[Federal Register Volume 73, Number 31 (Thursday, February 14, 2008)]
[Notices]
[Pages 8670-8692]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 08-684]


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FEDERAL COMMUNICATIONS COMMISSION

[WC Docket No. 02-60, FCC 07-198]


Rural Health Care Support Mechanism

AGENCY: Federal Communications Commission.

ACTION: Notice.

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SUMMARY: In this document, the Commission selects participants for the 
universal service Rural Health Care (RHC) Pilot Program established by 
the Commission in the 2006 Pilot Program Order. Sixty-nine of these 
applicants have demonstrated the overall qualifications consistent with 
the goals of the Pilot Program to stimulate deployment of the broadband 
infrastructure necessary to support innovative telehealth and, in 
particular, telemedicine services to those areas of the country where 
the need for those benefits is most acute.

FOR FURTHER INFORMATION CONTACT: Thomas Buckley, Senior Deputy Chief; 
Elizabeth Valinoti McCarthy, Attorney; or Antoinette Stevens, 
Telecommunications Access Policy Division, Wireline Competition Bureau, 
(202) 418-7400, TTY (202) 418-0484.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Order, 
in WC Docket No. 02-60, released November 19, 2007. The full text of 
this document is available for public inspection during regular 
business hours in the FCC Reference Center, Room CY-A257, 445 12th 
Street, SW., Washington, DC 20554.

I. Introduction

    1. In this Order, the Commission selects participants for the 
universal service Rural Health Care (RHC) Pilot Program established by 
the Commission in the 2006 Pilot Program Order, 71 FR 65517, November 
8, 2006, pursuant to section 254(h)(2)(A) of the Communications Act of 
1934, as amended by the Telecommunications Act of 1996 (1996 Act). The 
initiation of the Pilot Program resulted in an overwhelmingly positive 
response from those entities the Commission intended to reach when it 
established the program last year--health care providers, particularly 
those operating

[[Page 8671]]

