[Federal Register Volume 64, Number 229 (Tuesday, November 30, 1999)]
[Rules and Regulations]
[Pages 66778-66787]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-30989]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[CC Docket Nos. 97-21 and 96-45; FCC 99-269]


Changes to the Board of Directors of the National Exchange 
Carrier Association, Inc. and Federal-State Joint Board on Universal 
Service

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: This document concerning the Changes to the Board of Directors 
of the National Exchange Association, Inc. and Federal-State Joint 
Board simplifies the process for rural health care providers to receive 
support from the

[[Page 66779]]

universal service support mechanism, among other things, and adopts 
rules to permit the Universal Service Administrative Company to provide 
support for any commercially available telecommunications service, 
regardless of the bandwidth. It also requires USAC to calculate support 
based upon all actual distance-based charges, unless the rural health 
care provider or carrier requests a more comprehensive support 
calculation and substantiates that request.

DATES: Effective July 1, 2000.

FOR FURTHER INFORMATION CONTACT: Linda Armstrong, Assistant Division 
Chief, Common Carrier Bureau, Accounting Policy Division, (202) 418-
7400.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Sixth 
Order on Reconsideration in CC Docket No. 97-21, Fifteenth Order on 
Reconsideration in CC Docket No. 96-45 released on November 1, 1999. 
The full text of this document is available for public inspection 
during regular business hours in the FCC Reference Center, Room CY-
A257, 445 Twelfth Street, S.W., Washington, D.C., 20554.

I. Introduction

    1. In this Fifteenth Order on Reconsideration, we reconsider, on 
our own motion, some of the Commission's conclusions in the Universal 
Service Order, 62 FR 32862 (June 17, 1997), in order to simplify the 
process for rural health care providers to receive support from the 
universal service support mechanism. Specifically, we amend our rules 
to permit the Universal Service Administrative Company (USAC) to 
provide support for any commercially available telecommunications 
service, regardless of the bandwidth. We further modify our rules to 
require USAC to calculate support based upon all actual distance-based 
charges, unless the rural health care provider or carrier requests a 
more comprehensive support calculation and substantiates that request. 
We affirm the conclusion reached in the Universal Service Order that, 
despite the difficulties of allocating costs and preventing abuses, the 
benefits of permitting rural health care providers to join consortia 
with other subscribers of telecommunications service outweigh the 
danger that such arrangements will lead to significant abuse of the 
prohibition on resale. Accordingly, we clarify that new members may be 
added to a consortium at any time after the rural health care provider 
applies for universal service support, and we clarify our use of the 
term ``tariffed or market rate'' to permit a rural health care provider 
participating in a consortium with ineligible private sector members to 
receive support. Finally, in order to achieve a more equitable 
distribution of USAC's joint and common billing and collection costs, 
we clarify that USAC should include these costs in the projected 
administrative expenses of the high-cost, low-income, schools and 
libraries, and rural health care programs, based upon the volume of 
disbursements by each program.

II. Scope of Services Eligible for Support

A. Per-Location Funding Limit

    2. We eliminate the per-location funding limit because it has made 
it more difficult for rural health care providers to receive the 
benefits of the rural health care support mechanism, and it is no 
longer necessary to ensure that demand for support remains below the 
$400 million per year cap that the Commission established in the 
Universal Service Order. We believe that eliminating the per-location 
funding limit will make it easier for rural health care providers to 
select and receive support for the telecommunications services that 
they need for telemedicine. We find that, even if USAC substantially 
underestimated the demand for support by rural health care providers, 
demand would still be well within the $400 million cap. Moreover, we 
find that the Commission's initial decision to limit support to a T-1 
or some combination of lesser services was driven by two express 
concerns that are no longer relevant. We further find that, because the 
per-location funding limit imposes some cost and generates no apparent 
benefit, it would be contrary to the public interest to maintain it. 
Accordingly, we conclude that the universal service support mechanism 
for rural health care providers shall support any commercially 
available telecommunications services, necessary for the provision of 
health care services in a state, regardless of the bandwidth, and we 
revise Sec. 54.613 of the Commission's rules to reflect this change.
    3. Based upon the information in the record, we find that the 
Commission's initial demand estimate was much too high. Section 254(g) 
directs that universal service support mechanisms should be specific, 
predictable, and sufficient. The only qualification, in section 
254(h)(1)(A), of the type of telecommunications service that may be 
supported is the requirement that the telecommunications service be 
``necessary for the provision of health care services in a [s]tate.'' 
In order to establish a ``specific, predictable, and sufficient'' 
mechanism for a program with no track record, the Commission concluded 
that it must limit the telecommunications services that a rural health 
care provider may receive for the provision of health care services in 
a state.
    4. The Commission's original estimate for the cost of the program 
predicted that maximum demand for support would be $366 million per 
year. The Commission arrived at this conclusion without the benefit of 
expert assessment of the cost of leaving rural health care providers 
free to purchase whatever telecommunications services they deemed 
necessary for the provision of health care. According to the USAC 
Report, ``[t]he best current estimates show that this Program is not 
likely to exceed $10 million in annual support level in the near 
term.'' Specifically, the USAC Report estimates that the total demand 
for support for rural health care providers will not exceed $3.1 
million for the 18 month period from January 1, 1998 through June 30, 
1999. USAC projects that the total demand for rural health care 
provider support for the second funding year (July 1, 1999 through June 
30, 2000) will be no more than $9.3 million. Although armed with a 
significantly more comprehensive set of data than used in the Universal 
Service Order, USAC estimates that, even if we remove the per-location 
funding limit, demand would not exceed $10 million per year. 
Apparently, as the Advisory Committee believed, the urban rates for 
telecommunications services are costly enough to deter rural health 
care providers from demanding excessive levels of telecommunications 
service. USAC also reports that there are a number of other factors 
that have served to reduce demand, which we discuss. Accordingly, we 
conclude that, beginning with the third funding cycle, the universal 
service support mechanism for health care providers will support all 
commercially available telecommunications services necessary for the 
provision of health care services, and that this expansion of eligible 
telecommunications services will not increase demand beyond the funding 
cap.
    5. The Commission's initial decision to limit support to a T-1 or 
some combination of lesser services was based upon two factors that are 
now irrelevant, given that there is little risk of demand exceeding the 
cap. First, the Commission's initial decision to limit support to a T-1 
or some combination of lesser services was based in part upon

