Rural Health Care Universal Service Support Mechanism, 48236-48272 [2010-19459]

Agencies

• FEDERAL COMMUNICATIONS COMMISSION

[Federal Register Volume 75, Number 152 (Monday, August 9, 2010)]
[Proposed Rules]
[Pages 48236-48272]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-19459]



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Part IV





Federal Communications Commission





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47 CFR Part 54



Rural Health Care Universal Service Support Mechanism; Proposed Rule

Federal Register / Vol. 75, No. 152 / Monday, August 9, 2010 / 
Proposed Rules

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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[WC Docket No. 02-60; FCC 10-125]


Rural Health Care Universal Service Support Mechanism

AGENCY: Federal Communications Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: In this document, the Commission seeks comment on a package of 
reforms that would expand the use of broadband to improve the quality 
and delivery of health care, and addresses each of the major 
recommendations in the National Broadband Plan regarding the 
Commission's rural health care program. The Commission proposes three 
major changes to the rural health care program. To create a health 
infrastructure program that would support up to 85 percent of the 
construction costs of new or upgraded regional or statewide dedicated 
broadband networks for health care purposes. To create a health 
broadband services program that would provide 50 percent of the monthly 
recurring costs for access to broadband services for eligible health 
care providers. To expand the definition of ``eligible health care 
provider'' to include administrative offices, data centers, skilled 
nursing facilities, and renal dialysis centers. The Commission also 
proposes to eliminate the offset contribution rule for the rural health 
care program, and seeks comment on prioritizing funding requests, and 
establishing performance measures.

DATES: Comments on the proposed rules are due on or before September 8, 
2010, and reply comments are due on or before September 23, 2010. 
Written comments on the Paperwork Reduction Act proposed information 
collection requirements must be submitted by the public, Office of 
Management and Budget (OMB), and other interested parties on or before 
October 8, 2010. If you anticipate that you will be submitting 
comments, but find it difficult to do so within the period of time 
allowed buy this notice, you should advise the contact listed below as 
soon as possible.

ADDRESSES: You may submit comments, identified by WC Docket No. 02-60, 
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://fjallfoss.fcc.gov/ecfs2/. Follow the instructions for submitting 
comments.
     Paper Filers. See instructions in the Supplementary 
Information section of this document (under Comment Filing Procedures).
     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.
     In addition to filing comments with the Secretary, a copy 
of any comments on the Paperwork Reduction Act information collection 
requirements contained herein should be submitted to the Federal 
Communications Commission via e-mail to PRA@fcc.gov and to Nicholas A. 
Fraser, Office of Management and Budget, via e-mail to Nicholas_A._Fraser@omb.eop.gov or via fax at 202-395-5167.
    For detailed instructions for submitting comments and additional 
information on the rulemaking process, see the SUPPLEMENTARY 
INFORMATION section of this document.

FOR FURTHER INFORMATION CONTACT: Ernesto Beckford (202) 418-1523, 
Wireline Competition Bureau, Telecommunications Access Policy Division 
or TTY: (202) 418-0484. For additional information concerning the 
Paperwork Reduction Act information collection requirements contained 
in this document, send an e-mail to PRA@fcc.gov or contact Judith B. 
Herman, Office of Managing Director, via e-mail to Judith-B.Herman@fcc.gov.

SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's 
Notice of Proposed Rulemaking (NPRM) in WC Docket No. 02-60, FCC 10-
125, adopted July 15, 2010, and released July 15, 2010. The complete 
text of this document is available for inspection and copying during 
normal business hours in the FCC Reference Information Center, Portals 
II, 445 12th Street, SW., Room CY-A257, Washington, DC 20554. The 
document may also be purchased from the Commission's duplicating 
contractor, Best Copy and Printing, Inc., 445 12th Street, SW., Room 
CY-B402, Washington, DC 20554, telephone (800) 378-3160 or (202) 863-
2893, facsimile (202) 863-2898, or via the Internet at https://www.bcpiweb.com. It is also available on the Commission's Web site at 
https://www.fcc.gov.

Comment Filing Procedures

    Pursuant to Sec. Sec.  1.415 and 1.419 of the Commission's rules, 
47 CFR 1.415, 1.419, interested parties may file comments and reply 
comments on or before the dates indicated on the first page of this 
document. Comments and reply comments may be filed using: (1) The 
Commission's Electronic Comment Filing System (ECFS), (2) the Federal 
Government's eRulemaking Portal, or (3) by filing paper copies. See 
Electronic Filing of Documents in Rulemaking Proceedings, 63 FR 24121, 
May 1, 1998.
     Electronic Filers: Comments may be filed electronically 
using the Internet by accessing the ECFS: https://fjallfoss.fcc.gov/ecfs2/or the Federal eRulemaking Portal: https://www.regulations.gov.
     Paper Filers: Parties who choose to file by paper must 
file an original and four copies of each filing. If more than one 
docket or rulemaking number appears in the caption of this proceeding, 
filers must submit two additional copies for each additional docket or 
rulemaking number. Filings can be sent by hand or messenger delivery, 
by commercial overnight courier, or by first-class or overnight U.S. 
Postal Service mail. All filings must be addressed to the Commission's 
Secretary, Office of the Secretary, Federal Communications Commission.
    [cir] All hand-delivered or messenger-delivered paper filings for 
the Commission's Secretary must be delivered to FCC Headquarters at 445 
12th St., SW., Room TW-A325, Washington, DC 20554. The filing hours are 
8 a.m. to 7 p.m. All hand deliveries must be held together with rubber 
bands or fasteners. Any envelopes must be disposed of before entering 
the building.
    [cir] Commercial overnight mail (other than U.S. Postal Service 
Express Mail and Priority Mail) must be sent to 9300 East Hampton 
Drive, Capitol Heights, MD 20743.
    [cir] U.S. Postal Service first-class, Express, and Priority mail 
must be addressed to 445 12th Street, SW., Washington DC 20554.
    [cir] In addition, one copy of each paper filing must be sent to 
each of the following: (i) The Commission's duplicating contractor, 
Best Copy and Printing, Inc., 445 12th Street, SW., Room CY-B402, 
Washington, DC 20554; Web site: https://www.bcpiweb.com; phone: 1-800-
378-3160; (ii) Ernesto Beckford, Telecommunications, Telecommunications 
Access Policy Division, Wireline Competition Bureau, 445 12th Street, 
SW., Room 5-A312, Washington, DC 20554; e-mail: 
Ernesto.Beckford@fcc.gov; and (iii) Charles Tyler, Telecommunications, 
Access Policy Division, Wireline Competition Bureau, 445 12th Street, 
SW., Room 5-A452, Washington, DC 20554, e-mail: Charles.Tyler@fcc.gov.