in rural areas. Exceeding even the Commission's own high expectations, 
the Commission received 81 applications representing approximately 
6,800 health care facilities from 43 states and three United States 
territories. Sixty-nine of these applicants have demonstrated the 
overall qualifications consistent with the goals of the Pilot Program 
to stimulate deployment of the broadband infrastructure necessary to 
support innovative telehealth and, in particular, telemedicine services 
to those areas of the country where the need for those benefits is most 
acute.
    2. Accordingly, selected participants will be eligible for 
universal service funding to support up to 85 percent of the costs 
associated with the construction of state or regional broadband health 
care networks and with the advanced telecommunications and information 
services provided over those networks. In addition, because of the 
large number of selected participants, the Commission modifies the 
Pilot Program so that selected participants may be eligible for funding 
for the appropriate share of their eligible two-year Pilot Program 
costs over a three-year period beginning in Funding Year 2007 and 
ending in Funding Year 2009. By spreading the two-year costs over a 
three-year commitment period, the Commission is able to increase the 
available support for selected participants from the amount established 
in the 2006 Pilot Program Order to approximately $139 million in each 
funding year of the three-year Pilot Program. This will ensure that all 
qualifying applicants are able to participate in the Pilot Program and 
yet do so in an economically reasonable and fiscally responsible 
manner, well below the $400 million annual cap, and enable selected 
participants to have sufficient available support to achieve the goals 
and objectives demonstrated in their applications. For the reasons 
discussed below, the Commission also denies 12 applicants from 
participating in the Pilot Program because these applicants have not 
demonstrated they satisfy the overall criteria, principles, and 
objectives of the 2006 Pilot Program Order.
    3. In light of the many applications the Commission received 
seeking funding and the wide range of network and related components 
for which support is sought, the Commission further clarifies the 
facilities and services that are eligible and ineligible for support to 
ensure that the Pilot Program operates to facilitate the goals set 
forth in the 2006 Pilot Program Order. For example, the Commission 
clarifies that eligible costs include the non-recurring costs for 
design, engineering, materials, and construction of fiber facilities 
and other broadband infrastructure; the non-recurring costs of 
engineering, furnishing, and installing network equipment; and the 
recurring and non-recurring costs of operating and maintaining the 
constructed network. The Commission also clarifies that ineligible 
costs include those costs not directly associated with network design, 
deployment, operations, and maintenance.
    4. The Commission provides specific guidance to the selected 
participants regarding how to submit existing FCC Forms to the 
universal service Fund Administrator, the Universal Service 
Administrative Company (USAC). For example, selected participants, in 
order to receive universal service support, must submit with the 
required FCC Forms detailed network cost worksheets concerning their 
proposed network costs, certifications demonstrating universal service 
support will be used for its intended purposes, and letters of agency 
from each participating health care provider. In order to receive 
reimbursement, selected applicants must also submit, consistent with 
existing processes and requirements, detailed invoices showing actual 
incurred costs of project build-out and, if applicable, network design 
studies. The Commission also requires that selected participants' 
network build-outs be completed within five years of receiving an 
initial funding commitment letter (FCL). As discussed below, selected 
participants that fail to comply with the terms of this Order and with 
the USAC administrative processes will be prohibited from receiving 
support under the Pilot Program. The Commission also sets forth data 
reporting requirements for selected participants where participants 
must submit to USAC and to the Commission quarterly reports containing 
data on network build-out and use of Pilot Program funds. This 
information will inform the Commission of the cost-effectiveness and 
efficacy of the different state and regional networks funded by the 
Pilot Program and of whether support is being used in a manner 
consistent with section 254 of the 1996 Act, and the Commission's rules 
and orders.
    5. The Commission also addresses various requests for waivers of 
Commission rules filed by applicants concerning participation in the 
Pilot Program. Among other things, the Commission denies waiver 
requests of the Commission's rule requiring that Pilot Program selected 
participants competitively bid their proposed network projects. In 
doing so, the Commission reaffirms that the competitive bidding process 
is an important safeguard for ensuring universal service funds are used 
wisely and efficiently by requiring the most cost effective service 
providers be selected by Pilot Program participants.
    6. In addition, the Commission establishes an audit and oversight 
mechanism for the Pilot Program to guard against waste, fraud, and 
abuse, and to ensure that funds disbursed through the Pilot Program are 
used for appropriate purposes. In particular, each Pilot Program 
participant and service provider shall be subject to audit by the 
Commission's Office of Inspector General (OIG) and, if necessary, 
investigated by the OIG to determine compliance with the Pilot Program, 
Commission rules and orders, and section 254 of the 1996 Act. As 
discussed in greater detail below, because audits or investigations may 
provide information showing that a beneficiary or service provider 
failed to comply with the statute or Commission rules and orders, such 
proceedings can reveal instances in which Pilot Program disbursement 
awards the Commission improperly distributed or used in a manner 
inconsistent with the Pilot Program. To the extent the Commission finds 
funds were not used properly, USAC or the Commission may recover such 
funds and the Commission may assess forfeitures or pursue other 
recourse.
    7. Finally, selected participants shall coordinate the use of their 
health care networks with the Department of Health and Human Services 
(HHS) and, in particular, with its Centers for Disease Control and 
Prevention (CDC) in instances of national, regional, or local public 
health emergencies (e.g., pandemics, bioterrorism). In such instances, 
where feasible, selected participants shall provide access to their 
supported networks to HHS, including CDC, and other public health 
officials. Similarly selected participants shall use Pilot Program 
funding in ways that are consistent with HHS' health information 
technology (IT) initiatives that ``provide leadership for the 
development and nationwide implementation of an interoperable health 
information technology infrastructure to improve the quality and 
efficiency of health care.'' Accordingly, where feasible, selected 
participants, as part of their Pilot Program network build-out projects 
shall: (1) Use health IT systems and products that meet 
interoperability standards recognized by the HHS Secretary; (2) use 
health IT products certified by the Certification

[[Page 8672]]

Commission for Healthcare Information Technology; (3) support the 
Nationwide Health Information Network (NHIN) architecture by 
coordinating their activities with the organizations performing NHIN 
trial implementations; (4) use resources available at HHS's Agency for 
Healthcare Research and Quality (AHRQ) National Resource Center for 
Health Information Technology; (5) educate themselves concerning the 
Pandemic and All Hazards Preparedness Act and coordinate with the HHS 
Assistant Secretary for Public Response as a resource for telehealth 
inventory and for the implementation of other preparedness and response 
initiatives; and (6) use resources available through CDC's Public 
Health Information Network (PHIN) to facilitate interoperability with 
public health organizations and networks.