[[Page 66780]]

a finding that the record did not demonstrate that rural health care 
providers would require higher bandwidths than T-1. Specifically, the 
Commission found that the Advisory Committee and the majority of 
commenters who recommended a specific level of telecommunications 
bandwidth recommended a capacity of up to and including 1.544 Mbps or 
its equivalent. The Advisory Committee and the majority of commenters 
contended that rural health care providers did not need higher 
bandwidths for the provision of health care services, and that the cost 
of higher bandwidth connections would outweigh the benefits. It is 
still unclear to us whether rural health care providers need services 
with greater or lesser bandwidth than 1.544 Mbps for the provision of 
health care. On the one hand, the Rural Utilities Service (RUS) argues 
that the current supported bandwidth of 1.544 Mbps may be inadequate 
because, with the rapid evolution of high-speed broadband networks 
approaching the 1.544 Mbps capability, the medical community's needs 
are expected to significantly exceed this level in the near future. On 
the other hand, the National Rural Health Association (NRHA) asserts 
that it appears that many telehealth applications are moving away from 
dedicated point-to-point T-1 type services to switched, lower bandwidth 
applications such as ISDN and POTs. Further, a letter jointly filed by 
the American Telemedicine Association, the American College of Nurse 
Practitioners, the Association of Telemedicine Service Providers, and 
the NRHA states that:

    The program should include discounts for all forms of 
communications services when used in the delivery of health care to 
rural health care providers. As currently designed, services 
eligible for the rural health care program are effectively limited 
to a T1 line, largely because of the use of distance costs 
associated with this service. However, advancements over the past 
few years in technology and communications have enabled health care 
providers to transmit and receive information at speeds lower than 
that required of T1 lines. Although lower in cost, this still 
remains an impediment to many health providers due to the few 
resources available in support of rural health care.

    6. We, therefore, affirm our finding in the Universal Service Order 
that rural health care providers are best able to determine what 
telecommunications services best meet their needs; moreover, we find 
that allowing rural health care providers to choose the transmission 
speeds necessary for health care services in rural areas, outweigh our 
need to determine with certainty the required bandwidth. Accordingly, 
we conclude that, given that the per-location funding limit is not 
necessary for keeping demand on the fund within the $400 million cap, 
as long as the telecommunications services are necessary for health 
care services in rural areas, there is little reason to ascertain 
definitively whether rural health care providers need 
telecommunications services with greater or lesser bandwidth than T-1.
    7. The second reason that the Commission decided to support only 
bandwidths up to 1.544 Mbps was because it agreed with the parties who 
weighed the cost of higher services against the benefits and found that 
the limited data suggested that the cost of higher bandwidths could 
unnecessarily increase the cost of the program by a significant amount. 
While very few respondents to the USAC Report Public Notice discussed 
the cost of supporting higher services, the USAC Report suggests that 
the cost of higher bandwidths would not unnecessarily increase the cost 
of the program by a significant amount.
    8. More importantly, it appears from the record, particularly the 
USAC Report, that maintaining the current limits on services does not 
adequately serve the public interest. That is, regardless of whether 
rural health care providers need services with greater or lower 
bandwidth, the public interest would be better served by allowing rural 
health care providers to have affordable access to all modern 
telecommunications services necessary to provide medical services. The 
majority of interested parties in this proceeding assert that the per-
location funding limit imposed by the Commission's rules increases the 
cost of participating in the program, while reducing the value of the 
potential benefit that a rural health care provider may receive. For 
example, USAC reports that one of the costs of the restriction is that 
it discourages some rural health care providers from seeking services. 
This is in part because of the complexity of securing some combination 
of services of less than 1.544 bandwidth. Specifically, in May 1999, 
USAC reported that ``calculation of the PLFL for each applicant to this 
program has taken a significant amount of effort by carriers and RHCD 
staff.'' Consistent with the findings reported by USAC, RUS asserts 
that the Commission's rules significantly limit the value of the 
support provided by the program.
    9. Finally, we reject the argument by USTA that any change to the 
Commission's rules that would expand the class of eligible services 
would be inconsistent with the Act. Although USTA admits that the per-
location funding limit could be made simpler to administer, USTA argues 
that the Commission should not expand the scope of eligible services 
for the sole purpose of increasing demand to the level that we 
previously anticipated would be reached. We agree with USTA that the 
Commission should not expand the scope of eligible services solely for 
the sake of increasing demand. Instead, we expand the scope of eligible 
services because the current restrictions are in large part the result 
of the per-location funding limit, and for the reasons discussed, we 
now reject the per-location funding limit. The per-location funding 
limit is not necessary to ensure that demand for support remains below 
the $400 million per year cap. We find that demand will be sufficiently 
limited by the statutory requirement that supported telecommunications 
services must be necessary for the provision of health care. Moreover, 
as previously discussed, we find that a rural health care provider is 
ill served by our current rule, which further limits the rural health 
care provider's choices to telecommunications services within 
bandwidths up to and including 1.544 Mbps, and limits the total amount 
of support that a rural health care provider can receive to the cost of 
one T-1 connection. We believe that a rural health care provider may 
under some circumstances need, for the provision of health care 
services, telecommunications services with a higher bandwidth than 
1.544 Mbps; a single service with a lesser bandwidth that requires more 
support than a T-1; or a number of services with lesser bandwidth that 
together require more support than one T-1. Accordingly, while we 
recognize that removing the per-location funding limit will potentially 
increase the amount of support for services that are already eligible 
for support, and expand the list of eligible services, we conclude that 
this result is consistent with the Act.

B. Long Distance Charges

    10. Based upon the information in this record, we remain 
unconvinced that the rural health care program should provide 
additional support for long distance and toll charges, with the 
exception of support for toll charges incurred by accessing an Internet 
service provider (for those unable to secure toll-free Internet 
access). We find that section 254(h)(1)(A) does not obligate 
telecommunications carriers to deliver service to rural health care 
providers at rates that are less than those

[[Page 66781]]

charged to urban health care providers. We note that section 
254(h)(1)(A) directs telecommunications carriers to deliver service to 
rural health care providers at rates that are reasonably comparable to 
those charged to health care providers in urban areas of the state. 
Further, we note that, although many of the commenters argue that using 
long distance service makes it more expensive for rural health care 
providers to engage in the practice of telemedicine, none have argued 
that telecommunications carriers charge more for long distance service 
provided to rural health care providers than for similar service 
provided to urban residents. Based on the record before us, therefore, 
we find no basis for providing additional support for long distance and 
toll charges.

