[Federal Register Volume 68, Number 119 (Friday, June 20, 2003)]
[Proposed Rules]
[Pages 36961-36967]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-14929]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[CC Docket No. 02-6; FCC 03-101]


Schools and Libraries Universal Service Support Mechanism

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: In this document, the Commission seeks comment on additional 
proposals to further improve the operation of the schools and libraries 
support mechanism. Specifically, the Commission seeks comment on 
specific rules and procedures implementing the Commission's policy to 
carry forward unused funds from the schools and libraries support 
mechanism in subsequent funding years of the schools and libraries 
support mechanism adopted in the First Report and Order adopted in this 
docket.

DATES: Comments are due on or before July 21, 2003. Reply comments are 
due on or before August 19, 2003.

ADDRESSES: All filings must be sent to the Commission's Secretary, 
Marlene H. Dortch, Office of the Secretary, Federal Communications 
Commission, 445 12th Street, SW., Washington, DC 20554. See 
Supplementary Information for further filing instructions.

FOR FURTHER INFORMATION CONTACT: Jonathan Secrest and Katherine Tofigh, 
Attorneys, Telecommunications Access Policy, Wireline Competition 
Bureau, (202) 418-7400.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's 
Further Notice of Proposed Rulemaking in CC Docket No. 02-6, FCC 03-
101, released on April 30, 2003. This Further Notice of Proposed 
Rulemaking was also released with a companion Second Report and Order 
(Second Order). The full text of this document is available for public 
inspection during regular business hours in the FCC Reference Center, 
Room CY-A257, 445 12th Street, SW., Washington, DC 20554.

I. Introduction

    1. After consideration of many of the important issues raised in 
the comments to the Schools and Libraries NPRM, 67 FR 7327, February 
19, 2002, we find that it is appropriate to seek further comment on 
several additional matters. Therefore, in the Further Notice of 
Proposed Rulemaking (FNPRM), we seek comment on additional proposals to 
further improve the operation of the schools and libraries support 
mechanism. In particular, we seek comment on specific rules and 
procedures implementing the Commission's policy to carry forward unused 
funds from the schools and libraries support mechanism in subsequent 
funding years of the schools and libraries support mechanism adopted in 
the First Report and Order (First Order), 67 FR 41862, June 20, 2002, 
adopted in this docket. We seek comment regarding our existing rules 
governing the filing of an applicant's technology plan, and the 
viability of an online computerized eligible services list. We also 
seek comment on additional measures to limit waste, fraud, and abuse.

II. Further Notice of Proposed Rulemaking

A. Background

    2. In the First Order, we determined that unused funds from the 
schools and libraries mechanism should be used to stabilize the 
contribution factor while the Commission considers whether and how to 
reform its methodology for contributions to the universal service 
support mechanism. We also determined that beginning no later than the 
second quarter of 2003, which began April 1, 2003, unused funds shall 
be carried forward for disbursal in subsequent funding years of the 
schools and libraries mechanism. Accordingly, in this FNPRM we seek 
comment on proposed rules regarding the carryover of unused funds from 
funding year to funding year of the schools and libraries support 
mechanism.
    3. We also seek comment on several other matters relevant to the 
schools and libraries mechanism. We seek comment regarding our rules 
pertaining to when applicants file a technology plan. We seek further 
comment on the establishment of an online computerized eligible 
services list for telecommunications services and Internet access. 
Finally, we seek comment on additional measures to limit waste, fraud, 
and abuse.

