 90 percent of the price of eligible services, based 
on indicators of need, i.e., percentages of students eligible for free 
or reduced price lunch through the National School Lunch Program, or a 
federally approved alternative mechanism. In addition, rural applicants 
receive enhanced discounts, ranging from 25 to 90 percent of the pre-
discount price for the eligible services.
    29. The application process generally begins with a technology 
assessment and a technology plan. After developing the technology plan, 
the applicant must file the FCC Form 470 (Form 470) to request 
discounted services such as tariffed telecommunications services, 
month-to-month Internet access, cellular services, or paging services, 
and any services for which the applicant is seeking a new contract. The 
Form 470 must be posted on USAC's schools and libraries division Web 
site for at least 28 days. The applicant must then comply with the 
Commission's competitive bidding requirements set forth in Sec. Sec.  
54.504 and 54.511(a) of the Commission's rules. The applicant then 
files the FCC Form 471 (Form 471), after entering into agreements for 
eligible services.
    30. After receiving the Form 471, USAC assigns a ``funding request 
number'' to each request for discounted services. USAC reviews the Form 
471 and then, if the request is approved, issues funding commitment 
decision letters advising the applicants of the discounts that the 
applicants will receive under the rules. The FCC Form 486, Receipt of 
Service Confirmation Form (Form 486), is filed after the school or 
library begins to receive the service from the vendor. The FCC Form 
472, Billed Entity Applicant Reimbursement (BEAR) Form may be filed if 
the school or library needs reimbursement of discounts due on approved 
services for which it has paid full price. Alternatively, the applicant 
can pay only the non-discounted portion of the bill and the vendor can 
seek reimbursement from USAC by filing the FCC Form 474, Service 
Provider Invoice Form (Form 474).
    31. Application Process. We seek comment on the application process 
for obtaining support from the schools and libraries mechanism. In 
particular, we seek proposals on ways to improve the administration of 
the application process while maintaining an effective review system to 
ensure that USF moneys are disbursed properly. We invite suggestions 
for streamlining the application process, such as shortening, 
combining, or eliminating forms. Commenters should discuss, for 
example, whether we should streamline applications for priority 1 
services, establish a different application cycle for applicants with 
repeat requests, or limit the current application form to applicants 
seeking priority 2 services and develop a simpler application process 
for priority 1 services. We seek comment on whether the burden on 
applicants would be reduced by creating a streamlined form for certain 
circumstances and only requiring full applications when changing 
technology plan criteria or ordering new services. It appears, based on 
the information we have at this time that relatively few instances of 
waste, fraud, and abuse occur in requests for priority 1 services. We 
tentatively conclude that we should adopt a streamlined multi-year 
application for priority one services. Commenters should address 
whether such a streamlined process may create the potential for waste, 
fraud, and abuse, and if so, how we can mitigate such risk. We seek 
comment on whether the complexity of the application process leads some 
small schools and libraries to choose not to participate in the E-rate 
program. In addition, we seek comment on whether the Administrator 
should provide applicants and service providers more, or less, 
information regarding the status of applications and if we should 
establish deadlines or target dates for processing applications. We 
note that there may be practical limitations to establishing firm 
deadlines for processing applications, which are typically submitted in 
batches. We ask commenters to consider these concerns in their 
comments. We also seek comment on suggestions for using technology to 
improve the application process, such as receiving electronic-only 
notifications and status reports. Commenters should discuss the costs 
and benefits of alternative proposals or modifications to the current 
system.
    32. The timing of various parts of the USAC and Commission 
processes is critical to schools and libraries, many of which operate 
according to strict State or municipal budget and procurement 
schedules. When USAC or the Commission cause delay, schools and 
libraries can be thrown off their mandated budget or procurement 
schedules. This can have a significant negative impact on schools' and 
libraries' ability to achieve connectivity goals. Sometimes delay can 
complicate the USAC application process for schools and libraries, 
leading to ministerial errors on subsequent applications, complicating 
auditing, and undermining our ability to combat waste, fraud, and 
abuse. What are the timing and delay issues that the Commission should 
address in this proceeding? How can we improve timing problems and 
delays? While the dedicated staffs of USAC and the Commission work 
hard, do USAC and the Commission have adequate staff resources to 
combat delay? Should we create new deadlines for Commission or USAC 
action in various phases of the E-rate process? Current deadlines for 
resolution of appeals are rarely met. How can we improve? Should we set 
deadlines for particular phases of the USAC and Commission process, 
such as deadlines for progressing from the completion of an application 
to FCDL, or for completion of appeals at the Commission?