C. Urban/Rural Rate Calculation

    11. In light of the entire record now before us, we determine that 
most of the base rates for telecommunications service elements charged 
to rural health care providers are already reasonably comparable to 
those charged in urban areas. This position is consistent with USTA's 
recommendation. Accordingly, we conclude that the Administrator need 
not compare the tariffed or publicly available base rates for 
telecommunications service elements to determine the amount of support 
that it can provide for the benefit of a rural health care provider. 
We, therefore, direct that, beginning with the third funding cycle, the 
Administrator must calculate support based upon all actual distance-
based charges.
    12. At the time that the rural health care program was established, 
the Commission did not realize the extent to which directing the 
parties to identify the highest tariffed or publicly available rate 
actually being charged to urban customers, in order to set rates for 
telecommunications services ``that are reasonably comparable to rates 
charged for similar services in urban areas in that State,'' would 
consume an unwarranted amount of resources for very little benefit. In 
the Universal Service Order, the Commission specifically acknowledged 
that most base rates for telecommunications services are averaged 
across a state or study area, and concluded, therefore, that it is 
often the distance-based charges that account for the difference 
between the urban and rural rates charged to rural health care 
providers. As a result, the Commission directed that, in addition to 
providing rural health care providers with support for the difference 
between the highest tariffed or publicly available rate actually being 
charged to urban customers and the rate charged to the rural health 
care providers (i.e. the base rates for telecommunications service 
elements), the Administrator must also provide support for distance-
based charges. We have since learned that, because of the need to refer 
to the various tariffs, calculating the difference between the urban 
and rural base rates for telecommunications service elements is 
extremely labor intensive. For many carriers and rural health care 
providers, the cost of calculating the difference between the urban and 
rural base rates for telecommunications service elements outweighs the 
benefits of participating in the rural health care program, because it 
is the distance charges that account for the rate differences of any 
significance. For example, Alaska argues that FCC Forms 466 and 468 
should be simplified because,

    [r]equirements for detailed diagramming of circuits have proven 
confusing and time-consuming to some LECs in Alaska. Rural health 
care providers throughout the State have often encountered 
complaints or resistance from telecommunications carriers with 
respect to this task. Moreover, the information is also of 
questionable value, particularly when the rate for the service 
provided is not distance-sensitive.

Because the failure to properly calculate the difference between the 
urban and rural base rates for telecommunications service elements must 
be corrected by the Administrator, this activity has proven to be a 
burden for the Administrator as well.
    13. We, therefore, simplify the method for calculating support 
found in Sec. 54.609 of the Commission's rules. Consistent with the 
approach proposed by USTA in response to the USAC Report Public Notice, 
we direct the Administrator to consider the base rates for 
telecommunications services elements in rural areas to be reasonably 
comparable to the base rates charged for similar telecommunications 
service elements in urban areas in that state. The Administrator, 
therefore, shall not include these charges in calculating support. In 
addition, we direct the Administrator to treat a rural health care 
provider as if it is located in the nearest large city in the state, in 
the same manner as it does under the current rules. That is, if the 
requested service distance is less than or equal to the SUD for the 
state, the distance-based charge for that service can be no higher than 
the distance-based charged for a similar service over the same distance 
in the large city nearest to the rural health care provider. If the 
requested service distance is greater than the SUD for the state, but 
less than the maximum allowable distance, the distance-based charge for 
that service can be no higher than the distance-based charged for a 
similar service, transmitted the length of the SUD, in the large city 
nearest to the rural health care.
    14. Consistent with the approach proposed by USTA, we also conclude 
that, in the event a rural health care provider or carrier can 
establish that there is a difference between the urban and rural base 
rates charged for a telecommunications service, the rural health care 
provider or the telecommunications carrier may request a more 
comprehensive rate comparability calculation consistent with the 
Commission's current rules. We note that it would not be feasible for 
the Administrator to document the tariffed or publicly available urban 
rates for all commercially available telecommunications services to 
establish a benchmark for comparison of the base rates of 
telecommunications service elements. Consequently, in the rare instance 
where there is a difference between the urban and rural base rates for 
services, we require the rural health care provider or carrier to 
provide the evidence thereof.
    15. We do not modify our rules to require the Administrator to 
deduct a standardized SUD from the total distance-based charge. We 
believe that such an approach would generally result in establishing a 
national SUD to calculate the support amount. We reject this approach 
because the Administrator has already established the average of the 
longest diameters of all cities with a population of 50,000 or more 
within each state, and adding the state averages together to ultimately 
arrive at a national SUD would not be as accurate as using each state's 
SUD. We also reject this suggestion because we believe that it would 
not result in rural health care providers paying distance-based charges 
that are reasonably comparable to those required of urban subscribers 
as required by section 254(h)(1)(A), since it would require a rural 
health care provider to pay the balance of the distance-based charge. 
We find that this balance would generally be more than urban 
subscribers are required to pay.
    16. We reject USAC's proposal to establish statewide average 
discount percentages to apply to the rural base rates and/or distance 
sensitive charges for eligible services. Section 254(h)(1)(A) requires 
the Commission to adopt mechanisms designed to make telecommunications 
services available to rural health care providers at rates reasonably 
comparable to ``rates charged for similar services in urban

[[Page 66782]]

areas.'' As the Joint Board previously stated, however, use of an 
average rate ``would entitle some rural customers to rates below those 
paid by some urban customers, creating fairness problems for those 
urban customers and arguably going farther with this mechanism than 
Congress intended.''

D. Equipment

    17. Section 254(h)(1)(A) does not authorize the provision of 
universal service support for equipment needed by rural health care 
providers to establish telemedicine programs. We note that section 
254(h)(1)(A) directs telecommunications carriers to provide 
telecommunications services to rural health care providers at a 
discounted rate, and permits the telecommunications carriers to have 
the amount of the discount treated as part of their obligation to 
participate in the mechanisms to preserve and advance universal 
service. There is nothing in section 254(h)(1)(A) that authorizes the 
provision of universal service support for the purchase of equipment by 
rural health care providers. Indeed, the Joint Explanatory Statement 
indicates that Congress' intent was that ``the rural health care 
provider receive an affordable rate for the services necessary for the 
purposes of telemedicine and instruction relating to such services.'' 
Consistent with the Joint Explanatory Statement, USTA argues that it 
would be inappropriate and unlawful to provide support for equipment, 
or any other non-telecommunications service component of telemedicine. 
RUS similarly opposes providing support to reduce the cost of any non-
telecommunications service expenses of telemedicine. RUS notes that 
other federal programs, such as the RUS Distance Learning and 
Telemedicine Loan and Grant Program are available to assist with the 
financing of end-user hardware and facilities used in telemedicine 
projects. Under these circumstances, we conclude that the rural health 
care support mechanism cannot assist in reducing the cost of the 
equipment necessary for rural health care providers to provide 
telemedicine services.