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     People with Disabilities: To request materials in 
accessible formats for people with disabilities (braille, large print, 
electronic files, audio format), send an e-mail to fcc504@fcc.gov or 
call the Consumer & Governmental Affairs Bureau at 202-418-0530 
(voice), 202-418-0432 (TTY).
    Filings and comments are available for public inspection and 
copying during regular business hours at the FCC Reference Information 
Center, Portals II, 445 12th Street, S.W., Room CY-A257, Washington, DC 
20554. Copies may also be purchased from the Commission's duplicating 
contractor, BCPI, 445 12th Street, SW., Room CY-B402, Washington, DC 
20554. Customers may contact BCPI through its Web site: https://www.bcpiweb.com, by e-mail at fcc@bcpiweb.com, by telephone at (202) 
488-5300 or (800) 378-3160 (voice), (202) 488-5562 (TTY), or by 
facsimile at (202) 488-5563.
    Comments and reply comments must include a short and concise 
summary of the substantive arguments raised in the pleading. Comments 
and reply comments must also comply with Sec.  1.49 and all other 
applicable sections of the Commission's rules. We direct all interested 
parties to include the name of the filing party and the date of the 
filing on each page of their comments and reply comments. All parties 
are encouraged to utilize a table of contents, regardless of the length 
of their submission. We also strongly encourage parties to track the 
organization set forth in the NPRM in order to facilitate our internal 
review process.

Initial Paperwork Reduction Act of 1995 Analysis

    This document contains proposed information collection 
requirements. The Commission, as part of its continuing effort to 
reduce paperwork burdens, invites the general public and the Office of 
Management and Budget (OMB) to comment on the information collection 
requirements contained in this document, as required by the Paperwork 
Reduction Act of 1995, Public Law 104-13. Public and agency comments 
are due October 8, 2010.
    Comments on the proposed information and collection requirements 
should address: (a) Whether the proposed collection of information is 
necessary for the proper performance of the functions of the 
Commission, including whether the information shall have practical 
utility; (b) the accuracy of the Commission's burden estimates; (c) 
ways to enhance the quality, utility, and clarity of the information 
collected; (d) ways to minimize the burden of the collection of 
information on the respondents, including the use of automated 
collection techniques or other forms of information technology; and (e) 
ways to further reduce the information collection burden on small 
business concerns with fewer than 25 employees. In addition, pursuant 
to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, 
see 44 U.S.C. 3506(c)(4), we seek specific comment on how we might 
further reduce the information collection burden for small business 
concerns with fewer than 25 employees.
    OMB Control Number: 3060-0804.
    Title: Universal Service--Rural Health Care Program.
    Form No.: FCC Form 465, 466, 466-A, 467 (currently approved), newly 
proposed FCC Forms 464-A, 464-B, 464-Q, and 468.
    Type of Review: Revision of currently approved collection.
    Respondents: Not-for-profit institutions; Business or other for-
profit institutions; and State, local, or Tribal Government.
    Number of Respondents and Responses: 11,000 and 46,721.
    Estimated Time per Response: 1.5 hours.
    Frequency of Response: Annually, Quarterly and One-time only.
    Obligation to Respond: Required to obtain or retain benefits.
    Total Annual Burden: 58,360 hours.
    Total Annual Costs: $3,118,069.06.
    Privacy Act Impact Assessment: This information collection does not 
affect individuals or households; thus, there are no impacts under the 
Privacy Act.
    Nature and Extent of Confidentiality: There is no need for 
confidentiality. However, respondents may request materials or 
information submitted to the Commission be withheld from public 
inspection under 47 CFR 0.459 of the Commission's rules.
    Needs and Uses: The information collected provides the Commission 
with the necessary information to administer the rural health care 
support mechanism, determine the amount of support entities seeking 
funding are eligible to receive, and inform the Commission about the 
feasibility of revising its rules.

    Statutory Authority: Statutory authority for this collection is 
contained in 47 U.S.C. 151, 154(i), 154(j), 201-205, 214, 254, and 
403.

Synopsis of the Notice of Proposed Rulemaking

I. Introduction

    1. The NPRM seeks comment on a package of potential reforms to the 
rural health care program that could be implemented in funding year 
2011 (July 1, 2011-June 30, 2012).
    2. The proposed reforms include: (1) Establishing a broadband 
infrastructure program (the ``health infrastructure program'') that 
would support up to 85 percent of the construction costs of new 
regional or statewide networks to serve public and non-profit health 
care providers in areas of the country where broadband is unavailable 
or insufficient; (2) establishing a broadband services access program 
(the ``health broadband services program'') that would subsidize 50 
percent of the monthly recurring costs for access to broadband services 
for eligible public or non-profit rural health care providers, which 
should make broadband connectivity more affordable for providers 
operating in rural areas; (3) expanding the Commission's interpretation 
of ``eligible health care provider'' to include acute care facilities 
that provide services traditionally provided at hospitals, such as 
skilled nursing facilities and renal dialysis centers and facilities, 
and administrative offices and data centers that do not share the same 
building as the clinical offices of a health care provider but that 
perform support functions critical for the provision of health care; 
(4) clarifying the Commission's existing recordkeeping requirements to 
enhance its ability to protect against waste, fraud and abuse; and (5) 
eliminating the current rule that requires that funding be offset 
against universal service contributions owed by participating service 
providers, and instead propose to allow service providers participating 
in the health broadband services program, telecommunications program, 
and health infrastructure program to receive rural health care funds 
directly from USAC.
    3. The Commission also seeks comment on the following: (1) How to 
prioritize funding requests for rural health care support to the extent 
demand exceeds the annual $400 million funding cap; and (2) ways to 
enhance ongoing program evaluation and implementation of performance 
measures to ensure that the public realizes benefits from the 
investment of universal service funding to improve broadband 
connectivity for health care providers.
    4. In addition to the changes discussed below, the proposed rules 
include non-substantive changes to the rules applicable to the 
telecommunications program. We seek comment on such changes.