B. Proposed Unused Funds Carryover Rules

    4. In this FNPRM, we propose specific rules implementing the 
Commission's decision to carry forward unused funds for use in 
subsequent funding years of the schools and libraries program. In 
general, we propose to amend our rules to require USAC to provide 
quarterly estimates to the Commission regarding the amount of unused 
funds that will be available to be carried forward. We further propose 
to amend our rules so that the Commission would carry forward available 
unused funds from prior years on an annual basis for use in the 
following full funding year of the schools and libraries program. We 
seek comment on the proposed rules and our proposed procedures 
implementing these rules.
    5. We propose that on a quarterly basis, USAC, after consultation 
with the Schools and Libraries Committee, provide the Commission with 
an estimate of unused funds from the schools and libraries support 
mechanism for each of the prior funding years. By providing quarterly 
estimates of unused funds, we would establish a regular reporting cycle 
for USAC. In addition, quarterly estimates would provide schools and 
libraries with general notice regarding the amount of unused funds that 
may be made available for use in the subsequent funding year. We seek 
comment on this proposal.
    6. We propose that USAC's estimate of unused funds for a particular 
funding year generally total the difference between the amount of funds 
collected, or made available for that particular funding year, and the 
amount of funds disbursed or to be disbursed. We expect that USAC's 
estimates will become more refined as a particular funding year 
progresses, given its unique skills and experience administering the 
schools and libraries mechanism. We seek comment on this proposal.
    7. In addition, we propose that in the second quarter of each 
calendar year, the Commission will announce a specific amount of unused 
funds from prior funding years to be carried forward in accordance with 
the public interest for use in the next full funding year, in excess of 
the annual funding cap. For example, unused funds as of second quarter 
2004 would be carried forward for use in the Schools and Libraries 
Funding Year 2004. Carrying forward unused funds in the second quarter 
of the calendar year would coincide with the time of year the SLD makes 
funding commitment decisions, which typically occurs in the second

[[Page 36962]]

and third quarters of the calendar year. Once added, the funding year 
would continue to operate normally, with the benefit of any additional 
unused funds. We believe that this will ensure minimal disruption of 
the administration of the schools and libraries program.
    8. We also propose that after unused funds are identified and 
carried forward in the second quarter of the calendar year, USAC will 
begin to re-calculate unused funds, beginning with unused funds as of 
the third quarter of the calendar year. Such funds would be carried 
forward to the next full funding year. As a result, we believe that the 
described rolling methodology will provide certainty regarding when 
unused funds will be carried forward for use in the schools and 
libraries program. In addition, the proposed rules would ensure that 
schools and libraries have reasonable notice from the quarterly 
estimates of the approximate amount of funds that we expect to become 
available in the second quarter of the calendar year. In general, 
schools and libraries submit applications for funding between November 
and January, preceding the start of the funding year. Under our 
proposal, applicants would have the benefit of three quarterly 
estimates of unused funds before the filing window closes, and would be 
able to structure their applications appropriately. We seek comment 
regarding this proposal.
    9. Further, we propose that USAC begin estimating unused funds from 
the schools and libraries mechanism in 2003, and that unused funds 
would be carried forward in accordance with the public interest for use 
in Funding Year 2004 of the schools and libraries program. In the First 
Order, the Commission determined that it would begin to carry forward 
unused funds from the schools and libraries program no later than 
second quarter 2003. We seek comment regarding this proposal.

C. Technology Plan

    10. To ensure that purchased services are used in a cost-effective 
manner, the Commission requires applicants to base their requests for 
services on an approved technology plan. Section 54.504(b)(vii) states 
that in its FCC Form 470 the applicant must certify that its technology 
plan has been approved by its state, the Administrator, or an 
independent entity approved by the Commission.
    11. We propose modifying our existing rules governing the timing of 
the certification regarding the approval of the applicant's technology 
plan so that applicants can indicate that their technology plan will be 
approved by an authorized body by the time that services supported by 
the universal service mechanism for schools and libraries begin. We 
believe that the rule change will improve program operation by 
recognizing that it may be difficult for an applicant to obtain 
approval of a technology plan well in advance of the commencement of a 
funding year. We seek comment on the costs and benefits of our 
proposal.

D. Computerized Eligible Services List

    12. In the Order, we have directed the Administrator to develop a 
pilot for an online computerized list for internal connections. While 
we gain operational experience through this pilot program, we seek 
further comment on the feasibility of an online eligible services list 
with brand name products in the telecommunications services and 
Internet access categories. We are concerned, as were many commenters, 
about the difficulties in describing and amassing information regarding 
brand name products in these categories. We seek comment on whether 
this list should be a ``safe harbor.'' We seek comment on whether such 
a list raises any legal issues. We seek comment on what effect such a 
list would have on our statutory mandate to evaluate requests for 
discounts on a competitively neutral basis. For example, how would we 
create a safe harbor telecommunications services provider list? Would 
such a list vary by location, state, or region? If a geographic area 
only had one telecommunications carrier, would it foster or impede 
competition to place that carrier on the list? We further seek comment 
on these and other issues raised by the establishment of an online 
eligible services list.