II. Discussion

    8. The 2006 Pilot Program Order generated overwhelming interest 
from the health care community. The Commission received 81 applications 
representing approximately 6,800 health care providers. Of these, 69 
applications covering 42 states and three United States territories 
demonstrate the overall qualifications consistent with the goals, 
objectives, and other criteria outlined in the 2006 Pilot Program Order 
necessary to advance telehealth and telemedicine in their areas by: 
Describing strategies for aggregating the specific needs of health care 
providers within a state or region, including providers serving rural 
areas; providing strategies for leveraging existing technology to adopt 
the most efficient and cost effective means of connecting those 
providers; describing previous experience in developing and managing 
telemedicine programs; and detailing project management plans. Rather 
than limit participation to a select few among the 69 qualified 
applicants, the Commission finds that it would be in the best interests 
of the Pilot Program, and appropriate as a matter of universal service 
policy, to accommodate as many of these qualified applicants as 
possible. Moreover, having more participants will enable the Commission 
to collect more data and thus enhance the Commission's ability to 
critically evaluate the Pilot Program. To accommodate the 69 qualified 
applicants in an economically reasonable and fiscally responsible 
manner, including remaining well within the existing $400 million 
annual RHC program cap, the Commission modifies the Pilot Program to 
spread funding equally over a three-year period. Specifically, total 
available support for Year One of the Pilot Program (FY 2007 of the 
existing RHC Program), Year Two (FY 2008 of the existing RHC Program), 
and Year Three (FY 2009 of the existing RHC Program) of the Pilot 
Program will be approximately $139 million per funding year. With this 
modification, the Commission is thus able to select all of the 69 
qualified applicants as eligible to participate in the Pilot Program. 
Finally, selected participants shall work with HHS and, in particular, 
CDC, to make the health care networks funded by the Pilot Program 
available for use in instances of nationwide, regional, or local public 
health emergencies (e.g., pandemics, bioterrorism). Selected 
participants shall also use funding in a manner consistent with HHS's 
health IT initiatives.

A. Overview of Applicants

    9. Consistent with the Commission's goal in the 2006 Pilot Program 
Order to learn from the health care community through the design of a 
bottom-up application process, selected participants proffered a wide 
array of proposals to construct new health care networks or to upgrade 
existing networks and network components in an efficient manner. The 
selected proposals range from small-scale, local networks to large-
scale, statewide or multi-state networks. Examples of applicants 
proposing small-scale networks include Mountain States Health Alliance 
which seeks $54,400 to connect two rural Virginia hospitals to an 
existing network consisting of 11 Tennessee hospitals. Rural Healthcare 
Consortium of Alabama seeks $232,756 to connect four critical access 
hospitals in rural Alabama to enable teleradiology, lab information 
systems, video conferencing, and secure networking with academic 
medical centers and universities.
    10. Other applicants propose networks much larger in scope. For 
instance, Tennessee Telehealth Network (TTN) seeks approximately $7.8 
million to expand upon the existing Tennessee Information 
Infrastructure, a pre-existing broadband network serving state, local, 
and educational agencies in Tennessee. Upon completion of the project, 
TTN's network will reach more than 440 additional health care providers 
throughout the state enabling it to bring the benefits of innovative 
telehealth, such as access to specialists in urban areas, to rural 
sites. In addition, certain applicants plan to connect multi-state 
networks, such as New England Telehealth Consortium (NETC) which seeks 
approximately $25 million to connect 555 sites in Vermont, New 
Hampshire, and Maine to the Northern Crossroads network, enabling 
connectivity to hospitals and universities throughout New England, 
including Rhode Island, Massachusetts, and Connecticut. NETC's 
resulting network would facilitate expansive telemedicine benefits, 
including remote trauma consultations, throughout the multi-state 
region.
    11. Numerous applicants also demonstrate the serious need to deploy 
broadband networks for telehealth and telemedicine services to the 
rural areas of the nation where the needs for these services are most 
acute. For example, Pacific Broadband Telehealth Demonstration Project 
seeks to connect Hawaii and 11 Pacific Islands to one broadband network 
in the region where transportation costs are extremely high and health 
care specialists are concentrated mainly in the region's urban centers 
such as Honolulu.
    12. Similarly, Health Care Research & Education Network 
convincingly demonstrates its state's need for expanded telemedicine 
services: North Dakota is an extremely rural state where 42 of its 53 
counties include 30 percent or more residents living at or below 200 
percent of the Federal Poverty Level. Part or all of 83 percent of 
North Dakota's counties are designated as Health Professional Shortage 
Areas, and 94 percent are designated as mental health shortage areas. 
To help alleviate these hardships, the University seeks to construct a 
high-speed data network to connect, via the existing state fiber 
network, Stagenet, its medical school's four main campus sites and 
clinical medical sites to five rural North Dakota health care 
facilities. Doing so will allow for research which would greatly 
accelerate the ability to bring contemporary treatment options to rural 
areas.
    13. The Wyoming Telehealth Network also demonstrates the need for 
broadband infrastructure for health care use. In its application, it 
explains that Wyoming is an extremely low populous and rural state, 
suffering from a severe shortage of health care providers. Wyoming 
ranks 45th in physicians per 100,000 people, and have only 18 
psychiatrists, four certified psychological practitioners, and two 
school psychologists statewide. Wyoming Telehealth Network's proposed 
network will extend the reach of health care professionals by linking 
the entire state's 72 hospitals, community mental health centers, and 
substance abuse centers, which will enable these facilities to transmit 
data to one another and videoconference. As these and other 
applications