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II. Health Infrastructure Program

    5. The National Broadband Plan stated that the Pilot Program 
``represents an important first step in extending broadband 
infrastructure to unserved and underserved areas and ensuring that 
health care providers in rural areas and Tribal lands are connected 
with sophisticated medical centers in urban areas.'' However, the 
National Broadband Plan noted that, despite the efforts of the 
Commission to date, many health care providers remain under-connected. 
The National Broadband Plan recommended that the Commission continue to 
support broadband infrastructure for health care purposes, 
incorporating lessons learned from the Pilot Program.
    6. In establishing the Pilot Program, the Commission noted that 
many health care providers were unable to access certain telehealth 
services without deployment of broadband facilities. Despite the 
overwhelming interest and participation levels in the Pilot Program, 
the National Broadband Plan found that a large broadband connectivity 
gap still exists, particularly among small, rural providers. For 
example, the National Broadband Plan identified a broadband 
connectivity gap among an estimated 3,600 out of approximately 307,000 
small providers. 70 percent of those small providers lacking access to 
mass-market broadband services--approximately 2,500 providers--are 
located in areas that the Commission defines as rural. The National 
Broadband Plan also found that larger physician offices (i.e., five or 
more physicians), larger clinics and hospitals also face broadband 
connectivity barriers; it noted that due to their size and health IT 
service needs, such health care providers cannot utilize mass-market 
broadband, but require dedicated Internet access (DIA) solutions.
    7. Consistent with its authority under section 254(h)(2)(A) of the 
Act, the Commission proposes to create a ``health infrastructure 
program'' to fund up to 85 percent of eligible costs for the design, 
construction and deployment of dedicated broadband networks that 
connect public or non-profit health care providers in areas of the 
country where the existing broadband infrastructure is inadequate. The 
program would provide support for the construction of State or regional 
broadband health care networks that can, for example, connect rural and 
urban health care providers, facilitate the transmission of real time 
video, pictures, and graphics, bridge the silos that presently isolate 
relevant patient data, make communications resources more robust and 
resilient, and maximize the efficiency and reliability of packet 
routing. Broadband infrastructure projects may include either new 
facilities or improvements to upgrade existing facilities (for example, 
converting a copper facility to a fiber facility capable of broadband 
delivery). In addition, funding may be used to support up to 85 percent 
of the cost of connecting health care networks to Internet2 or National 
LambdaRail (NLR), both of which are non-profit, nationwide backbone 
providers.

A. Program Process

    8. The Commission proposes an application and selection process for 
the health infrastructure program in which eligible health care 
providers may seek funding for qualified projects through a streamlined 
process. The Commission seeks comment on each step of the process 
described below. To the extent a commenter disagrees with a particular 
aspect of the proposed process, the Commission asks them to identify 
that with specificity and propose an alternative.
    9. Initial Application Phase. First, applicants may request 
consideration for funding by completing a user friendly online 
application available on a Web site to be developed and maintained by 
the Universal Service Administrative Company (USAC). Applications would 
be accepted during the first quarter of each funding year (July 1 to 
September 30). As part of this initial application phase, an applicant 
would be required to (1) Verify that either there is no available 
broadband infrastructure or the existing available broadband 
infrastructure is insufficient for health IT needed to improve and 
provide health care delivery, (2) provide letters of agency for each of 
the eligible health care providers in the applicant's proposed network, 
(3) include a preliminary budget and an infrastructure funding request, 
not in excess of the per-project caps discussed below, and (4) certify 
that it will comply with all program requirements if selected for 
funding.
    10. Project Selection Phase. The Commission proposes that 
applications submitted for funding be made publicly available on USAC's 
Web site. Publicly available information would include the names of the 
parties seeking funding, their geographic location, and information 
filed by the applicants to corroborate that sufficient broadband 
infrastructure is unavailable or insufficient in their geographic 
location. During the second quarter of each funding year (October 1 to 
December 31), USAC would review all applications received during the 
initial application phase. The Commission seeks comment below on 
limiting the total number of projects that may be selected in a given 
year. The Commission also seeks comment below on prioritization rules 
to be applied by USAC in the event that funding requests exceed the 
annual amount available under the health infrastructure program. After 
applications have been reviewed, and prioritization rules have been 
applied, USAC would notify selected participants of their project 
eligibility status. This would normally occur during the third quarter 
of each funding year (January 1 to March 30). After a participant is 
notified of project eligibility, it may proceed with the project 
commitment phase per the requirements set forth below. During the 
project commitment phase, participants may receive funding from the 
health infrastructure program for a portion of the reasonable 
administrative expenses incurred in connection with the project, 
subject to certain caps as discussed further below.
    11. Project Commitment Phase. After being selected based on their 
initial application, the Commission proposes that participants in the 
health infrastructure program would complete and submit all application 
materials and comply with all program requirements, including: (1) 15 
percent minimum contribution requirement; (2) project milestones; (3) 
detailed project description; (4) facilities ownership, IRU or capital 
lease requirements; (5) standard terms and conditions; (6) 
sustainability plan; (7) excess capacity disclosures; (8) vendor cost 
reporting requirements; (9) quarterly reporting requirements, (10) 
competitive bidding and vendor selection requirements; (11) completion 
of project; and (12) NEPA and NHPA requirements. USAC would review each 
step of the project commitment phase to confirm the participant's 
compliance with all data and information requirements and compliance 
with program rules. USAC would conduct technical and financial review 
of all proposed projects to ensure that they comply with the 
Commission's rules. USAC may request additional information from 
applicants and participants if deemed necessary to substantiate, 
explain or clarify any materials submitted as part of the funding 
process.
    12. Build-Out Period. The Commission proposes that participants 
have a period of three funding years (commencing with the funding year 
in which the initial online application was submitted) to file all 
forms and supporting documents necessary to

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receive funding commitment letters from USAC; and a period of five 
years (commencing on the date on which the participant receives its 
first funding commitment letter for the project) in which to complete 
build-out.