E. Other Measures To Prevent Waste, Fraud, and Abuse

    13. In the Order, we have established rules to debar persons 
convicted or held civilly liable with respect to the schools and 
libraries support mechanism from participating in the program. We also 
believe, however, that there may be circumstances not culminating in a 
criminal conviction or civil judgment that may warrant debarment. We 
accordingly seek to further develop the record on debarment in 
situations where evidence of misconduct is less clear-cut. We also seek 
further comment on other measures to limit waste, fraud, and abuse.
    14. Adoption of Governmentwide Regulations. A NPRM, 67 FR 3266, 
January 23, 2002, is pending that proposes, among other things, to 
allow independent regulatory agencies to elect to participate in 
governmentwide debarment rules. We seek comment on whether we should 
adopt the governmentwide nonprocurement debarment regulations, which 
inform the rules we adopt today. The current governmentwide rules do 
not apply to independent agencies. However, the proposed governmentwide 
rules explicitly allow for adoption by independent agencies. We seek 
comment on whether, if these governmentwide rules are adopted, we 
should elect to participate in the governmentwide debarment rules for 
purposes of the schools and libraries universal service support 
mechanism, or whether, given the unique nature of the program, adoption 
of the proposed governmentwide rules would be inappropriate or less 
effective than other rules we adopt.
    15. Debarring willful or repeated violators. A rule allowing for 
debarment of willful or repeated violators of our rules could be an 
important tool for ensuring the integrity of the program, because there 
may be situations in which persons may not be convicted or held civilly 
liable, yet their continued program participation may still constitute 
a threat to the integrity of the program. Moreover, some applicants or 
service providers may reach settlement with prosecuting authorities in 
a given case without admission of liability, that otherwise would have 
resulted in a conviction or civil judgment. Accordingly, we tentatively 
conclude that the Commission should have the flexibility to debar a 
person whose willful or repeated violation of Commission rules 
threatens to undermine program integrity and result in waste, fraud, or 
abuse. Debarring those who have violated program rules in this manner 
not only ensures accountability within the program, but allows for 
additional funding for more deserving persons.
    16. The ``willful or repeated'' standard is based upon existing 
Commission forfeiture authority under section 503(b). Consistent with 
section 312(f) of the Act, we propose to define ``willful'' as ``the 
conscious and deliberate commission or omission of any act, 
irrespective of any intent to violate any provision of this Act or any 
rule or regulation of the Commission authorized by this Act or by a 
treaty ratified by the United States.'' We propose to define 
``repeated'' as ``the commission or omission of any act more than once 
or, if such commission or omission is continuous, for more than one 
day.'' We seek comment on the proposed definitions.