[[Page 8673]]

demonstrate, health care providers in rural areas need access to 
broadband facilities for telehealth and telemedicine services to be 
available in rural areas.
    14. Some applicants request Pilot Program funding to support build-
out to tribal lands. For example, Tohono O'odham Nation Department of 
Information Technology (Nation) seeks funding to connect three of the 
Nation's remote health care facilities to Internet2 and to Arizona 
health care providers with existing networks to facilitate 
implementation of a comprehensive telemedicine program for the Tohono 
O'odham Nation that will enable the Nation to connect into a nationwide 
backbone of networks. The Nation's planned dedicated broadband network 
will result in a comprehensive health care delivery system that reaches 
even its most remote geographic areas--a particularly important goal 
considering the Nation's extremely limited public transportation 
system.
    15. The Commission finds that the selected participants demonstrate 
a viable strategy for effective utilization of Pilot Program support 
consistent with the principles established in the 2006 Pilot Program 
Order, and sufficiently set forth how their networks will meet the 
detailed Pilot Program criteria set forth in the 2006 Pilot Program 
Order. As discussed in detail below, while the Commission finds that 
the selected applications overall satisfy the criteria set forth in the 
2006 Pilot Program Order, many applicants must submit additional 
information to USAC to ensure that fund commitments and disbursements 
will be consistent with section 254 of the 1996 Act, this Order, and 
the Commission's rules and orders.