    33. We seek comment on what guidance, if any, we should provide to 
define a completed application for E-rate money. We note that, since 
the inception of the program, parties have experienced problems with 
meeting the requirement to submit a complete application during the 
filing window. The Administrator has rejected applications that were 
not complete, including applications that were not signed. We seek 
comments on what rules, if any, we should adopt to provide clarity to 
program applicants. In addition, we seek comment on whether to 
establish minimum processing standards with which the Administrator 
must comply (e.g., requiring the Administrator to verify that the 
applicant's technology plan was signed by an authorized entity). We 
note that failure to sign an application may implicate law enforcement 
activity, as well as the enforcement of the Commission's governing 
rules.
    34. Competitive Bidding. We seek comment on modifying our current 
rules requiring competitive bidding. In particular, we request 
commenters to

[[Page 41665]]

submit alternative proposals or suggestions for improving our 
competitive bidding rules to ensure that program participants obtain 
the best value for USF support provided. We seek comment on whether to 
limit the obligation to issue a competitive bid should apply only to 
applications above a particular dollar value threshold. Would this be 
an appropriate way to balance administrative burdens on applicants with 
the need for competitive bids? We seek comment on the process for 
establishing and administering the eligible services list. We seek 
comment on the pilot on-line eligible products list that USAC 
established pursuant to a Commission order, and whether this project 
has materially streamlined or simplified the application process. 
Commenters should discuss ways to handle the list of eligible services 
in a more administratively efficient way, while at the same time 
ensuring that USF moneys are provided only for eligible services. 
Commenters should also discuss whether we should publish service life, 
or depreciation, guidelines for equipment. In addition, we seek comment 
on how the E-rate technology planning process can be reviewed in 
accordance with other federal technology planning requirements. We also 
seek comment on whether the Good Samaritan E-rate program policy is an 
efficient method of disbursing funds.
    35. Forms. Commenters should discuss the Forms 470, 471, 472, 473, 
474, 486, and 498 and address whether more or less information should 
be required on these forms, if any of these forms could be consolidated 
or eliminated, and if any other forms would be helpful. We seek comment 
on whether the Form 470 facilitates the competitive bidding process, 
and whether our rules should continue to require this form and its 
public disclosure. We seek comment on whether forms can be combined in 
an effort to improve the process, e.g., combining the Form 472 and Form 
474. We note that the Bureau is proposing revisions to the Forms 472, 
473, and 474 in order to combat waste, fraud, and abuse. We seek 
comment on the certification requirements in the E-rate forms. 
Specifically, commenters should discuss whether we should revise the 
Form 473, so that the applicant paying on an installment plan would be 
required to certify that, as of the time of the final invoice payment, 
all of the services covered by the invoice or invoices had been 
provided. In addition, commenters should discuss how we can ensure that 
the certifications by the applicant and the service provider in the 
Form 472 are executed independently. Commenters should also discuss 
whether we should add a signature requirement to the Form 474. We also 
seek comment on whether any of these forms should be optional.
    36. Timing of Application Cycle. Commenters should address whether 
we should better synchronize the application and disbursement process 
with the planning and budget cycles of the schools and libraries 
benefiting from this program. For example, the instructions to the Form 
471 state: ``Provide the number of students eligible for the National 
School Lunch Program (NSLP) as of the October 1st prior to the filing 
of this form, or use the most current figure available.'' Commenters 
should discuss whether this date for data, October 1st or the most 
current, is reasonable, or if a different date should be used. We seek 
comment on whether there are inconsistencies between Commission rules 
(or USAC procedures) and state or municipal rules, including state or 
municipal procurement rules. Commenters should discuss ways to 
reconcile any such inconsistencies. We seek comment on whether an 
annual application cycle is necessary or whether it would be more 
efficient to permit multi-year application cycles. Commenters should 
address the costs and benefits of an annual cycle or multi-year cycle.