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    17. Because it is not our intention to debar persons that 
inadvertently make mistakes, even if repeated, with respect to program 
rules, we propose debarring only those willful or repeated offenders 
whose actions threaten to undermine program integrity and result in 
waste, fraud, or abuse. We believe that this standard adequately 
balances the need to strictly enforce our rules with our desire not to 
debar applicants whose mistakes do not undermine program integrity. We 
seek comment on these tentative conclusions.
    18. Determination of violation resulting in debarment. We seek 
comment on how the Commission should determine when a person whose 
willful or repeated violation of Commission rules (or the 
Administrator's procedures) threatens to undermine program integrity 
and result in waste, fraud, or abuse. We also seek comment on whether 
only the violations of certain rules or procedures should be 
considered, and if so, which ones. We seek comment on the appropriate 
period of debarment and whether such period should be fixed or 
discretionary.
    19. We also seek comment on the process whereby the Commission 
would determine that willful or repeated violations of our rules (or of 
the Administrator's procedures) have occurred. Ordinarily, SLD 
determines in the first instance whether an applicant has complied with 
program requirements in the course of reviewing requests for discounts. 
If SLD concludes that an application is not consistent with the 
Commission's rules, it issues a decision, and the applicant may seek 
Commission review of SLD's decision to deny discounts. We seek comment 
on how to implement debarment in the absence of a formal SLD decision 
denying a request for discounts. We propose that if SLD suspects that a 
person has willfully or repeatedly committed acts that threaten to 
undermine program integrity and result in waste, fraud, or abuse, 
either in the course of application review or subsequently, it may 
refer the matter to the Commission, which would then begin an 
investigation that may culminate in notice of proposed debarment to the 
person. We seek comment on this approach.
    20. Notification procedures for debarment. We also seek comment on 
what procedures would ensure adequate notice to persons subject to 
debarment proceedings for willful or repeated violations, while still 
providing for expeditious Commission determinations in order to 
adequately protect the program. As informed by the federal agency 
rules, we propose that the Commission shall give notice of proposed 
debarment on the ground of willful or repeated violations to the person 
by: (1) Giving the reasons for the proposed debarment in terms 
sufficient to put the person on notice of the conduct or transaction(s) 
upon which it is based and the cause relied upon; (2) explaining the 
applicable debarment procedures; (3) describing the potential effect of 
debarment. The person would be afforded an opportunity to respond and 
submit information and argument within 30 days after the notice is 
published. The Commission would then make a decision on the basis of 
all the information in the administrative record, including any 
submission made by the respondent, and provide notice to the 
respondent. We seek comment on these procedures.
    21. Other grounds for debarment. We also seek comment on whether we 
should adopt a rule debarring persons who, in the course of their 
participation in the schools and libraries support mechanism, commit 
any other act indicating a lack of business integrity or business 
honesty that seriously and directly affects the present responsibility 
of the person. We also seek comment on whether to exercise discretion 
to debar persons who commit any other act indicating a lack of business 
integrity or business honesty that seriously and directly affects the 
present responsibility of the person, even if unrelated to schools and 
libraries support mechanism, and invite comment on specific examples of 
conduct that would warrant debarment. We seek comment on how, if the 
Commission adopts either provision, the Commission should implement 
debarment.
    22. Imputation for debarment. We recognize that there may be 
circumstances in which debarment of one entity--whether under rules we 
adopt today or under any additional rules we may adopt in the future--
may not adequately protect the integrity of the program. For example, 
there may be circumstances where one person is found liable for certain 
actions, but other individuals have also engaged in misconduct that 
threatens the integrity of the program. We seek comment on rules for 
imputation of conduct from one person to another, based upon the 
Federal agency rules governing imputation of conduct. Under our 
proposed rules, the conduct of a person may be imputed to another 
person when the conduct occurs in connection with the former's 
performance of duties for or on behalf of the latter, or with the 
latter's knowledge, approval, or acquiescence. One example of evidence 
of such knowledge, approval, or acquiescence could be the latter's 
acceptance of the benefits derived from the conduct. The conduct may be 
imputed to any officer, director, shareholder, partner, employee, or 
other individual associated with the person who participated in, knew 
of, or had reason to know of the person's conduct. In addition, the 
conduct of one person may be imputed to other persons in a joint 
venture or similar arrangement if the conduct occurred for or on behalf 
of the joint venture or similar arrangement, or with the knowledge, 
approval, or acquiescence of those persons. One example of evidence of 
such knowledge, approval, or acquiescence could be the latter's 
acceptance of the benefits derived from the conduct. We seek comment on 
the administrative process for making a finding that the conduct of one 
person should be imputed to another. We seek comment on these proposed 
rules.
    23. Effect of debarment. We seek comment on what effect, if any, 
suspension or debarment of a person should have with regard to the 
person's participation in other activities associated with the 
Commission. For example, should suspension or debarment of a service 
provider from the schools and libraries support mechanism preclude 
participation in providing certain services to the Commission, such as 
Internet access or telephone service? Similarly, should suspension or 
debarment from the schools and libraries support mechanism also result 
in suspension or debarment from other universal service support 
mechanisms?
    24. Changing service providers post-debarment. We seek comment on 
whether our rules should permit applicants whose service provider has 
been debarred to change their service provider before their application 
for discounted services has been approved or after the last date for 
invoices. SLD's current operating procedures permit applicants whose 
service providers have been debarred to change service providers only 
after SLD has issued a funding commitment decision letter, and no later 
than the last date to submit an invoice. The existing procedure 
allowing SPIN changes within this window balances fairness to 
applicants and flexibility in the program with goals of program 
efficiency, including the importance of certainty and finality so that 
the Administrator can properly allocate limited funds among a large 
pool of applicants. If applicants were permitted to change service 
providers after they had applied for discounts but before SLD had made 
a funding