B. Demonstrated Need for Infrastructure Funding

    13. The Commission proposes that applicants under the health 
infrastructure program demonstrate that broadband, at the connectivity 
speeds defined below, is presently unavailable or insufficient for 
health IT needed to improve or provide health care delivery requested 
by the eligible health care providers seeking funding. The Commission 
seeks comment on this proposal.
    14. Connectivity Speed. The Commission seeks comment on setting a 
minimum threshold for broadband connectivity speeds under the health 
infrastructure program. The National Broadband Plan suggested that most 
businesses in the United States, including health care providers, have 
two choices of broadband service: Mass-market, small business solutions 
of 4 Mbps or more, or dedicated Internet access (DIA) solutions of 10 
Mbps or more. Because the focus of the health infrastructure program is 
to fund dedicated networks, the Commission proposes setting 10 Mbps as 
the minimum broadband speed for infrastructure deployment supported 
under the health infrastructure program. The Commission seeks comment 
on this proposal. The Commission also seeks comment on minimum levels 
of reliability, including physical redundancy, to support health IT 
services and what can be done to encourage reliability. The Commission 
also seeks comment on the minimum quality of service standards 
necessary to meet health IT needs. The Commission seeks comment on 
whether the health infrastructure program should contain a minimum 
quality of service requirement.
    15. The National Broadband Plan recommended that the Commission 
establish demonstrated-needs criteria to ensure that deployment is 
focused in those areas of the country where the existing broadband 
infrastructure is insufficient. It suggested that such criteria could 
include: Demonstration that the health care provider is located in an 
area where sufficient broadband is unavailable or unaffordable; or 
certification that the health care provider has posted for services for 
an extended period of time and has not received any viable proposals 
from qualified network vendors for such services.
    16. Building a dedicated broadband network involves significant 
effort and costs. It is important, therefore, to adopt a process that 
will help ensure that projects are funded only in those regions where 
providers cannot obtain access to broadband adequate for health care 
purposes due to a lack of sufficient infrastructure. Accordingly, the 
Commission proposes that applicants seeking funding under the health 
infrastructure program demonstrate that broadband adequate to meet 
their health care needs is unavailable or insufficient in the 
geographic area where health care providers are to be connected by the 
proposed dedicated network, by using any of the following methods:
     Provide a survey of current carrier network capabilities 
in the geographic area, compiled by a preparer reasonably qualified to 
make such surveys. The survey should provide details as to the identity 
and broadband capabilities of all existing carriers in the proposed 
network area, and discuss and justify the methodology used to make such 
determinations. The survey should be accompanied by a statement of the 
preparer's professional, educational, and business background that make 
the preparer qualified for conducting the survey. For example, indicate 
the preparer's prior experience, technical or engineering degrees, 
telecommunications background, and knowledge of methods typically 
employed to perform such surveys. In addition to the survey, the 
applicant would be required to provide a report detailing either that 
there is no available broadband infrastructure, or explaining why 
existing broadband infrastructure would be insufficient for health IT 
needed to provide or improve health care delivery requested by the 
health care providers that are proposing the infrastructure project.
     Provide copies or linked references to recognized 
broadband mapping studies, such as NTIA's national broadband map, State 
or local broadband maps, and other mapping sources that adequately 
depicts the available broadband in the proposed network area. In 
addition to referencing such NTIA or State broadband mapping studies, 
the applicant would be required to provide a report detailing why 
existing broadband infrastructure would be insufficient to meet the 
needs of the eligible health care providers that are proposing the 
infrastructure project.
     Certify that, for a continuous period of not less than six 
months, the health care providers in the proposed dedicated network 
requested broadband services under the telecommunications program or 
the health broadband services program, and did not receive any 
proposals from qualified network vendors meeting the terms of the 
requested services. The Commission proposes six months as the minimum 
time period for which applicants must show that they were unable to 
acquire broadband services sufficient for their needs. This period 
would allow existing carriers to compete to provide services to the 
health care providers prior to any health infrastructure funding from 
the health infrastructure program. The Commission seeks comment on 
whether six months is a sufficient period of time. To the extent 
commenters propose other time periods, they should provide specific 
information to support their recommended time periods.
    17. The National Broadband Plan also suggested that health care 
providers could justify funding from an infrastructure program by 
providing a financial analysis showing that the cost of new network 
deployment would be significantly less expensive over a specified time 
period (e.g., 15-20 years) than purchasing services from an existing 
network carrier. The Commission seeks comment on whether it should 
adopt such criteria, in addition to the three options proposed above, 
and, if so, what should be included in the financial analysis? If the 
Commission requires that applicants demonstrate that network deployment 
would be less expensive over a period of time, what period of time is 
appropriate? For example, should such period of time be equivalent to 
the useful economic life of the funded network? Should an applicant 
provide a net present value to demonstrate cost effectiveness? Are 
there other methodologies that can be included in a financial analysis 
to demonstrate the cost effectiveness of network deployment?
    18. The Commission invites comments on whether the above criteria 
are sufficient to establish that broadband is unavailable or 
insufficient. In addition, the Commission invites comments on other 
ways in which health care providers could demonstrate, or interested 
stakeholders could challenge, the sufficiency of existing broadband 
infrastructure. When possible, such comments should indicate publicly 
available sources that could be used to determine the existence or 
absence of adequate broadband infrastructure.
    19. All information submitted by applicants to establish that 
broadband is unavailable or insufficient would be

[[Page 48240]]

subject to review and verification by USAC.