    37. Service Providers and Consultants. We seek comment on the 
process as it pertains to service providers and consultants. We 
specifically seek comment on whether we should establish certain 
criteria, such as quality standards or standards of conduct, for 
participating service providers and consultants. Adopting quality 
standards or standards of conduct for service providers and consultants 
could help deter waste, fraud, and abuse by, for example, ensuring 
program participants maintain effective procedures for complying with 
our rules. In addition, we seek comment on whether we should impose 
specific standards or a certification process for consultants for E-
rate and consultants used by other USF beneficiaries. Commenters should 
also discuss any other measures we should adopt to deter fraudulent 
actions by service providers or consultants. Commenters should discuss 
the costs and benefits for any proposal submitted.
(ii) High Cost
    38. The High Cost support mechanism provided approximately $3.4 
billion in support in fiscal year 2004. Under the statute and the 
Commission's rules, only Eligible Telecommunications Carriers (ETCs) 
may receive High Cost support. Under section 214(e) of the Act, a state 
commission can designate a common carrier as an ETC for a service area 
designated by the state commission. An ETC is eligible for universal 
service support and must offer the services supported by universal 
service support mechanisms using its own facilities or a combination of 
its own facilities and resale of another carrier's services. In 
addition, the ETC must advertise the availability of such services.
    39. The High Cost support mechanism is made up of five components: 
high cost loop support, local switching support, interstate access 
support, forward-looking, or model, support for non-rural carriers, and 
interstate common line support (ICLS) for rate-of-return carriers. A 
telecommunications carrier seeking High Cost support for the first time 
must do the following: (1) obtain a service provider identification 
number (SPIN) by using Form 498, (2) obtain ETC status and submit a 
copy of the ETC designation order to USAC, (3) submit line count 
information, (4) have a valid certification on file, and (5) submit the 
Forms 499-A and 499-Q, in which the carrier reports interstate and 
international end user telecommunications revenue.
    40. We seek proposals from stakeholders on ways to improve the High 
Cost program application process and participation by reducing or 
eliminating the administrative burden on carriers. Commenters also 
should discuss whether we should permit High Cost carriers to file 
annual, biannual, or triennial applications for support to provide for 
a more efficient administration of the High Cost program while 
minimizing the burden on carriers. Because support levels may change 
from year to year, a multi-year process, with annual true-ups and 
filing revisions, could cause administrative burdens on the 
Administrator and the carriers. If we adopt a multi-year application 
process, should we make it mandatory? If not, should we require 
carriers that opt for a multi-year process to retain the same level of 
support over the multi-year term, without an opportunity for true-up?
    41. We seek comment on whether any rule changes are needed to 
permit the High Cost support mechanism to operate in a more efficient 
and effective manner while ensuring that USF moneys are used for their 
intended purpose. Should we adopt forms in lieu of the ``Line Count 
Sample Letters'' available on USAC's Web site? Is there additional 
information we should collect from carriers to prevent waste, fraud, 
and abuse? We also seek

[[Page 41666]]

comment on whether the Commission should adopt additional standards or 
deadlines (applicable either to carriers or the Administrator) to 
ensure more efficient management of this program. Commenters should 
discuss the costs and benefits of alternative proposals or suggestions. 
We note that our rules pertaining to the High Cost support mechanism 
are contained in both part 36 and part 54 of the Commission's rules. We 
seek comment on whether we should modify our rules to consolidate all 
High Cost program rules in a single section.
    42. High Cost Loop Support. We seek comment on whether we should 
modify the administrative process for participating in the High Cost 
Loop support mechanism. Specifically, we seek comment on whether we 
should modify the timing and the content of the reporting requirements 
imposed on High Cost companies for the purpose of administering the 
High Cost loop support mechanism. Local exchange carriers (LECs) 
receiving this support are required to submit certain investment and 
expense data, including line count information, to NECA on July 31 of 
each year for participation in the High Cost loop support mechanism. 