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commitment decision, it may be more difficult for SLD to determine 
whether program requirements are met if an applicant changed service 
providers because of potential irregularities. Permitting applicants to 
change service providers after the last date for invoices to be 
submitted could introduce a lack of finality into the process, 
undermining our efforts to streamline program procedures.
    25. We seek comment on whether applicants whose service providers 
have been debarred should be permitted to change service providers 
before a funding commitment decision has been issued, or after the last 
date for invoices. We seek comment on how such a rule might reconcile 
our goals of ensuring both fairness and finality. We seek comment on 
what procedures SLD might implement in such situations.
    26. We further seek comment on whether applicants that are 
complicit in the bad acts of a debarred service provider, but who are 
not themselves convicted or held civilly liable, should be permitted to 
change service providers in the same manner as applicants that were not 
so complicit. While we do not intend to punish applicants that are 
merely innocent victims of a particular service provider, we also do 
not want to create incentives for applicants to undermine the goals of 
the program through complicity in program violations by a service 
provider. We therefore seek comment on whether complicit applicants 
should not be permitted to change service providers (and therefore are 
effectively debarred for that funding year), and if so, how such a 
standard of ``complicity'' should be defined. Finally, we seek comment 
generally on whether any other rules should be adopted relating to 
debarment that would serve our goals of protecting against waste, 
fraud, and abuse.

III. Procedural Issues

A. Initial Paperwork Reduction Act of 1995 Analysis

    27. This FNPRM contains no proposed or modified information 
collection. As part of a continuing effort to reduce paperwork burdens, 
we invite the general public and the Office of Management and Budget 
(OMB) to take this opportunity to comment on the information 
collections contained in this FNPRM, as required by the Paperwork 
Reduction Act of 1995, Pub. L. 104-13. Public and agency comments are 
due at the same time as other comments on this FNPRM; OMB comments are 
due August 19, 2003. Comments 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; and (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.

B. Initial Regulatory Flexibility Analysis

    28. As required by the Regulatory Flexibility Act (RFA), the 
Commission has prepared this Initial Regulatory Flexibility Analysis 
(IRFA) of the possible significant economic impact on small entities by 
the policies and rules proposed in the Further Notice of Proposed 
Rulemaking (FNPRM). Written public comments are requested on this IRFA. 
Comments must be identified as responses to the IRFA and must be filed 
by the deadlines for comments on the FNPRM. The Commission will send a 
copy of the IRFA to the Chief Counsel for Advocacy of the Small 
Business Administration (SBA). In addition, the IRFA (or summaries 
thereof) will be published in the Federal Register.
1. Need for, and Objectives of, the Proposed Rules
    29. In the Schools and Libraries NPRM, 67 FR 7327, February 19, 
2002, we sought comment on whether to amend our rules regarding the 
treatment of unused funds from the schools and libraries universal 
service mechanism. In the First Order, 67 FR 41862, June 20, 2002, 
revising our rules regarding the treatment of unused funds from the 
schools and libraries universal service support mechanism, we 
determined that beginning no later than the second quarter of 2003, any 
unused funds from the schools and libraries support mechanism shall, 
consistent with the public interest, be carried forward for 
disbursement in subsequent funding years of the schools and libraries 
support mechanism. We also stated our intent to develop specific rules 
implementing this policy. In the FNPRM, we seek comment on proposed 
rules and procedures implementing that policy.
    30. In addition, in the FNPRM, we seek further comment on the 
viability of an online eligible services list with brand name products 
in the telecommunications services and Internet access categories. We 
also seek comment on whether to modify our existing rules so that 
applicants no longer need to certify that their technology plan has 
been approved, but instead can certify that it will be approved by the 
time that services supported by the universal service mechanism for 
schools and libraries begin. We seek comment on whether it may be 
appropriate to debar persons from participation in the schools and 
libraries program under circumstances that do not culminate in a 
criminal or civil judgment. Finally, we seek comment on the effect of a 
debarment on a provider's participation in other universal service 
programs, and on our rules regarding changing service providers post-
debarment.
2. Legal Basis
    31. The legal basis for the FNPRM is contained in sections 1 
through 4, 201 through 205, 254, 303(r), and 403 of the Communications 
Act of 1934, as amended by the Telecommunications Act of 1996, 47 
U.S.C. 151 through 154, 201 through 205, 254, 303(r), and 403, and 
Sec.  1.411 of the Commission's rules.
3. Description and Estimate of the Number of Small Entities to Which 
Rules Will Apply
    32. We have described in detail in the Final Regulatory Flexibility 
Analysis in this proceeding the categories of entities that may be 
directly affected by our proposals. For this Initial Regulatory 
Flexibility Analysis, we hereby incorporate those entity descriptions 
by reference.
4. Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements
    33. The specific proposals under consideration in the FNPRM would 
not, if adopted, result in additional recordkeeping requirements for 
small businesses. The proposal to have the Universal Service 
Administrative Company report unused fund data to the Commission does 
not add any reporting, recordkeeping, or compliance requirements to 
small entities.
    34. In the FNPRM, we ask for further comment on the feasibility of 
an online eligibility list including brand name products in the 
telecommunications services and Internet access categories to help 
applicants in the application process. We conclude in the Second Order 
that the establishment of a similar program with regard to internal 
connections is likely to reduce compliance burdens on small applicants 
because it would help facilitate the application process, as commenters 
noted. We believe that such a list would help all schools, libraries, 
local governments applying for these entities, all of which include 
small entities, and reduce any costs by facilitating the