B. Scope of Pilot Program and Selected Participants

    16. In the 2006 Pilot Program Order, the Commission stated, 
``[o]nce we have determined funding needs of the existing program, the 
Commission will fund the Pilot Program in an amount that does not 
exceed the difference between the amount committed under our existing 
program for the current year and $100 million.'' The Commission 
estimated that approximately $55-60 million would be available for the 
Pilot Program, based on its past experience and estimates of funding 
requests received under the existing program for Funding Year 2006. In 
the 2006 Pilot Program Order, the Commission also established the Pilot 
Program as a two-year program.
    17. Funding Cap. In light of the overwhelming need for the Pilot 
Program funding to build-out dedicated health care network capacity to 
support telehealth and telemedicine, the Commission increases the 
funding cap amount from that set in the 2006 Pilot Program Order to 
approximately $139 million for each year of the Pilot Program. The 
Commission finds this modification necessary to enable the 69 qualified 
applicants to implement their plans to the fullest extent possible. In 
particular, the Commission believes this increased amount of Pilot 
Program funding will enable participants to fully realize the benefits 
to telehealth and telemedicine services by making universal service 
support available for significant build-out of dedicated broadband 
network capacity. Increased support will also provide the Commission 
with an RHC Pilot Program extensive enough to soundly evaluate and to 
serve as a basis to propose to modify the existing RHC support 
mechanism, all without requiring the Commission to reject otherwise 
compliant applications. Although available yearly Pilot Program support 
is higher than the Commission originally contemplated in the 2006 Pilot 
Program Order, this amount is still well below the $400 million cap for 
each funding year of the existing RHC support mechanism (even when 
combined with the most recent disbursements under the existing RHC 
support mechanism of $41 million), and therefore remains well within 
the existing parameters of economic reasonability and fiscal 
responsibility.
    18. Duration of Pilot Program. To continue to maintain fiscal 
discipline, the Commission modifies the duration of the Pilot Program 
to require that commitments for the two-year program costs identified 
by selected participants in their applications occur over a three-year 
period. Funding the selected applications over a three-year period at 
somewhat lower levels than requested based on a two-year program will 
better serve goals of section 254(h)(2)(A) of the 1996 Act because it 
provides the Commission with sufficient flexibility to support more 
expansive network build-outs, thereby significantly enhancing health 
care providers' access to broadband services and enabling such access 
to occur considerably quicker than it otherwise would. Spreading 
commitments over a three-year period will also ensure that the Program 
moves forward seamlessly to facilitate uninterrupted rural telehealth/
telemedicine network build-outs, while balancing the need for economic 
reasonableness and responsible fiscal management of the program, 
including by staying well within the $400 million RHC mechanism cap. In 
addition, expansion of the Pilot Program's duration, as well as 
increasing available aggregate support, will provide greater certainty 
of support to applicants that requested funding for multiple years, and 
will obviate the need for reapplications during the duration of the 
Pilot Program. Accordingly, the Pilot Program will begin in Funding 
Year 2007 and end in Funding Year 2009 of the existing RHC support 
mechanism.
    19. Administration of Funding Year 2006 Funds. In establishing the 
Pilot Program duration, the Commission applies to Funding Year 2007 the 
moneys that USAC already collected in Funding Year 2006 for the Pilot 
Program. Because the Commission did not receive approval from the OMB 
until March 8, 2007, only two months prior to the application deadline 
of May 7, 2007, and because applicants could not meet the June 30, 
2007, deadline for submitting Funding Year 2006 forms to USAC, the 
Commission finds it impracticable to begin the Pilot Program in Funding 
Year 2006 as originally contemplated. Consequently, the Commission 
begins the USAC application, commitment, and disbursement process for 
the Pilot Program with Funding Year 2007. Total available support for 
Year One of the Pilot Program (Funding Year 2007 of the existing RHC 
support mechanism), Year Two (Funding Year 2008 of the existing RHC 
support mechanism), and Year Three (Funding Year 2009 of the existing 
RHC support mechanism) of the Pilot Program will be approximately $139 
million per Pilot Program funding year. The funding total is capped by 
the maximum amount allowable funding for each applicant during the 
three-year period.
    20. Selected Participants. Appendix B of this Order lists each 
selected participant's eligible support amounts for each Pilot Program 
funding year. As indicated in Appendix B, selected participants' 
available support for each funding year of the Pilot Program is one-
third of the sum of their Year One and Year Two application funding 
requests, as calculated by the Commission. Calculations are based on 85 
percent of each selected participant's funding request. For selected 
participants that did not clearly request 85 percent funding for their 
total costs, the Commission has adjusted the support level to the 
appropriate 85 percent level. The Commission finds that committing this 
funding over a three-year period ensures the Pilot Program remains 
economically reasonable and fiscally responsible while allowing 
selected participants to remain eligible to receive their entire 
eligible Funding Year One

[[Page 8674]]

and Year Two support as identified in their applications. Although the 
Commission increases available support amounts, as explained in greater 
detail below, selected participants may not exceed the available 
support for each funding year as listed in Appendix B. The selected 
participants also remain required to provide at least 15 percent of 
their network costs from other specified sources. In addition, the 
Commission requires that selected participants' network build-outs be 
completed within five years of receiving an initial funding commitment 
letter (FCL).
    21. Priority System. Contrary to the Commission's findings in the 
2006 Pilot Program Order, the Commission also, on its own motion, 
modifies the Pilot Program structure by declining to establish a 
funding priority system similar to the priority system provided for in 
the universal service schools and libraries mechanism. In the 2006 
Pilot Program Order, the Commission found that applications for support 
under the existing rural health care program would be funded before 
funding any of the projects proposed in the Pilot Program. The 
Commission had limited funding for the Pilot Program to the difference 
between the amount committed to the existing rural health care program 
and $100 million. The Commission finds it is not necessary to establish 
a priority system for the rural health care program because the 
Commission has eliminated the $100 million cap on funding for the 
existing program and the Pilot Program. As such, the Commission's 
expansion of the Pilot Program will ensure that both the applicants 
under the existing program and those under the Pilot Program receive 
funding for all eligible expenses they have included in their 
applications.