Non-rural High Cost carriers must submit updated data quarterly. Rural 
High Cost carriers may voluntarily submit updated data. Currently, NECA 
processes the information and performs the necessary calculations, but 
does not provide the supporting documentation to USAC. Does this lack 
of supporting information impede auditing efforts? We seek comment on 
whether investment and expense information should be submitted to USAC 
in addition to or instead of NECA. We also seek comment on whether we 
should revise or clarify the calculation of line count information; for 
example, should we use an average annual line count instead of an end-
of-year line count? In addition, we seek comment on whether we should 
make the voluntary update filings requirement mandatory, or eliminate 
this requirement altogether. We also seek comment on whether we should 
harmonize the filing dates and requirements so that rural and non-rural 
companies are subject to the same deadlines and billing requirements.
    43. High Cost loop support and local switching support are based on 
an incumbent LEC's costs at the study area level. Rural carriers submit 
line count information at the study area level. We also seek comment on 
whether we should revise Sec.  36.611 of our rules, which describes the 
data collection requirements applicable to High Cost carriers. 
Commenters should discuss whether revisions to NECA's data collection 
form are needed in order to accomplish the goals of the program. 
Finally, we seek comment on whether we should modify the quarterly 
reporting requirement for rural High Cost LECs in whose service area a 
competitive ETC has initiated service and reported line count data. 
These LECs must update their line count data quarterly (but not the 
investment and expense data). We invite comments and proposals on what 
measures we can implement to balance the filing burden on High Cost 
companies with our need for information to run the program.
    44. Local Switching Support. We seek comment on the administrative 
process pertaining to the Local Switching Support mechanism, including 
the timing of and scope of the information submitted by program 
beneficiaries to administer this program. A cost company serving fewer 
than 50,000 lines must submit the Form LSSc, an average schedule 
company serving fewer than 50,000 lines must submit the Form LSSa. We 
seek comment on these forms. We seek comment on whether we should 
shorten, combine, revise, or eliminate these forms. Commenters should 
discuss whether we should revise Sec.  54.301 of the Commission's rules 
to limit projected growth in accounts based on actual past performance. 
In addition, commenters should discuss any other revisions to the LSS 
data collection form and whether the quantity and timing of information 
requested is appropriate. The Commission's rules require incumbent LECs 
receiving Local Switching Support to provide data to the Administrator 
by October 1st of each year. We seek comment on this process and 
specifically on the deadlines for submitting Local Switching Support 
data. We seek comment on whether carriers should receive a pro-rated 
portion of LSS, if the LSS information is filed late. We also seek 
comment on whether we should adopt rules to ensure the accuracy and 
reliability of these data. We seek suggestions for improving the 
process while at the same time promoting measures to ensure that Local 
Switching Support is used for appropriate purposes.
    45. Interstate Access Support. Only price cap carriers or 
competitive LECs serving in the area of a price cap carrier are 
eligible for Interstate Access Support. Price cap carriers must submit 
information on line counts, revenue information, UNE zone rates and UNE 
zone maps, and carrier certification. Line counts are the number of 
lines served within each price cap LEC study area in which it serves. 
We seek comment on the application process, the timing and scope of the 
information carriers must file, and whether we should impose greater or 
lesser reporting requirements on participants. We seek comment on 
whether we can administer Interstate Access Support with less 
information than we currently collect and still ensure that funds are 
used appropriately.
    46. Forms. Applicants for funds from each of the universal service 
support mechanisms must comply with various certification requirements. 
Generally, these consist of statements certifying that information 
provided on the forms themselves are accurate and complete, and that 
funds received will be used for their intended purpose. We invite 
comment on whether the certification language in existing forms that 
must be submitted by applicants are sufficient to ensure that funds are 
used in their intended manner, in the absence of waste, fraud, and 
abuse. Would additional forms or modified language in existing forms 
further protect the high-cost universal service support mechanisms 
against waste, fraud, and abuse? We request that commenters propose 
specific additional certification language they believe would further 
these goals, along with an explanation why the current certification 
language is insufficient. We also seek comment on the administrative 
burden (particularly on rural and small entities) of any proposed new 
forms and certifications.