C. Letters of Agency

    20. The Commission proposes that as part of the initial application 
phase for infrastructure projects, applicants identify (1) all eligible 
health care providers on whose behalf funding is being sought, and (2) 
the lead entity that will be responsible for completing the application 
process. In addition, as in the Pilot Program, the Commission would 
require that the application include a Letter of Agency (LOA) from each 
participating health care provider, confirming that the health care 
provider has agreed to participate in the applicant's proposed network, 
and authorizing the lead entity to act as the health care provider's 
agent for completing the application process. Such letters of agency 
will serve as confirmation that the identified health care providers 
endorse the proposed network, and will also avoid improper duplicate 
support for health care providers participating in multiple networks. 
All such letters of agency would be delivered by the applicant as part 
of the initial application.
    21. Consortium Applications. The Commission recognizes that 
eligible health care providers may wish to obtain broadband services as 
part of consortia that may include other entities that are not eligible 
health care providers. For example, health care providers may join with 
State organizations, public sector (governmental) entities, and non-
profit entities that are not eligible health care providers. The Pilot 
Program allowed State organizations, public entities and non-profits to 
act as administrative agents for eligible health care providers within 
a consortium. The Commission proposes retaining this same flexibility 
for the health infrastructure program. Although State organizations, 
public entities and non-profits may not constitute eligible health care 
providers, they may apply on behalf of eligible health care providers 
as part of a consortium (e.g., as consortia leaders) to function in an 
administrative capacity for eligible health care providers within the 
consortium. In doing so, however, State organizations, public entities 
and non-profits would be prohibited from receiving any funding from the 
health infrastructure program (other than some administrative expenses, 
as discussed below). The Commission proposes that any discounts, 
funding, or other program benefits secured by a State organization, 
public sector (governmental) entity or non-profit entity acting as a 
consortium leader under the health infrastructure program would be 
passed on to the consortium members that are eligible health care 
providers.
    22. The Commission also proposes that in the case of a consortium, 
the legally and financially responsible entity that owns dedicated 
facilities funded by the health infrastructure program could be a State 
organization, public sector (governmental), or not-for profit entity 
acting as a fiduciary agent for eligible health care providers within 
such consortium. For example, a State, public (government) or non-
profit entity acting as administrative agent for a consortium of 
eligible health care providers seeking funding for a dedicated network 
could also serve as the title owner of the dedicated network. However, 
the Commission proposes that title to the dedicated network would be 
held exclusively for the benefit of eligible health care providers. The 
Commission seeks comment on the above proposals.

D. Funding Requests and Budgets

    23. The Commission proposes that every applicant's initial 
application include a funding request, a brief project description and 
a detailed budget. The funding request should not exceed 85 percent of 
the eligible costs identified in the budget. The Commission seeks 
comment on the proposals set forth below.
    24. Cap on Amount Funded per Project. The Commission seeks comment 
on whether there should be a cap on the total amount for which a 
project may seek funding. A per project cap would help ensure that 
multiple projects across varying unserved geographic areas will be 
eligible to receive funding for infrastructure. The Commission notes 
that nearly 90 percent of the projects in the Pilot Program had 
proposed budgets below $15 million. For example, the Commission could 
provide that no single project would be eligible for more than $15 
million in funding. The Commission seeks comment on whether $15 
million, or some other figure, is the correct per project cap to use. 
The Commission notes that it would retain authority to consider an 
applicant's request for waiver of the per project cap on a case-by-case 
basis if warranted by the particular circumstances and the public 
interest.
    25. Cap on Number of Projects per Year. Further, the Commission 
seeks comment on whether to adopt a rule setting a maximum number of 
projects to be selected for funding each year. One of the lessons 
learned from the Pilot Program is that many applicants were ill-
prepared to undertake the complex process of developing a new health 
care network, and consequently many required ongoing coaching and 
support to navigate their way through the process. A smaller number of 
projects will allow USAC to devote greater resources and time in 
ensuring their success. Also, unlike the Pilot Program, projects not 
selected for funding in any funding year will have opportunities to 
apply for funding in subsequent funding years. If the number of 
projects that apply and qualify for funding in any year exceeded such a 
cap, should priority be given to those projects that connect the 
greatest number of rural health care providers? If the Commission 
adopts a cap on the number of projects that may be funded per year, it 
seeks comment on whether such cap should be in addition to or in lieu 
of a cap on the amounts funded per project.
    26. Budget. The Commission proposes that together with the funding 
request, applicants submit a detailed budget that identifies all costs 
related to the proposed project. The budget should be reasonable, and 
should be based on pricing information available to the applicant. All 
material assumptions used in preparing the budget should be noted and 
discussed in narrative form. The budget should separately identify the 
following (each subject to the limitations identified in this NPRM): 
(1) Eligible non-recurring costs; (2) eligible administrative expenses; 
(3) eligible network design costs; (4) eligible maintenance costs; (5) 
eligible NLR or Internet2 membership fees; and (6) all costs that are 
necessary for completion of the project, but that are not eligible for 
support under the health infrastructure program. If a budget line item 
contains both eligible and ineligible components, costs should be 
allocated to the extent that a clear delineation can be made between 
the eligible and ineligible components.
    27. Requiring applicants to prepare and submit a budget would 
ensure that the applicant has given adequate consideration to the 
project requirements, has undertaken a preliminary analysis of 
potential costs, and has identified the amount of funds that they will 
be required to contribute to the overall project. The Commission seeks 
comment on whether to require applicants to include any additional 
information in their preliminary budget.
    28. The Commission proposes that USAC review all project budgets 
for compliance with program rules. USAC could assist prospective 
applicants with tools that provide benchmark cost estimates for certain 
items common to

[[Page 48241]]

all infrastructure projects. The Commission proposes allowing budgets 
submitted by program applicants and program participants to be made 
available publicly so that other prospective applicants may use such 
information as a basis for preparing their own budgets. The Commission 
seeks comment on the above proposals.