E. Insular Areas

    18. Because we still lack sufficient information to ensure that 
health care providers located in the insular areas have access to the 
telecommunications services available in urban areas in the country at 
affordable rates, on August 5, 1999, the Commission adopted the 
Unserved, Tribal, and Insular Areas FNPRM, 64 FR 52738 (September 30, 
1999), seeking public input on these and many related issues. We note 
that the record here contains insufficient information about the status 
and availability of health care services and telemedicine in most of 
the insular areas.
    19. We are concerned that, to the extent that section 254(h)(1)(A) 
was intended solely to help equalize the rates paid by residents of 
urban and rural areas within a state, the Commission would be 
constrained in its ability to provide relief to rural health care 
providers in the insular areas. We note that Congress could have 
provided discounts on the telecommunications service that rural health 
care providers use to connect to the nearest major urban hospital 
within or outside the state when rural health care providers rely on 
such hospitals for consultations. This approach would have directed 
assistance to rural health care providers hindered by the high costs of 
linking to major hospitals they need to reach outside of their states. 
Moreover, the Act could have sought to equalize rates paid by rural 
health care providers in different states, ensuring that no rural 
health care provider paid significantly more than hospitals in the 
largest urban areas, regardless of state boundaries. The language of 
section 254(h)(1)(A), however, merely directs the Commission to provide 
universal service support to rural health care providers to enable them 
to pay rates similar to those paid in urban areas of their states.
    20. On the other hand, we have always recognized that our method 
for determining the amount of support that a rural health care provider 
may receive is ill suited to insular areas. In the Universal Service 
Order, for example, we noted that ninety-five percent of American 
Samoa's population of 56,000 lives on the island of Tutuila, where the 
territory's single hospital is located. Since we designated Tutuila as 
an urban area for purposes of setting the urban rate, rural health care 
providers in American Samoa will be constrained in their ability to 
take full advantage of the benefits of the rural health care support 
mechanism.
    21. The Commission concluded in the Universal Service Order that 
section 254(h)(2)(A) authorizes the Commission to adopt special 
mechanisms to calculate support for the insular areas. Section 
254(h)(2)(A) directs the Commission, in part, to establish 
competitively neutral rules ``to enhance, to the extent technically 
feasible and economically reasonable, access to advanced 
telecommunications . . . services for all public and nonprofit . . . 
health care providers.'' In order to implement the statute's 
directives, among other things, we need to identify the necessary 
services and determine what is ``technically feasible and economically 
reasonable.'' That is, we need additional data about the specific needs 
of insular areas in this context, as well as the estimated cost of 
providing such support for those needs. We also note that, were we to 
grant support for links between rural health care providers in insular 
areas and the nearest advanced health care facilities in some other 
jurisdiction, we would need to set standards for identifying such 
facilities. We would also need to ensure that such rules would not be 
inconsistent with state physician licensing requirements that might 
preclude a rural health care provider from establishing a telemedicine 
connection with an advanced facility in the nearest large city in 
another state. Consequently, we encourage interested parties to submit 
their comments in the Unserved, Tribal, and Insular Areas FNPRM 
proceeding that we initiated on August 5, 1999, as we will be 
addressing these issues in the near future.

III. Eligibility of Health Care Providers

A. Definition of Health Care Provider

    22. We affirm our initial conclusion that section 254(h)(5)(B) 
adequately describes those entities Congress intended to be eligible 
for universal service support. We find that, given the specific 
categories of health care providers listed in section 254(h)(5)(B), if 
Congress had intended to include nursing homes, hospices, or other 
long-term care facilities, and emergency medical service facilities, it 
would have done so explicitly. Thus, we find that the definition of 
``health care provider'' does not include nursing homes, hospices, or 
other long-term care facilities, and emergency medical service 
facilities.
    23. Moreover, we clarify that a rural nursing home is ineligible to 
receive universal service support from the rural health care support 
mechanism, whether or not it is part of a not-for-profit hospital or 
rural health clinic. We are not persuaded that an entity omitted from 
the list in the statute should be allowed to apply for and receive the 
benefits of the program directly from the universal service support 
mechanism simply because of the relationship between the ineligible and 
eligible entity. Moreover, we find no rational basis for distinguishing 
between a rural nursing home that is part of a not-for-profit hospital 
or rural health clinic and a rural nursing home that is associated with 
any of the other categories of

[[Page 66783]]

eligible entities listed in the statute. Finally, we believe that 
allowing nursing homes to receive support directly from the rural 
health care support mechanism based upon their association with 
eligible entities would very likely result in a flood of other types of 
ineligible entities requesting similar treatment, and thus would render 
meaningless the limitations imposed by Congress in section 
254(h)(5)(B). We find, therefore, that, to the extent that the 
instructions for the current version of the FCC Form 465 state that 
nursing homes that are ``part of a not-for-profit hospital or rural 
health care clinic'' are health care providers eligible to receive 
support, those instructions are incorrect.

B. Restrictions on Resale and Aggregated Purchases

    24. We affirm the conclusion that we reached in the Universal 
Service Order that, despite the difficulties of allocating costs and 
preventing abuses, the benefits of permitting rural health care 
providers to join consortia with other subscribers of 
telecommunications service outweigh the danger that such arrangements 
will lead to abuse of the prohibition on resale. Accordingly, we 
clarify that new members may be added to a consortium at any time after 
the rural health care provider applies for universal service support. 
We note that the Commission's rules do not restrict a rural health care 
provider's ability to join a consortium with other eligible health care 
providers, or public sector governmental entities (such as schools and 
libraries). The Commission's rules also do not restrict a rural health 
care provider's ability to continue to participate in a consortium to 
which any of the above are added after the rural health care provider 
applies for universal service support. The Commission's rules limit a 
rural health care provider's ability to receive universal service 
support only if the consortium includes a private sector entity. 
Section 54.601(b) of the Commission's rules state that, in the event 
that a consortium includes a private sector entity, a rural health care 
provider may receive support only if the consortium is paying tariffed 
or market rates for the subject services. We believe that our 
interpretation is consistent with both the section 254(h)(1)(A) 
requirement to ensure that health care providers located in rural areas 
have access to telecommunications services at rates available to urban 
residents, and the section 254(h)(3) prohibition against the sale, 
resale, or other transfer of supported services for money.
    25. We also clarify that a tariffed or market rate received by a 
consortium of eligible and ineligible entities may include a volume 
discount, or otherwise reflect consideration of the unique 
characteristics of the subscribers, to the extent that characteristic 
is not a rural health care provider's eligibility to receive support 
from the rural health care program. This is because the Commission's 
restriction on consortium membership was intended to prohibit 
ineligible private entities from receiving the benefits of the rural 
health care support mechanism. The Universal Service Order clearly 
states that the Commission and the Joint Board supported broad-based 
participation in consortia and intended to encourage their growth. The 
Commission explained, in the Universal Service Order, that this 
restriction is necessary to ``deter ineligible, private entities from 
entering into aggregated purchase arrangements with rural health care 
providers to receive below-tariff or below-market rates that they 
otherwise would not be entitled to receive.'' We find that an 
ineligible private entity that enters into an aggregated purchase 
arrangement with a rural health care provider, and receives a tariff or 
market rate that includes a volume discount, would not be receiving a 
below-tariff or below-market rate because of the eligibility status of 
a rural health care provider participating in the consortium. We, 
therefore, find that such an arrangement would not violate our rules, 
as long as entities and individuals not eligible for universal service 
support pay the full contract rates for their portion of the services.
    26. The section of the Universal Service Order that addresses the 
universal service support mechanism for schools and libraries offers an 
additional reason for the Commission's restriction on consortium 
membership, which would not be contradicted by the finding. In the 
section of the Universal Service Order that discusses the universal 
service support mechanism for schools and libraries, the Commission 
noted that it was concerned that ``permitting large private sector 
firms to join with eligible schools and libraries to seek prices below 
tariffed rates could compromise both the federal and state policies of 
non-discriminatory pricing.'' The Commission found congressional 
support for permitting eligible schools and libraries to secure prices 
below tariffed rates, and no basis for extending that exception to 
enable all private sector firms to secure such prices. The Commission 
concluded that eligible schools and libraries would generally qualify 
for universal service discounts and prices below tariffed rates for 
interstate services, only if any consortia they join include only other 
eligible schools, libraries, rural health care providers, and public 
sector customers. Although the Universal Service Order does not define 
the term ``tariffed rates,'' the definition of the term ``pre-discount 
price,'' and the explanation of the Commission's intent in the schools 
and libraries section of the Universal Service Order is instructive in 
determining whether permitting a consortium of eligible and ineligible 
entities to obtain tariff rates that include a volume discount could 
compromise the policies of non-discriminatory pricing. The Universal 
Service Order defines pre-discount price as the price of services to 
schools and libraries prior to the application of a discount from the 
universal service support mechanism. It is ``the total amount that 
carriers will receive for the services they sell to schools and 
libraries: the sum of the discounted price paid by a school or library 
and the discount amount that the carrier can recover from universal 
service support mechanisms for providing such services.'' The Universal 
Service Order explains:

    Although consortia-negotiated prices might commonly be 
characterized as ``discounted prices,'' because they are lower than 
the prices that individual members of the consortia would be able to 
secure on their own, we still characterize them as ``pre-discount 
prices'' for the purposes of section 254(h) because they are the 
prices eligible schools and libraries could obtain even without 
application of the relevant universal service support discounts. All 
members of such consortia, including those ineligible for universal 
service support, would benefit from these lower ``pre-discount'' 
prices produced by such statewide, regional, or large group 
contracts. . . . While those consortium participants ineligible for 
support would pay the lower pre-discount prices negotiated by the 
consortium, only eligible schools and libraries would receive the 
added benefit of universal service discount mechanisms.

It is clear from this statement that the Commission's intent as 
expressed in both the rural health care and schools and libraries 
sections of the Universal Service Order is the same; to wit, to ensure 
that only eligible entities receive the benefit of the universal 
service support mechanism, not to prohibit a consortium from taking 
advantage of the tariff or other publicly available rates that reflect 
the economies of scale. Accordingly, we conclude that it would not 
violate section 254, or compromise Federal and state policies of non-
discriminatory pricing to permit a rural health care provider to 
benefit from the

[[Page 66784]]

rural universal service support mechanism, where the rural health care 
provider is a member of a consortium of eligible and ineligible 
entities receiving service at tariffed or other publicly available 
rates that include a volume discount.
    27. The fact that the Commission's rules prohibit a rural health 
care provider from receiving support if it is in a consortium that 
includes private sector members, unless the consortium is receiving 
tariffed rates or market rates, has apparently largely been erroneously 
interpreted as requiring the consortium members to be paying rates that 
do not include volume discounts. As a result, commenters such as the 
Rural Telecommunications Policy Working Group (RTP) and the Health Care 
Systemic Change Initiative (HCSCI) believe that the Commission's 
treatment of consortia discourages community-based telecommunications 
facilities. Consequently, they request that the Commission generally 
encourage the community use of telecommunications service facilities 
that the rural health care providers use for telemedicine. Similarly, 
RUS argues that community use should be allowed because it is not 
resale.
    28. We find that, to the extent that the Commission's exception is 
being narrowly interpreted as requiring a rural health care provider in 
a consortium with ineligible private entities to receive rates that do 
not include a volume discount, the interpretation largely defeats the 
purpose of participating in a consortium, and, therefore, is 
inconsistent with our intention to encourage participation in 
consortia. OAT and NTIA provide ample justification for rejecting the 
narrow interpretation of the terms ``tariffed rates'' and ``market 
rates.'' OAT and NTIA indicate that together they support over 400 
rural telemedicine sites in the United States, and about ninety percent 
of those sites organize their networks into formal and informal 
consortia to achieve greater economic efficiency. They further indicate 
that the consortium typically includes an urban ``hub'' site such as a 
medical college, urban hospital, medical center, or state governmental 
unit associated with several small rural ``spoke'' sites. According to 
OAT and NTIA, many rural health care providers use telecommunication 
infrastructures established and maintained by the ``hub'' site. We are 
not convinced that requiring a consortium to receive tariffed or market 
rates should mean that the rate cannot take volume into consideration, 
and reflect the economies of scale. We believe that a better 
interpretation is one that recognizes that there are tariffed and 
market rates that include volume discounts, just as there are tariffed 
and market rates that recognize the unique characteristics of other 
subscribers of telecommunications service. Consequently, we conclude 
that entities not explicitly eligible for support cannot gain 
eligibility for support by participating in consortia with those that 
are eligible, but every member of the consortium may receive the 
benefits otherwise available to them in tariffed or other publicly 
available rates without jeopardizing a rural health care provider's 
eligibility to receive the benefits of the rural health care support 
mechanism.
    29. Because of the difficulties of allocating costs and preventing 
abuses, we also find that, in addition to telecommunications carriers, 
health care providers and consortia of health care providers must share 
in the responsibility for calculating and justifying the request for 
support by maintaining documentation of the amount of support for which 
each member of a consortium is eligible. Health care providers and 
consortia of health care providers must also carefully maintain 
complete records of how they allocate the costs of shared facilities 
among consortium participants in order to charge eligible health care 
providers the correct amounts. Accordingly, we revise Sec. 54.601 of 
the Commission's rules to extend the record-keeping requirement to 
health care providers and consortia of health care providers. Finally, 
to the extent that a telecommunications carrier will not be applying 
the discount directly to a billing telephone number in the name of the 
rural health care provider, the rural health care provider and the lead 
member of the consortium must certify to the proper disposition of the 
benefits of the rural health care support mechanism.
    30. Based upon the information in the record, we also clarify that 
it is not necessary to set a time limit for rural health care providers 
to report the identities of all of the consortia participants in order 
to enforce the statutory prohibition against the resale of 
telecommunications services by rural health care providers, or to 
otherwise ensure that the support provided by the rural health care 
universal service support mechanism is used for the purposes intended 
by Congress. We find that USAC should permit a rural health care 
provider to add new consortium members by submitting a new form 465 
that the Administrator will use to re-evaluate the eligibility of the 
rural health care provider. The rural health care provider must satisfy 
anew the competitive bidding requirements only if the addition of a new 
consortium member would be more than a minor change in the contract or 
other arrangement for service from the carrier. Consistent with the 
Fourth Reconsideration Order, a rural health care provider must look to 
state or local procurement laws and regulations to determine whether a 
proposed contract modification would be considered minor, and, 
therefore, exempt from state or local competitive bid processes. If a 
proposed modification would be exempt from state or local competitive 
bid requirements, the applicant would not be required to undertake an 
additional competitive bid process in connection with the applicant's 
request to add a new member to the consortium. Similarly, if a proposed 
modification would have to be re-bid under state or local competitive 
bid requirements, then the applicant would also be required to comply 
anew with the Commission's universal service competitive bid 
requirements in order to be eligible to receive the benefits of the 
rural health care program. Consistent with the Fourth Reconsideration 
Order, 63 FR 2093 (January 13, 1998), where state and local procurement 
laws and regulations are silent, or otherwise inapplicable with respect 
to whether a proposed contract modification must be re-bid under state 
or local competitive bid processes, the Commission will look to the 
``cardinal change doctrine'' to determine whether the contract 
modification requires re-bidding. The ``cardinal change doctrine'' 
generally examines the extent to which a modification exceeds the scope 
of the original contract. We understand that USAC might prefer that 
rural health care providers list all possible participants in their 
initial applications, thus, permitting USAC to evaluate all 
participants at once. We, however, are not persuaded that the 
administrative difficulties are so great as to warrant restricting 
joint purchasing and network-sharing arrangements.