(iii) Low Income
    47. The Low Income program provided approximately $800 million to 
carriers in fiscal year 2004 in order to promote subscribership among 
people of limited means. Only ETCs are eligible to receive Low Income 
support. In our Lifeline/Link-Up Report and Order, 69 FR 34590, June 
22, 2004, we observed that only one-third of the households currently 
eligible for Lifeline/Link-Up assistance actually subscribe to this 
program. In that proceeding, we expanded the eligibility criteria and 
adopted federal certification and verification procedures to minimize 
potential abuse of these programs. We also adopted outreach guidelines 
to target low income consumers more effectively.
    48. The Lifeline program reimburses carriers for discounting low 
income consumers' monthly telephone bills. This program allows low 
income consumers to save up to $10.00 per month on their telephone 
bills. Low income consumers living on tribal lands may qualify for 
additional monthly discounts ranging from $30.25 to $35.00. The Link-Up 
program

[[Page 41667]]

reimburses carriers for providing discounted connection charges to 
eligible low income consumers. Qualifying consumers are eligible to 
save up to 50 percent on installation fees (not to exceed $30). Low 
income consumers living on tribal lands may qualify for a discount of 
up to an additional $70.
    49. We seek comment on the process for participating in the Low 
Income support mechanism. In particular, we seek comment on whether we 
should revise the information requested and the frequency of carrier 
submissions. Carriers must submit the FCC Form 497, Lifeline and Link-
Up Worksheet (Form 497), for reimbursement. In the Form 497, carriers 
report the number of Lifeline and Link-Up customers served, for each 
tier of support. This form must be submitted quarterly, by April 15th, 
July 15th, October 15th, and January 15th of each year. Commenters 
should discuss whether we should simplify the application process to 
require annual or semi-annual reporting instead of quarterly reporting. 
Low income rules appear in both part 54 and part 36 of our rules. We 
also seek comment on whether we should consolidate the Low Income 
rules. In addition, we invite comments and proposals on what measures 
we can implement to balance the filing and advertising burdens on 
companies with low income end users with our need for information to 
run the program effectively.
    50. Forms. Applicants for funds from each of the universal service 
support mechanisms must comply with various certification requirements. 
Generally, these consist of statements certifying that information 
provided on the forms themselves are accurate and complete, and that 
funds received will be used for their intended purpose. We invite 
comment on whether the certification language in existing forms that 
must be submitted by applicants for funds from the low income support 
mechanism are sufficient to ensure that funds are used in their 
intended manner, in the absence of waste, fraud, and abuse. Would 
additional forms or modified language in existing forms further protect 
the low income universal service support mechanisms against waste, 
fraud, and abuse? We request that commenters propose specific 
additional certification language they believe would further these 
goals, along with an explanation why the current certification language 
is insufficient. We also seek comment on the administrative burden 
(particularly on rural and small entities) of new forms and 
certifications.
(iv) Rural Health Care
    51. In the Rural Health Care program, eligible health care 
providers apply for discounts on telecommunications services, in a 
procedure similar to that for the schools and libraries. The Rural 
Health Care support mechanism provided approximately $18 million thus 
far to carriers in fiscal year 2003. The program reimburses carriers 
that ``provide telecommunications services which are necessary for the 
provision of health care services in a State, including instruction 
relating to such services, to any public or nonprofit health care 
provider that services persons who reside in rural areas in that State 
at rates that are reasonably comparable to rates charged for similar 
services in urban areas in that State.'' This design ensures that 
health care providers in rural areas obtain the benefits of the 
Internet and telecommunications through universal service support. 
Rural health care providers often use rural health care support to 
implement telemedicine programs, i.e., medical treatment supported by 
advanced telecommunications services and information services. 
Telemedicine programs allow rural health care providers to consult with 
specialists in an effective manner. Carriers are not required to be 
ETCs to participate in this program; all Internet service providers and 
common carriers may participate, including interexchange carriers. This 
program is capped at $400