[[Page 36965]]

application process. We invite comment on whether an online eligibility 
list including brand name products in the telecommunications services 
and Internet access categories would affect the cost of complying for 
small businesses.
    35. In addition, the proposal to modify our existing requirement 
that applicants can certify that their technology plan will be approved 
does not add a requirement for small entities, but rather extends the 
timing of the requirement to allow more time to meet the requirement of 
the program. As we noted in the Order, we believe that the rule change 
will reduce any burden on applicants in obtaining approval of a 
technology plan well in advance of the commencement of a funding year. 
We seek comment on the costs and benefits of our proposal.
5. Steps Taken To Minimize Significant Economic Impact on Small 
Entities, and Significant Alternatives Considered
    36. The RFA requires an agency to describe any significant 
alternatives that it has considered in reaching its proposed approach, 
which may include the following four alternatives (among others): (1) 
The establishment of differing compliance and reporting requirements or 
timetables that take into account the resources available to small 
entities; (2) the clarification, consolidation, or simplification of 
compliance or reporting requirements under the rule for small entities; 
(3) the use of performance, rather than design, standards; and (4) an 
exemption from coverage of the rule, or part thereof, for small 
entities.
    37. As noted, in the First Order we revised our rules regarding the 
treatment of unused funds from the schools and libraries universal 
service support mechanism. In the FNPRM, we seek comment on how to 
implement the Commission's policy to carry over unused funds to 
subsequent years of the schools and libraries mechanism. We propose 
that in the second quarter of each calendar year, the Commission will 
announce a specific amount of unused funds from prior funding years to 
be carried forward in accordance with the public interest for use in 
the next full funding year, in excess of the annual funding cap. We 
propose that USAC provide the Commission with quarterly estimates of 
the amount of unused funds, and that the Commission would carry forward 
available unused funds from prior years on an annual basis. Consistent 
with our analysis in the First Order, we believe that the rules and 
procedures that we propose will have a similar impact on both small and 
large entities, because schools and libraries will benefit equally from 
the additional funds made available. We invite commenters to discuss 
the benefits of these proposed rules and procedures and whether these 
benefits are outweighed by resulting costs to any other small entities.
    38. Regarding an online eligible services list including brand name 
products in the telecommunications services and Internet access 
categories, we direct the Administrator in the Order to create a pilot 
program for a similar item, internal connections discounts. In the 
Second Order, we also direct the Administrator to report back to the 
Commission about the ramifications of the pilot program for internal 
connections. We believe this will help us in our assessment of the 
feasibility of an online eligible services list including brand name 
products in the telecommunications services and Internet access 
categories. We request that commenters, in proposing possible 
alternatives to an online eligible services list including brand name 
products in the telecommunications services and Internet access 
categories, discuss the economic impact that changes may have on small 
entities.
    39. In addition, in the FNPRM, we seek comment on the allocation of 
funds for Priority One services in the event that requests for such 
services exceed the funding cap. Although the program has not had a 
funding year in which this has happened, if the requests for Priority 
One services exceed the funding cap, there currently are no rules that 
govern the way the Priority One requests would be awarded discounts. 
The way in which such funding is disbursed may have an impact upon 
those small entities applying for discounts and any small companies 
providing such goods and services. We request that commenters, in 
proposing possible alternatives to our rules, discuss the economic 
impact that changes may have on small entities.
    40. We also consider whether it is appropriate to debar certain 
persons from participation in the schools and libraries universal 
service mechanism under certain circumstances that may not culminate in 
a criminal conviction or civil judgment. We believe that providing the 
Commission the flexibility to debar persons who, for example, willfully 
or repeatedly violate Commission's rules, ensures accountability in the 
program and allows for addition funding for more deserving applicants. 
This would potentially benefit applicants that abide by the 
Commission's rules, including small entities. We also seek comment on 
whether there should be a process whereby the Commission could delay, 
reverse, or modify suspension or debarment on a case-by-case basis. 
Such action may provide the Commission with additional flexibility to 
take into account the various situations that may arise under the 
debarment program. In addition, we seek comment on whether our rules 
should permit applicants whose service provider has been debarred to 
change service providers before their application for discounted 
services has been approved or after the last date for invoices. We 
believe that such action would provide greater flexibility to all 
entities, including small entities, to change service providers under a 
greater range of circumstances. We request that commenters, in 
proposing possible alternatives to these rules, discuss the economic 
impact that changes may have on small entities.
6. Federal Rules That May Duplicate, Overlap, or Conflict With the 
Proposed Rules
    41. None.