IV. Administration

A. Billing and Collection

    31. Consistent with the USAC Report, we direct USAC to include its 
joint and common billing and collection costs in the projected 
administrative expenses of the high cost, low-income, schools and 
libraries, and rural health care programs, based upon the volume of 
disbursements by each program, beginning January 1, 2000. We agree with 
USAC that, in order to ensure a fair and accurate allocation of billing 
and

[[Page 66785]]

collection costs among the four support mechanisms, it is better to use 
an allocator that takes into account the actual size of the programs. 
The Commission did not know, in 1997, the actual size of the individual 
programs, or the extent of the difference in their sizes. Based upon 
the information in the record, we find that there is no longer any 
rational basis for requiring the rural health care program to be 
responsible for twenty-five percent of the joint and common billing and 
collection costs in question. We further find that continuing to 
include one-fourth of USAC's joint and common billing and collection 
costs in the projected administrative expenses of the rural health care 
program would place a disproportionate burden on the rural health care 
support mechanism.

B. Consolidation of Support Mechanisms

    32. Consistent with the USAC Reorganization Order, we conclude 
that, where efficiencies can be achieved, USAC should consolidate the 
functions and operations that are common to the administration of all 
three universal service support mechanisms. We decline, however, to 
further direct the consolidation of any additional specific functions 
and operations at this time. There is very little information in the 
record upon which to base any decision to further consolidate 
additional functions of the various universal service support 
mechanisms. Although both the schools and libraries, and rural health 
care programs have completed their first funding cycle, there will be 
enough changes to the rural health care program as a result of this 
Order, that the rural health care program will, in essence, be 
repeating its first program year. We believe that, under these 
circumstances, not only would it be difficult to identify with any 
certainty the division with which we should merge RHCD, we find that 
there would be little benefit to merging RHCD with any of the other 
divisions of USAC while RHCD is undergoing significant change. 
Moreover, as we indicated in the USAC Reorganization Order, we will 
review USAC's performance after one year from the merger to assess 
whether USAC has succeeded in eliminating duplicative functions, and 
whether it has succeeded in preserving the distinct missions of the 
schools and libraries, and rural health care support mechanisms. Given 
that it has been less than one year since the merger, we conclude that 
it would be premature to further direct the consolidation of additional 
functions and operations that are common to the administration of the 
support mechanisms.

V. Supplemental Final Regulatory Flexibility Analysis

    33. In compliance with the Regulatory Flexibility Act (RFA), this 
Supplemental Final Regulatory Flexibility Analysis (SFRFA) supplements 
the Final Regulatory Flexibility Analysis (FRFA) included in the 
Universal Service Order only to the extent that changes to that Order 
adopted herein on reconsideration require changes in the conclusions 
reached in the FRFA. As required by 603 RFA, 5 U.S.C. 603, the FRFA was 
preceded by an Initial Regulatory Flexibility Analysis (IRFA) 
incorporated in the Notice of Proposed Rulemaking and Order 
Establishing the Joint Board (NPRM), and an IRFA, prepared in 
connection with the Recommended Decision, which sought written public 
comment on the proposals in the NPRM and the Recommended Decision.
    34. Need for and Objective of this Order. The Commission is 
required by section 254 of the Act to promulgate rules to implement 
promptly the universal service provisions of section 254. On May 8, 
1997, the Commission adopted rules whose principle goal is to reform 
our system of universal service support mechanisms so that universal 
service is preserved and advanced as markets move toward competition. 
In this Order, we reconsider two aspects of those rules and clarify one 
aspect of those rules. First, we direct USAC to provide support for any 
commercially available telecommunications service necessary for health 
care in rural areas, regardless of the bandwidth. Second, we find that 
the Administrator need not compare the tariffed or publicly-available 
base rates for telecommunications service elements to ensure that rural 
health care providers are receiving rates that are reasonably 
comparable to those in urban areas, and we direct the Administrator to 
calculate support based upon all actual distance-based charges. 
Finally, we clarify that new members may be added to a consortia at any 
time after the rural health care provider applies for universal service 
support. We also conclude that, a rural health care provider 
participating in a consortium with eligible private sector members may 
receive support, even if the consortium is receiving a tariffed or 
market rate that includes a volume discount. Because of the 
difficulties of allocating costs and preventing abuses, we find that, 
in addition to telecommunications carriers, health care providers, and 
consortia of health care providers must share in the responsibility for 
calculating and justifying the request for support by maintaining 
documentation of the amount of support for which each member of a 
consortium is eligible.
    35. Summary and Analysis of the Significant Issues Raised by Public 
Comments in Response to the IRFA. In this Order, the Commission 
simplifies the process for rural health care providers to receive 
support from the universal service support mechanism. The Commission 
reconsiders, on its own motion, the rules that define the services that 
are eligible for support, and clarifies the definition of the entities 
eligible to receive the benefits of that support. In addition, the 
Commission clarifies the rules associated with the administration of 
the universal service support mechanisms. Specifically, the Order 
modifies the rules to allow the universal service mechanism for rural 
health care providers to support any commercially available 
telecommunications service regardless of the bandwidth, and allow the 
Administrator to calculate support based solely upon all actual 
distance-based charges. The Order clarifies the rules to allow a rural 
health care provider participating in a consortium with ineligible 
private sector members to be able to receive support even if the 
consortium is receiving a tariffed or market rate that includes a 
volume discount. It also clarifies the rules to enable USAC to include 
its joint and common billing and collection costs in the projected 
administrative expenses of the high cost, low-income, schools and 
libraries, and rural health care programs, based upon the volume of 
disbursements by each program.
    36. Description and Estimates of the Number of Small Entities to 
Which the Rules Adopted in This Order Will Apply. The RFA directs 
agencies to provide a description of and, where feasible, an estimate 
of the number of small entities that may be affected by the proposed 
rules, if adopted. The RFA generally defines the term ``small entity'' 
as having the same meaning as the terms ``small business,'' ``small 
organization,'' and ``small governmental jurisdiction.'' In addition, 
the term ``small business'' has the same meaning as the term ``small 
business concern'' under the Small Business Act. A small business 
concern is one which: (1) Is independently owned and operated; (2) is 
not dominant in its field of operation; and (3) satisfies any 
additional criteria established by the Small Business Administration 
(SBA). A small organization is generally ``any not-for-profit 
enterprise which is independently