E. Eligible Costs

    29. Non-Recurring Costs. The Commission proposes that the health 
infrastructure program may provide support for the following non-
recurring costs for the deployment of infrastructure: (1) Initial 
network design studies (but not in excess of the cap identified below); 
(2) engineering, materials and construction of fiber facilities or 
other broadband infrastructure; and (3) the costs of engineering, 
furnishing (i.e., as delivered from the manufacturers), and installing 
network equipment. The Commission seeks comment on these proposals and 
on whether the health infrastructure program should offer support for 
other non-recurring infrastructure costs.
    30. Network Design. While network design would be eligible for 
funding, the primary focus of the health infrastructure program should 
be capital costs for infrastructure construction and deployment. 
Therefore, the Commission proposes that support for eligible network 
design costs be limited to $1 million per project or 15 percent of the 
project's eligible costs, whichever is less. The Commission seeks 
comment on this proposal.
    31. Administrative Expenses. The Commission proposes that, for the 
health infrastructure program only, reasonable administrative expenses 
incurred by participants for completing the application process may be 
eligible for some limited support. Examples of administrative expenses 
are costs incurred in preparing request for proposals, negotiating with 
vendors, reviewing bids, etc. The Commission's experience with the 
Pilot Program supports the need to provide some amount of funding for 
administrative expenses in infrastructure projects, to support the 
process of designing the network and securing necessary agreements. 
Participants have indicated that the costs associated with 
infrastructure deployment can be a considerable financial burden on 
participants that are designing and deploying networks over vast 
geographic areas. Allowing a portion of funding to be used for 
administrative expenses could enable program participants to explore 
more efficient, effective means of deploying broadband for the delivery 
of health care. Accordingly, the Commission proposes that after a 
participant is selected for funding based on its initial application, 
it may request funding for up to 85 percent of the reasonable 
administrative expenses incurred in connection with the project.
    32. Because the primary focus of the program should be to fund 
infrastructure and not project administration, the Commission proposes 
three limitations on administrative expenses. First, support for such 
expenses will be limited to 36 months, commencing with the month in 
which a participant has been notified that its project is eligible for 
funding. This period should be sufficient for completing the majority 
of program requirements, and support should not be provided beyond this 
period. Second, the Commission proposes that the rate of support will 
not exceed $100,000 per year. This amount should be sufficient for one 
full-time employee (or the equivalent) dedicated to project 
administration. Participants would be required to submit certifications 
and maintain records confirming the number of hours provided by one or 
more employees for tasks related to the health infrastructure program 
project, and that the administrative expense for which support is 
sought is not more than the reasonable costs for the amount of time 
such employee(s) spent on the project. Third, the Commission proposes 
that the aggregate amount of support a project may receive for 
administrative expenses shall not exceed ten percent of the total 
budget for the project. The Commission acts conservatively in proposing 
a ten percent cap, which is similar to funding limits on administrative 
expenses used in some Federal grant programs. The Commission seeks 
comment on this proposal to provide limited support for administrative 
expenses.
    33. Maintenance Costs. The Commission proposes allowing limited 
support for up to 85 percent of the reasonable, necessary and customary 
ongoing maintenance costs for networks funded by the health 
infrastructure program. Such costs would include, for example, service 
agreements to operate and maintain dedicated broadband facilities. The 
primary focus of the health infrastructure program is to create a 
sustainable broadband infrastructure where access is presently 
inadequate. The Commission seeks comment on whether support for 
maintenance costs should be limited to a defined period of time, such 
as three years from completion of build-out of a project, or five years 
from the first funding commitment letter issued for such project 
(whichever period is shorter). Participants should be able to 
demonstrate in their sustainability plans that the costs of network 
operations and maintenance will be sustainable after such period of 
support from the health infrastructure program. Service agreements for 
network maintenance will be subject to competitive bidding rules, and 
may be bid either at the time of construction of the network or at a 
later time. The Commission seeks comment on this proposal.
    34. National LambdaRail and Internet2. The Commission proposes that 
participants may receive support for not more than 85 percent of the 
membership fees for connecting their networks to the dedicated 
nationwide backbones, Internet2 or NLR. As in the Pilot Program, while 
the Commission allows such connections as an eligible expense, the 
Commission does not indicate that such connections are mandatory or 
preferred. Thus, under the health infrastructure program, applicants 
would be free to propose the construction of State or regional 
dedicated networks that do not connect to a nationwide backbone. It is 
reasonable to allow, as an eligible expense, membership fees to connect 
to NLR and Internet2. As noted in the Pilot Program, both of these 
backbone providers are non-profit entities that already link a number 
of institutions such as government research institutions and academic, 
public and private health care providers that house significant medical 
expertise. By connecting to either of these two dedicated national 
backbones, health care providers at the State and local levels could 
have the opportunity to benefit from advanced applications in 
continuing education and research. While the membership fees for 
joining NLR or Internet2 would be an eligible cost, the Commission does 
not propose allowing other recurring costs related to connecting to 
such backbone networks. The Commission seeks comment on this proposal.
    35. For the Pilot Program, the Commission provided that connections 
to Internet2 or NLR were not subject to the competitive bidding rules 
requirement. For the health infrastructure program, the Commission 
proposes that participants may either pre-select to connect with either 
Internet2 or NLR, and seek funding for such connection, or may (at 
their discretion) seek competitive bids from NLR and Internet2 through 
the normal competitive bidding process. Allowing a participant to pre-
select NLR on

[[Page 48242]]

Internet2 should provide the participant with an opportunity to more 
fully develop the specific elements of its infrastructure proposal, 
particularly where only a specific non-profit nationwide backbone 
provider will fulfill the participant's network plan or meet its need 
to access a particular institution that is currently connected to only 
one nationwide network. If Internet2 or NLR are pre-selected by a 
participant, the costs of connection to such nationwide backbone must 
be reasonable. The Commission invites comment on its proposal to exempt 
connections to Internet2 and NLR from the competitive bidding rules in 
the new health infrastructure program. Regardless of whether they 
choose to pre-select NLR or Internet2, participants in the health 
infrastructure program will be subject to the Commission's audit 
authority. The Commission emphasizes that it retains the discretion to 
evaluate the activities of participants and determine on a case-by-case 
basis whether waste, fraud, or abuse has occurred and whether 
corrective action is necessary.