C. Comment Filing Procedures

    42. We invite comment on the issues and questions set forth in the 
Further Notice of Proposed Rulemaking and Initial Regulatory 
Flexibility Analysis contained herein. Pursuant to applicable 
procedures set forth in Sec. Sec.  1.415 and 1.419 of the Commission's 
rules, interested parties may file comments are due on or before July 
21, 2003. Reply comments are due on or before August 19, 2003. All 
filings should refer to CC Docket No. 02-6. Comments may be filed using 
the Commission's Electronic Comment Filing System (ECFS) or by filing 
paper copies.
    43. Comments filed through ECFS can be sent as an electronic file 
via the Internet to http://www.fcc.gov/e-file/ecfs.html. Generally, 
only one copy of an electronic submission must be filed. In completing 
the transmittal screen, commenters should include their full name, 
Postal Service mailing address, and the applicable docket number, which 
in this instance is CC Docket No. 02-6. Parties may also submit an 
electronic comment by Internet e-mail. To receive filing instructions 
for e-mail comments, commenters should send an e-mail to [email protected], 
and should include the following words in the body of the message: get 
form . A sample form and directions will 
be sent in reply.
    44. 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,

[[Page 36966]]

commenters must submit two additional copies for each additional docket 
or rulemaking number. Parties who choose to file by paper are hereby 
notified that effective December 18, 2001, the Commission's contractor, 
Vistronix, Inc., will receive hand-delivered or messenger-delivered 
paper filings for the Commission's Secretary at a new location in 
downtown Washington, DC. The address is 236 Massachusetts Avenue, NE., 
Suite 110, Washington, DC 20002. The filing hours at this location will 
be 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. This facility is the only location where hand-
delivered or messenger-delivered paper filings for the Commission's 
Secretary will be accepted. Accordingly, the Commission will no longer 
accept these filings at 9300 East Hampton Drive, Capitol Heights, MD 
20743. Other messenger-delivered documents, including documents sent by 
overnight mail (other than United States Postal Service (USPS) Express 
Mail and Priority Mail), must be addressed to 9300 East Hampton Drive, 
Capitol Heights, MD 20743. This location will be open 8 a.m. to 5:30 
p.m. The USPS first-class mail, Express Mail, and Priority Mail should 
continue to be addressed to the Commission's headquarters at 445 12th 
Street, SW., Washington, DC 20554. The USPS mail addressed to the 
Commission's headquarters actually goes to our Capitol Heights facility 
for screening prior to delivery at the Commission.