[[Page 66786]]

owned and operated and is not dominant in its field.''
    37. In the FRFA of the Universal Service Order, we estimated and 
described in detail the number of small entities that might be affected 
by the new universal service rules. The rules adopted in this Order, 
however, would affect primarily rural health care providers. 
Specifically, the Commission modifies the rules that define the 
services that are eligible for support. Health care providers will now 
receive universal service support for any commercially available 
telecommunications services, necessary for the provision of health care 
services in a state, regardless of the bandwidth. The Commission also 
revises the rules that calculate support based on the urban/rural rate. 
Rural health care providers' universal service support will now be 
calculated using actual distance-based charges. Finally, the Commission 
clarifies the rules that define limitations on supported services for 
rural health care providers. Rural health care providers are allowed to 
participate in a consortium with ineligible private sector members and 
will be able to receive support even if the consortium is receiving a 
tariffed or market rate that includes a volume discount. The adopted 
rules will allow rural health care providers to benefit more fully from 
the rural health care universal service support mechanism, constituting 
a positive economic impact on these small entities.
    38. As noted, small entities includes ``small businesses,'' ``small 
organizations,'' and ``small governmental jurisdictions.'' All three 
types of small entities may also constitute rural health care providers 
for the purpose of this analysis. ``Small governmental jurisdiction'' 
generally means ``governments of cities, counties, towns, townships, 
villages, school districts, or special districts, with a population of 
less than 50,000.'' As of 1992, there were approximately 85,006 such 
jurisdictions in the United States. This number includes 38,978 
counties, cities, and towns; of these, 37,566, or 96 percent, have 
populations of fewer than 50,000. The Census Bureau estimates that this 
ratio is approximately accurate for all governmental entities. Thus, of 
the 85,006 governmental entities, we estimate that 81,600 (91 percent) 
are small entities. As for ``small organizations,'' as of 1992, there 
were approximately 275,801.
    39. In addition, the Commission noted in the Universal Service 
Order that neither the Commission nor the SBA has developed a 
definition of small, rural health care providers. Section 254(h)(5)(B) 
defines the term ``health care provider'' and sets forth the seven 
categories of health care providers eligible to receive universal 
service support. We estimated that there is less than 12,296 health 
care providers potentially affected by the rules in the Universal 
Service Order. We note that these small entities may potentially be 
affected by the rules adopted in this Order.
    40. Summary Analysis of the Projected Reporting, Record keeping, 
and Other Compliance Requirements and Significant Alternatives. In the 
FRFA to the Universal Service Order, we described the projected 
reporting, record keeping, and other compliance requirements and 
significant alternatives associated with the Schools and Libraries 
section, the Rural Health Care Provider section, and the Administration 
section of the Universal Service Order. Because the rules adopted 
herein may only affect those requirements in a marginal way, we 
incorporate by reference paragraphs 956 through 960, 968 through 971, 
and 980 of the Universal Service Order, which describe those 
requirements and provide the following analysis of the new requirements 
adopted herein.
    41. Under the rules adopted herein, we revise the rules governing 
the eligibility of services that the universal service support 
mechanism will support. We find that regardless of whether rural health 
care providers need services with greater or lower bandwidths, the 
public interest would be better served by allowing rural health care 
providers to have affordable access to all modern telecommunications 
service to provide medical services without regard for the bandwidth 
thereof. We also revise the rules to allow the Administrator to 
calculate the support based upon all distance-based charges. We've 
learned that because of the need to refer to the various tariffs, 
calculating the difference between the urban and rural base rates for 
telecommunications is extremely labor intensive. We have determined 
that most of the base rates for telecommunications service elements 
charged to rural health care providers are already comparable to those 
charged in urban areas so there is no need to continue to require the 
comparison of tariffs to other publicly available rates. Finally, we 
revise the rules to show that a rural health care provider 
participating in a consortium with ineligible private sector members 
may receive support even if the consortium is receiving a tariffed or 
market rate that includes a volume discount. We find that, an 
ineligible private entity that enters into an aggregated purchase 
agreement with a rural health care provider, and receives a tariff or 
market rate that includes a volume discount, would not be receiving a 
below-tariff or below-market rate because of the eligibility status of 
a rural health care provider participating in the consortium. We also 
find that new members may be added to a consortium even after the rural 
health care provider submits it application for support. Finally, 
because of the difficulties of allocating costs and preventing abuses 
in consortium arrangements, we find that, in addition to 
telecommunications carriers, health care providers and consortia of 
health care providers must maintain documentation of the amount of 
support for which each member of a consortium is eligible. These 
changes will not have a significant impact on the reporting, record 
keeping, and other compliance requirements for participation in the 
rural health care support program.
    42. Steps Taken To Minimize the Significant Economic Impact on a 
Substantial Number of Small Entities Consistent With Stated Objectives. 
In the FRFA to the Universal Service Order, we described the steps 
taken to minimize the significant economic impact on a substantial 
number of small entities consistent with stated objectives associated 
with the Schools and Libraries section, the Rural Health Care Provider 
section, and the Administration section of the Universal Service Order. 
Because the rules adopted herein may only affect those requirements in 
a marginal way, we incorporate by reference paragraphs 961 through 967, 
972 through 976, and 981 through 982 of the Universal Service Order, 
which describe those requirements and provide the following analysis of 
the new requirements adopted herein.
    43. Our decision to simplify the process for rural health care 
providers to receive support from the universal service support 
mechanism, will benefit rural health care providers, as well as their 
chosen service providers, who may be small entities. We also find that 
this approach should permit all parties to use fewer resources (i.e. 
less time and labor) to access the benefits of the universal service 
support program.