C. Qualifications of Selected Participants

    22. In the 2006 Pilot Program Order, the Commission instructed 
applicants to indicate how they plan to fully utilize a broadband 
network to provide health care services and to present a strategy for 
aggregating the specific needs of health care providers within a state 
or region, including providers that serve rural areas. Overall, 
selected participants demonstrated significant need for RHC Pilot 
Program funding for health care broadband infrastructure and services 
for their identified health care facilities, and provided the 
Commission with sufficiently detailed proposals. In their applications, 
each selected participant explained the goals and objectives of their 
proposed networks and generally addressed other criteria on which the 
Commission sought information in the 2006 Pilot Program Order. Selected 
participants must meet the goals and objectives they identified in 
their Pilot Program applications. In addition, each selected 
participant must comply with all Pilot Program administrative 
requirements discussed below to receive universal service support 
funding.
    23. Network Utilization. In the 2006 Pilot Program Order, the 
Commission set forth the network goals and objectives for applicants to 
meet to be considered for Pilot Program funding. In particular, the 
Commission requested that applicants indicate how they will utilize 
dedicated broadband capacity to provide health care services. Selected 
participants sufficiently set forth the various ways in which they 
would appropriately utilize a broadband network. For example, Virginia 
Acute Stroke Telehealth Project proposes a broadband network that would 
focus on the continuum of care (prevention through rehabilitation) for 
stroke patients in rural and underserved areas of Virginia. Illinois 
Rural HealthNet Consortium plans to use its network for a wide variety 
of telemedicine applications, including video conferencing, remote 
doctor-patient consultations, and tele-psychiatry. Pacific Broadband 
Telehealth Demonstration Project seeks to interconnect seven existing 
networks to link health care providers throughout Hawaii and the 
Pacific Island region. The network will enable delivery of broadband 
telehealth and telemedicine for clinical applications, continuing 
medical, nursing and public health education, and electronic health 
records support. Alaska Native Tribal Health Consortium plans to 
connect rural health care providers throughout Alaska to urban health 
centers via a network that will support teleradiology, electronic 
medical records, and telepsychiatry through video conferencing.
    24. Based on the Commission's review of all 81 of the applications, 
the Commission finds that the 69 selected participants have shown that 
they intend to utilize dedicated health care network capacity 
consistent with the goals set forth in the 2006 Pilot Program Order. 
Thus, in selecting these applicants as eligible to receive funding for 
broadband infrastructure and services, the Commission will advance the 
goals of, among other things, bringing the benefits of telehealth and 
telemedicine to areas where the need for these benefits is most acute; 
allowing patients to access critically needed specialists in a variety 
of practices; and enhancing the health care community's ability to 
provide a rapid and coordinated response in the event of a national 
health care crisis.
    25. Leveraging of Existing Technology. In the 2006 Pilot Program 
Order, the Commission stated that applicants should leverage existing 
technology to adopt the most efficient and cost effective means of 
connecting providers. The Commission explained that the Pilot Program 
would be ``technically feasible'' because it would not require 
development of any new technology, but rather would enable participants 
to utilize any currently available technology. In general, selected 
participants explained how their proposed networks would leverage 
existing technology. Examples of applicants leveraging existing 
technology include the Association of Washington Public Hospital 
Districts, which plans to create a ``network of networks'' by 
interconnecting six existing networks to create a state-wide network. 
And Colorado Health Care Connections proposes to leverage an existing 
state network as the basis for a dedicated health care network for 
Colorado's public and non-profit health care providers. The goal is to 
connect all 50 rural hospitals and 76 rural clinics to the state 
network, which in turn is connected to the major metropolitan tertiary 
hospitals, and Internet2 and National LambdaRail.
    26. Aggregation. In the 2006 Pilot Program Order, the Commission 
instructed applicants to provide strategies for aggregating the 
specific needs of health care providers, including providers that serve 
rural areas within a state or region. In general, selected participants 
sufficiently explained how their proposed networks would aggregate the 
needs of health care providers, including rural health care providers. 
For example, Palmetto State Providers Network plans to link large 
tertiary centers, academic medical centers, rural hospitals, community 
health centers, and rural office-based practices in four separate 
rural/underserved areas in South Carolina into a developing fiber optic 
statewide backbone which connects to Internet2, NLR, and the public 
Internet. Similarly, Iowa Rural Health Telecommunications Program plans 
to link 100 hospitals in 57 counties in Iowa, one Nebraska hospital, 
and two South Dakota hospitals to a broadband network which will: 
Facilitate timely diagnosis and initiation of appropriate treatment or 
transfer of patients in rural communities; facilitate rapid access to 
and transmission of diagnostic images