------------------------------------------------------------------------
 If you are sending this type of document    It should be addressed for
    or using this delivery method . . .           delivery to . . .
------------------------------------------------------------------------
Hand-delivered or messenger-delivered       236 Massachusetts Avenue,
 paper filings for the Commission's          NE., Suite 110, Washington,
 Secretary.                                  DC 20002 (8 a.m. to 7 p.m.)
Other messenger-delivered documents,        9300 East Hampton Drive,
 including documents sent by overnight       Capitol Heights, MD 20743
 mail (other than United States Postal       (8 a.m. to 5:30 p.m.)
 Service Express Mail and Priority Mail).
United States Postal Service first-class    445 12th Street, SW.,
 mail, Express Mail, and Priority Mail.      Washington, DC 20554.
------------------------------------------------------------------------

    45. Parties who choose to file by paper should also submit their 
comments on diskette to Sheryl Todd, Telecommunications Access Policy 
Division, Wireline Competition Bureau, Federal Communications 
Commission, 445 12th Street, SW., Room 5-B540, Washington, DC 20554. 
Such a submission should be on a 3.5 inch diskette formatted in an IBM 
compatible format using Microsoft Word or compatible software. The 
diskette should be accompanied by a cover letter and should be 
submitted in ``read only'' mode. The diskette should be clearly labeled 
with the commenter's name, proceeding (including the docket number, in 
this case, CC Docket No. 02-6), type of pleading (comment or reply 
comment), date of submission, and the name of the electronic file on 
the diskette. The label should also include the following phrase ``Disk 
Copy--Not an Original.'' Each diskette should contain only one party's 
pleading, preferably in a single electronic file. In addition, 
commenters must send diskette copies to the Commission's copy 
contractor, Qualex International, Portals II, 445 12th Street, SW., 
Room CY-B402, Washington, DC 20554.
    46. Regardless of whether parties choose to file electronically or 
by paper, parties should also file one copy of any documents filed in 
this docket with the Commission's copy contractor, Qualex 
International, Inc., Portals II, 445 12th Street, SW., Room CY-B402, 
Washington, DC 20554. Comments and reply comments will be available for 
public inspection during regular business hours in the FCC Reference 
Center, Room CY-A257, 445 12th Street, SW., Washington, DC 20554. In 
addition, the full text of this document is available for public 
inspection and copying during regular business hours at the FCC 
Reference Information Center, Portals II, 445 12th Street, SW., Room 
CY-A257, Washington, DC 20554. This document may also be purchased from 
the Commission's duplicating contractor, Qualex International, Portals 
II, 445 12th Street, SW., Room CY-B402, Washington, DC 20554, telephone 
(202) 863-2893, facsimile (202) 863-2898, or via e-mail 
[email protected].
    47. 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 FNPRM in order to facilitate our internal 
review process.

D. Further Information

    48. Alternative formats (computer diskette, large print, audio 
recording, and Braille) are available to persons with disabilities by 
contacting Brian Millin at (202) 418-7426 voice, (202) 418-7365 TTY, or 
[email protected]. This FNPRM can also be downloaded in Microsoft Word 
and ASCII formats at http://www.fcc.gov/ccb/universal_service/highcost.

IV. Ordering Clauses

    49. Pursuant to the authority contained in sections 1, 4(i), 4(j), 
201-205, 214, 254, and 403 of the Communications Act of 1934, as 
amended, this Further Notice of Proposed Rulemaking is adopted.
    50. The Commission's Consumer and Governmental Affairs Bureau, 
Reference Information Center, shall send a copy of this Further Notice 
of Proposed Rulemaking, including the Final Regulatory Flexibility 
Analysis and Initial Regulatory Flexibility Analysis, to the Chief 
Counsel for Advocacy of the Small Business Administration.

List of Subject in 47 CFR Part 54

    Reporting and recordkeeping requirements, Telecommunications, 
Telephone.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.

Proposed Rules

    For the reasons discussed in the preamble, the Federal 
Communications Commission proposes to amend 47 CFR part 54 as follows:

PART 54--UNIVERSAL SERVICE

    1. The authority citation continues to read as follows:

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

    2. Amend Sec.  54.507 by adding paragraphs (a)(1) and (a)(2) to 
read as follows:


Sec.  54.507  Cap.

    (a) * * *
    (1) Amount of unused funds. Beginning in the second quarter 2003, 
the Administrator shall report to the Commission funding that is unused 
from prior years of the schools and libraries support mechanism on a 
quarterly basis.
    (2) Application of unused funds. On an annual basis, in the second 
quarter of each calendar year, all funds that are collected and that 
are unused from prior

[[Page 36967]]

years shall be available for use in the next full funding year of the 
schools and libraries mechanism in accordance with the public interest 
and notwithstanding the annual cap.
* * * * *
[FR Doc. 03-14929 Filed 6-19-03; 8:45 am]
BILLING CODE 6712-01-P