VI. Ordering Clauses

    44. The authority contained in 1-4, 201-205, 218-220, 254, 303(r), 
403, and 405 of the Communications Act of 1934, as amended, 47 U.S.C. 
151-154, 201-205, 218-220, 254, 303(r), 403, and 405, Sec. 1.108 of the 
Commission's rules, 47

[[Page 66787]]

CFR 1.108, the Fifteenth Order on Reconsideration is adopted.
    45. The authority contained in 1-4, 201-205, 218-220, 254, 303(r), 
403, and 405 of the Communications Act of 1934, as amended, 47 U.S.C. 
151-154, 201-205, 218-220, 254, 303(r), 403, and 405, Sec. 1.108 of the 
Commission's rules, 47 CFR 1.108, Part 54 of the Commission's rules, 47 
CFR Part 54, are amended.
    46. This Fifteenth Order on Reconsideration, the rule changes set 
forth are effective beginning with the third funding cycle of the rural 
health care universal service support program.
    47. The Commission's Office of Public Affairs, Reference Operations 
Division, shall send a copy of this Fifteenth Order on Reconsideration, 
including the Supplemental Final Regulatory Flexibility Analysis, to 
the Chief Counsel for Advocacy of the Small Business Administration.

List of Subjects in 47 CFR Part 54

    Universal service.

Federal Communications Commission.
Magalie Roman Salas,
Secretary.

Rule Changes

    Part 54 of Title 47 of the Code of Federal Regulations is amended 
as follows:

PART 54--UNIVERSAL SERVICE

    1. The authority for part 54 continues to read as follows:

    Authority: 47 U.S.C. 1, 4(i), 201, 205, 214, and 254 unless 
otherwise noted.

    2. Amend Sec. 54.601 by revising paragraphs (b)(3), (b)(4), and 
(c)(1) to read as follows:


Sec. 54.601  Eligibility.

* * * * *
    (b) * * *
    (3) Telecommunications carriers, health care providers, and 
consortia of health care providers shall carefully maintain complete 
records of how they allocate the costs of shared facilities among 
consortium participants in order to charge eligible health care 
providers the correct amounts. Such records shall be available for 
public inspection.
    (4) Telecommunications carriers, health care providers, and 
consortia of health care providers shall calculate and justify with 
supporting documentation the amount of support for which each member of 
a consortium is eligible.
    (c) * * *
    (1) Any telecommunications service that is the subject of a 
properly completed bona fide request by a rural health care provider 
shall be eligible for universal service support, subject to the 
limitations described in this paragraph. The length of a supported 
telecommunications service may not exceed the distance between the 
health care provider and the point farthest from that provider on the 
jurisdictional boundary of the nearest large city as defined in 
Sec. 54.605(c).
* * * * *
    3. Amend Sec. 54.609 by adding paragraphs (a)(1), (a)(2), and by 
revising paragraphs (b) and (c) to read as follows:


Sec. 54.609  Calculating support.

    (a) * * *
    (1) With one exception, the Administrator shall consider the base 
rates for telecommunications services elements in rural areas to be 
reasonably comparable to the base rates charged for similar 
telecommunications service elements in urban areas in that state, and, 
therefore, the Administrator shall not include these charges in 
calculating the support. The Administrator shall include, in the 
support calculation, all other charges specified, and all actual 
distance-based charges as follows:
    (i) If the requested service distance is less than or equal to the 
SUD for the state, the distance-based charge for that service can be no 
higher than the distance-based charged for a similar service over the 
same distance in the large city nearest to the rural health care 
provider;
    (ii) If the requested service distance is greater than the SUD for 
the state, but less than the maximum allowable distance, the distance-
based charge for that service can be no higher than the distance-based 
charged for a similar service in the large city nearest to the rural 
health care provider over the SUD.
    (iii) ``Distance-based charges'' are charges based on a unit of 
distance, such as mileage-based charges.
    (iv) Except with regard to services provided under Sec. 54.621, a 
telecommunications carrier that provides telecommunications service to 
a rural health care provider participating in an eligible health care 
consortium, and the consortium must establish the actual distance-based 
charges for the health care provider's portion of the shared 
telecommunications services.
    (2) If a telecommunications carrier, health care provider, and/or 
consortium of health care providers reasonably determines that the base 
rates for telecommunications services elements in rural areas are not 
reasonably comparable to the base rates charged for similar 
telecommunications service elements in urban areas in that state, the 
telecommunications carrier, health care provider, and/or consortium of 
health care providers may request that the Administrator perform a more 
comprehensive support calculation. The requester shall provide to the 
Administrator the information to establish both the urban and rural 
rates consistent with Sec. 54.605 and Sec. 54.607, and submit to the 
Administrator all of the documentation necessary to substantiate the 
request.
    (i) Except with regard to services provided under Sec. 54.621, a 
telecommunications carrier that provides telecommunications service to 
a rural health care provider participating in an eligible health care 
consortium, and the consortium must establish the applicable rural base 
rates for telecommunications service elements for the health care 
provider's portion of the shared telecommunications services, as well 
as the applicable urban base rates for the telecommunications service 
elements.
    (b) Absent documentation justifying the amount of universal service 
support requested for health care providers participating in a 
consortium, the Administrator shall not allow telecommunications 
carriers to offset, or receive reimbursement for, the amount eligible 
for universal service support.
    (c) The universal service support mechanisms shall provide support 
for intrastate telecommunications services, as set forth in Sec. 54.101 
paragraph (a), provided to rural health care providers as well as 
interstate telecommunications services.
    4. Revise Sec. 54.613 to read as follows:


Sec. 54.613  Limitations on supported services for rural health care 
providers.

    (a) Upon submitting a bona fide request to a telecommunications 
carrier, each eligible rural health care provider is entitled to 
receive the most cost-effective, commercially-available 
telecommunications service at a rate no higher than the highest urban 
rate, as defined in this paragraph, at a distance not to exceed the 
distance between the eligible health care provider's site and the 
farthest point from that site that is on the jurisdictional boundary of 
the nearest large city, as defined in Sec. 54.605(c).
    (b) This section shall not affect a rural health care provider's 
ability to obtain supported services under Sec. 54.621.

[FR Doc. 99-30989 Filed 11-29-99; 8:45 am]
BILLING CODE 6712-01-P