[[Page 8675]]

and patient information between hospitals; extend and improve terrorism 
and disaster preparedness and response through communication network 
interoperability between hospitals, the Iowa Department of Public 
Health, and Iowa Homeland Security and Emergency Management; and enable 
future remote monitoring and care coordination for intensive care 
patients.
    27. Creation of Statewide or Regional Health Care Networks and 
Connection to Dedicated Nationwide Backbone. In the 2006 Pilot Program 
Order, the Commission instructed applicants to submit proposals that 
would facilitate the creation of state or regional networks and 
(optionally) connect to a nationwide broadband network. These networks 
should be dedicated to health care, thereby connecting public and non-
profit health care providers in rural and urban locations. The selected 
participants generally demonstrated how their proposals would result in 
new or expanded state or regional networks and connection to a 
nationwide broadband network dedicated to health care. For example, 
Wyoming Telehealth Network will connect more than 30 hospitals and 42 
community health centers, providing consortium health care 
professionals with access to a statewide network, and facilitating 
connection to Internet2 or NLR. West Virginia Telehealth Alliance's 
proposed network will facilitate access in every region, health care 
market, and community in West Virginia, with particular focuses on 
medically underserved rural areas; health professional shortage areas; 
communities with high disease and chronic health condition disparities; 
and communities that demonstrate ``readiness for deployment.'' 
Southwest Alabama Mental Health Consortium plans to establish a 
broadband network connecting 34 mental health providers in 16 counties 
in Southwest Alabama, and this network will connect to Internet2 
thereby creating a large regional mental health care network that has 
access to the national backbone.
    28. Tribal Lands. A significant number of applicants plan to use 
Pilot Program funds to create or expand health care networks serving 
tribal lands. The Commission finds that network reach to tribal lands 
to be a positive use of Pilot Program funds; these areas traditionally 
have been underserved by health care facilities and reflect unique 
health care needs, particularly compared to non-tribal areas. In 
addition to inadequate access to health care, tribal lands suffer from 
relatively low levels of access to important telecommunications 
services. For example, Native American communities have the lowest 
reported levels of telephone subscribership in America.
    29. The Commission finds that these health care and 
telecommunications disparities between tribal lands and other areas of 
the country underscore the serious need for Pilot Program support of 
telemedicine and teleheath networks in tribal areas. Many selected 
participants plan to use Pilot Program support for networks on or near 
tribal lands. For example, Health Care Research & Education Network 
plans to construct a network that will serve a significant Native 
American population. According to the Health Care Research & Education 
Network, Native Americans report being uninsured at a rate of 37.1 
percent and North Dakota's Indian population is 1.5 times as likely to 
die of heart disease, cancer, stroke, and influenza/pneumonia as those 
living on non-tribal lands. The Network seeks to alleviate some of 
these disparities through use of its planned network that will provide 
a link to improve educational opportunities, and will facilitate new 
and ongoing research in health care delivery to rural areas.
    30. In the first year of the Pilot Program, Western Carolina 
University (WCU) in collaboration with the Eastern Band of Cherokee 
Indians (EBCI) seeks to connect the WCU's health care facilities to 
health care facilities on the reservation and in outlying areas so that 
patients can access critically needed medical specialists in a variety 
of practices without leaving their homes or their communities. In year 
two of the Pilot Program, WCU plans to connect the United South and 
Eastern Tribes, Inc. (USET), a non-profit, inter-tribal organization of 
24 federally recognized tribes, to its network. The Commission finds 
that these and the other planned uses of Pilot Program funds to support 
network build-out to tribal lands will further our goal of bringing 
innovative health care services to those areas of the country with the 
most acute health care needs.
    31. Cost Estimates. In the 2006 Pilot Program Order, the Commission 
requested that applicants provide estimates of their network's total 
costs for each year. Selected participants provided cost estimates or 
budgets. Several applicants provided significant cost and budget 
details, including Adirondack-Champlain Telemedicine Information 
Network whose budget includes a clear analysis of network costs with 
significant detail, including, e.g., cost per foot of fiber, cost of a 
pole installation, number of feet of fiber, and number of poles where 
fiber is installed. Alaska Native Tribal Health Consortium provides 
detailed cost estimates for each phase of its network, including 
deployment and services, and provides significant information about its 
revenue stream, operating expenses, and maintenance for five years. 
Although the Commission finds selected participants have satisfied this 
criterion, to ensure support is used for eligible costs, as part of the 
USAC application process, applicants must submit detailed network cost 
worksheets.
    32. Fair Share. To prevent improper distribution of Pilot Program 
funds, in the 2006 Pilot Program Order, the Commission instructed 
applicants to describe how for-profit network participants will pay 
their fair share of the network and other costs. In general, selected 
participants provided significant assurances that for-profit 
participants will be responsible for all of their network costs. 
Several applicants provided more detailed plans targeted to insuring 
that all for-profit participants pay their fair share of the costs. For 
instance, Northeast HealthNet states that its proposed network does not 
include for-profit entities and that, if for-profit entities are added 
to its network, they would be invoiced separately for each service item 
and USAC would receive invoice documentation that reflects only 
eligible rural health care providers. Similarly, Tennessee Telehealth 
Network notes that although it will not include for-profit participants 
in the first two years, for-profits will later be allowed to join and 
will be required to pay 100 percent of their actual costs.
    33. Funding Source. In the 2006 Pilot Program Order, the Commission 
instructed applicants to identify their source of financial support and 
anticipated revenues that will pay for costs not covered by the fund. 
To preserve the integrity of the Pilot Program, the Commission will 
continue to require selected participants to indicate how for-profit 
participants pay their fare share of network costs. Accordingly, 
selected participants must submit this information to USAC as part of 
their detailed line-item network costs worksheet submission and Pilot 
Program Participants Quarterly Data Reports. Generally, selected 
participants identified their source or sources of support for costs 
not covered by the Pilot Program. Several applicants provided the well-
documented assurances that their costs not supported by the Pilot 
Program will be funded by reliable sources. For example, University 
Health Systems of Eastern Carolina states that it, the participating 
health care providers, and the North Carolina Office of Rural Health 
will