F. Ineligible Costs

    36. Examples of Ineligible Costs. The Commission proposes that, for 
the health infrastructure program, as in the Pilot Program, ineligible 
costs are those costs that are not directly associated with network 
design, construction, or deployment of a dedicated network for eligible 
health care providers. The Commission seeks comment on this proposal. 
Participants would be required to certify that support from the health 
infrastructure program will not be used to pay for ineligible costs. 
The Commission proposes that, as in the Pilot Program and consistent 
with the Act, the authorized purposes of the health infrastructure 
program would include the costs of access to advanced 
telecommunications services. Ineligible costs would include (but not be 
limited to) the following costs, because the following costs are not 
directly related to access or to network design, construction or 
deployment:
     Personnel costs (including salaries and fringe benefits), 
except for those costs that qualify as administrative expenses, subject 
to the limitations set forth in paragraphs 37 and 38 of this NPRM.
     Travel costs, except for travel costs that are reasonable 
and necessary for network design or deployment and that are 
specifically identified and justified as part of a competitive bid for 
a construction project.
     Legal costs.
     Training, except for basic training or instruction 
directly related to and required for broadband network installation and 
associated network operations. For example, costs for end-user 
training, e.g., training of health care provider personnel in the use 
of telemedicine applications, are ineligible.
     Program administration or technical coordination, except 
for those costs that qualify as administrative expenses, subject to the 
limitations set forth in paragraphs 37 and 38 of this NPRM.
     Inside wiring or networking equipment (e.g., video/Web 
conferencing equipment and wireless user devices) on health care 
provider premises except for equipment that terminates a carrier's or 
other provider's transmission facility and any router/switch that is 
directly connected to either the facility or the terminating equipment.
     Computers, including servers, and related hardware (e.g., 
printers, scanners, laptops), unless used exclusively for network 
management.
     Helpdesk equipment and related software, or services.
     Software, unless used for network management, maintenance, 
or other network operations; software development (excluding 
development of software that supports network management, maintenance, 
and other network operations); Web server hosting; and Website portal 
development.
     Telemedicine applications and software.
     Clinical or medical equipment.
     Electronic records management and expenses.
     Connections to ineligible network participants or sites 
(e.g., for-profit health care providers).
     Costs related to any share of a project that is not 
allocable to the dedicated health care network.
     Administration and marketing costs (e.g., administrative 
costs; supplies and materials; marketing studies, marketing activities, 
or outreach efforts; evaluation and feedback studies), except for those 
costs that qualify as eligible administrative expenses, subject to the 
limitations set forth in paragraphs 37 and 38 of this NPRM.
     Continuous power source.
    37. Billing and Operational Expenses. The Commission proposes that 
the health infrastructure program not provide support for billing and 
operational expenses incurred either by a health care provider or its 
selected vendor. An example of billing or operational costs is the 
expense that service providers may charge for allocating costs to each 
health care provider in a project's network. Because the Commission 
does not require that costs be allocated in this manner, such billing 
and operational costs should not be eligible for support. The 
Commission seeks comment on this proposal.

G. Fifteen Percent Contribution Requirement

    38. Minimum Participant Contribution. The Commission proposes that 
as one of the conditions to receiving any funding commitments from 
USAC, participants submit certification of the availability of funds, 
from eligible sources, for at least 15 percent of all eligible costs. 
The Commission seeks comment on this proposal. The Pilot Program 
similarly required a 15 percent minimum contribution requirement for 
all eligible costs. As recognized by the National Broadband Plan, the 
participant contribution requirement aligns incentives and helps ensure 
that the health care provider values the broadband services being 
deployed, and makes financially prudent decisions regarding the 
project. Ensuring that each participant has a financial stake in the 
project is an important part of the implementation of infrastructure 
projects, as well as critical to maintaining overall accountability for 
prudent use of finite universal service funds. The Commission therefore 
proposes that the health infrastructure program would pay not more than 
85 percent of eligible project costs, and participants would be 
required to pay the remaining 15 percent of such eligible projects 
costs. In addition, participants would be required to pay all costs 
that are related to the project but that do not qualify as eligible 
project costs.
    39. The Commission notes that the matching funds requirement for 
the Broadband Technology Opportunities Program (BTOP), established 
pursuant to the Recovery Act, is generally 20 percent of eligible 
costs, and that the Broadband Initiatives Program (BIP), also 
established pursuant to the Recovery Act, will fund 75 percent in 
grants and 25 percent in loans. The Commission has learned from its 
experience with the Pilot Program that some applicants have difficulty 
even meeting a 15 percent contribution requirement. At the same time, 
one of the benefits of increasing the contribution requirement to 20 
percent or higher would be that more funds would be available under the 
program to fund additional projects. The Commission invites comment on 
whether it should consider a higher level of participant contribution 
for

[[Page 48243]]

health infrastructure projects. Commenters should identify whether, in 
light of higher levels of participant contributions in the BTOP and BIP 
programs, the contribution requirement for the health infrastructure 
program should be more than 15 percent to ensure better efficiencies 
and greater level of ``at risk'' commitment by participants to their 
projects.
    40. Evidence of Viable Source for 15 Percent Contribution. The 
Commission proposes that, within 90 days after being notified of 
project selection, participants demonstrate that they have a reasonable 
and viable source for the minimum 15 percent contribution. Many 
projects in the Pilot Program indicated deployment delays due to many 
factors, including difficulty in obtaining the minimum 15 percent 
contribution. This, among other factors, resulted in the Bureau 
extending (by one year) the deadline for participants in the Pilot 
Program to select vendors and request funding commitments from USAC. To 
ensure that projects are completed in a timely manner, it is important 
for participants in the health infrastructure program to meet a date 
certain by which they have secured the minimum 15 percent contribution 
for eligible project costs. Doing so will ensure that program funds are 
not indefinitely allocated to projects that cannot proceed to 
completion due to lack of adequate financial contribution from the 
participant. The Commission therefore proposes that after a participant 
has been notified that, based on its initial application, its project 
is eligible for funding, the participant have a period of 90 days to 
submit letters of assurances confirming funds from eligible sources to 
meet the 15 percent minimum contribution requirement. The Commission 
seeks comment on this proposal.
    41. Eligible Sources. The Commission proposes placing limitations 
on the eligible sources for matching funds. Selected participants would 
be required to identify with specificity their source(s) of funding for 
the minimum 15 percent contribution of eligible network costs. Only 
funds from an eligible source may apply towards meeting this 
requirement. As in the Pilot Program, eligible sources would be limited 
to (1) Eligible health care providers; (2) State grants, funding, or 
appropriations; (3) Federal funding, grants, loans, or appropriations 
(but not other universal service funding); and (4) other grant funding, 
including private grants. Participants who do not demonstrate that 
their 15 percent contribution comes from an eligible source or whose 
minimum 15 percent contribution is derived from an ineligible source 
would be denied funding by USAC. Ineligible sources would include (1) 
in-kind or implied contributions; (2) a local exchange carrier (LEC) or 
other telecom carrier, utility, contractor, consultant, or other 
service provider; and (3) for-profit participants. Moreover, selected 
participants may not obtain any portion of their 15 percent 
contribution from any universal service support program. These 
limitations on eligible sources would safeguard against program 
manipulation, and would prevent conflicts of interest or influence from 
vendors and for-profit entities that may lead to waste, fraud, and 
abuse. The Commission therefore proposes that these limitations, which 
were applied to the Pilot Program, be applied to the health 
infrastructure program. The Commission seeks comment on the proposed 
list of eligible sources.

H. Project Milestones

    42. To ensure that projects proceed to completion, the Commission 
proposes that participants submit a project schedule that identifies 
the following project milestones: start and end date for network 
design; Start and end date for drafting and posting RFPs; start and end 
date for selecting vendors and negotiating contracts; start date for 
commencing construction and end date for completing construction; and 
target dates for each health care provider to be connected to the 
network and operational. The project schedule should be submitted 
within 90 days after a participant has been notified that, based on its 
initial application, the project is eligible for funding. The project 
schedule would also have to be updated at the time that quarterly 
reports are filed by the participants, noting which project milestones 
have been met and any progress or unanticipated delays in meeting other 
milestones. The Commission proposes that in the event a project 
milestone is not achieved, or there is a material deviation from the 
project schedule, the participant would provide an explanation in the 
quarterly reports. Requiring participants to establish a schedule and 
report on project milestones for infrastructure projects would assist 
USAC and the Commission in assessing a participant's progress in 
completing project build-out, and would reduce fraud, waste and abuse. 
The Commission seeks comment on these proposals. The Commission also 
seeks comment on whether it should require participants to include 
other information in addition to or in lieu of project milestones. Such 
information should serve as a way to monitor project progress.

I. Detailed Project Description

    43. The Commission proposes that, within 90 days after a 
participant is notified that its project is eligible for funding based 
on its initial application, the participant complete and submit a 
detailed project description that describes the network, identifies the 
proposed technology, demonstrates that the project is technically 
feasible and reasonably scalable, and describes each specific 
development phase of the project (e.g., network design phase, 
construction period, deployment and maintenance period). The Commission 
seeks comment on these proposals, as described below.
    44. Technology Neutral. While a project description must establish 
feasibility and scalability, the Commission does not propose 
restricting the type of technology participants may use. Eligible 
health care providers participating in the health infrastructure 
program may choose any currently available technology that meets the 
definition of broadband as adopted for purposes of the Rural Health 
Care program. The Commission seeks comment on this proposal. Allowing 
health care providers flexibility in designing their networks furthers 
the ``competitive neutrality'' provision of section 254(h)(2) of the 
Act by ensuring that universal service support does not favor or 
disfavor one technology over another. The Commission notes that the 
various projects in the Pilot Program employed different solutions with 
varying levels of broadband capacity to meet the specific needs of the 
health care providers participating in each network.
    45. Network Coverage. The Commission proposes that the project 
description should include the identity and location of all network 
participants, and should include a network diagram. Participants would 
be required to indicate how they plan to fully utilize their proposed 
network to provide health care services, and would be required to 
present a strategy for aggregating the specific needs of health care 
providers within a State or region, including providers that serve 
rural areas. The project description should also discuss whether the 
proposed network will connect to a national backbone, such as NLR or 
Internet2. Networks may be limited to a particular State or region, but 
participants should describe feasible ways in which such networks will 
connect to a national broadband network. Designing networks so that 
they may, where feasible, connect to a dedicated national network will 
allow health care providers the

[[Page 48244]]

opportunity to benefit from advanced applications in continuing 
education and research and will also enhance the health care 
community's ability to provide a rapid and coordinated response in the 
event of a national crisis. The Commission seeks comment on these 
proposals.
    46. Service Speeds and Scalability. The Commission proposes that 
the project description include a discussion of the speeds and services 
necessary for the particular network, and how the minimum broadband 
speed, proposed above, will be provided. Networks should be adequately 
designed for the exchange of identifiable health information, and 
capable of meeting transmission speed requirements necessary for health 
care applications to be used by the health care providers. To 
demonstrate their broadband needs, participants would be required to 
explain and provide reasonable support for the type of health care 
providers that will use the network, the bandwidth and speed 
requirements for such network, and the health care services that 
necessitate broadband connections at the desired speeds. Participants 
would also be required to explain how the proposed network will be 
designed to meet the current broadband needs of the network members, 
and would be required to address whether or how the proposed network 
will be scalable to handle projected future demand. The Commission 
seeks comment on these proposals.
    47. Health IT Purposes. The Commission proposes requiring that, as 
part of the project description, participants specify how the dedicated 
broadband network will be used by eligible health care providers for 
health IT to improve or provide health care delivery. As defined in the 
National Broadband Plan, ``health IT'' refers to information-driven 
health practices and the technologies that enable them. Health IT 
includes billing and scheduling systems, e-care, electronic health 
records (EHRs) and telehealth and telemedicine. In adopting the Pilot 
Program, the Commission recognized the benefits of telehealth and 
telemedicine. The Commission seeks comment on this proposal. Consistent 
with the National Broadband Plan's recommendation to adopt outcome-
based performance goals for the Rural Health Care program, we seek 
comment below on how best to monitor how participants are utilizing 
dedicated broadband networks to support these health IT purposes.
    48. Emergency Response Connectivity. The Commission seeks comment 
on whether every project should be required to include ways in which 
the proposed network will be used in emergency response and meet 
disaster preparedness requirements. The Commission also seeks comment 
on whether every project should be required to include ways in which 
the proposed network will provide effective and secure connectivity, 
and peering with other networks in order to address global public 
health and border issues.

J. Facilities Ownership, IRU or Capital Lease Requirements

    49. The Commission proposes requiring health care providers to have 
an ownership interest, indefeasible right of use (IRU), or capital 
lease interest in facilities funded by the program. The Pilot Program 
did not restrict the form of agreement that health care providers could 
enter into with vendors for projects funded by that program. In some 
instances, Pilot Program projects opted to enter into short-term or 
operating leases, which placed them at greater risk and more dependent 
on the vendor than if they had obtained an ownership or long-term 
interest. For example, if a vendor becomes insolvent, a project that 
does not have an IRU or ownership interest could be left with a non-
operational network with limited recourse. Moreover, in the case of a 
participant that enters into a short-term or operating lease for 
network access, once the term of the lease expires, the participant 
could potentially lose access to the network. In some instances, lease 
arrangements may result in proposals in which vendors incur 
infrastructure costs and pass these costs to the health care providers 
as either a one-time construction charge or an amortized cost over the 
term of the lease. Funding from the health infrastructure program 
should confer optimal long-term interests in a funded network with the 
least amount of