[[Page 8676]]

provide funding for their network costs not supported by Pilot Program 
funds. And, Wyoming Telehealth Network has received a commitment from 
the Wyoming Department of Public Health and Terrorism Preparedness 
Program to fund the Network's costs not covered by the Program.
    34. 85 Percent Funding. The Commission also stated in the 2006 
Pilot Program Order that no more than 85 percent of their costs 
incurred by a participant will be funded to deploy a state or regional 
dedicated broadband health care network, and to connect that network to 
NLR or Internet2. Selected participants demonstrated their commitment 
to seeking no more than 85 percent of their network costs from the 
Pilot Program. Michigan Public Health Institute, for example, explains 
that the Michigan Legislature has appropriated funds to cover a portion 
of its 15 percent share of costs. California Telehealth Network stated 
that it will receive its 15 percent share from the California Emerging 
Technology Fund, which is operated by the California Public Utility 
Commission. Iowa Health System states that it plans to fund 
approximately 39 percent of the total cost of extending its existing 
fiber backbone to 78 rural sites.
    35. Included Facilities. With respect to health care facilities, 
the Commission directed applicants in the 2006 Pilot Program Order: (1) 
To list the health care facilities that will be included in their 
networks; and (2) to demonstrate that they will connect more than a de 
minimis number of rural health care providers in their networks. All 
selected participants satisfied this request by providing the names and 
details of facilities to be included and by proposing to connect more 
than a de minimis number of rural health care facilities. Although some 
proposals include only a few rural health care providers, relative to 
the total number of facilities to be included in these networks, and 
recognizing the significant benefits these networks will confer on 
their rural populations, the Commission finds these small numbers of 
rural health care providers are more than de minimis when viewed in 
context. For example, Erlanger Health System's proposed network in 
Tennessee and Georgia includes five rural health care providers out of 
a total of 11 facilities, and Puerto Rico Health Department's proposed 
network includes six rural health care providers out of a total of 52 
facilities. Considering the total number of health care providers to be 
included in these proposed networks, the Commission finds that the 
number of rural health care providers is more than de minimis.
    36. Prior Experience. To help ensure sufficient skill and 
competency of Pilot Program participants, in the 2006 Pilot Program 
Order the Commission asked whether applicants had previous experience 
in developing and managing telemedicine programs, and specifically 
whether applicants had successful track records in developing, 
coordinating, and implementing telehealth/telemedicine programs within 
their states or regions. In general, selected participants exhibited 
experience with telehealth/telemedicine programs, and some exhibited 
significant, impressive experience in this area. Notably, University 
Health Systems of Eastern Carolina has been recognized as one of the 
nation's ``100 Most Wired Healthcare Organizations'' five of the 
previous six years by Hospitals and Health Networks magazine, and 
connects regional hospitals via a high-speed fiber-optic network 
enabling telemedicine, teleradiology and telehealth services. 
University of Mississippi Medical Center's TelEmergency program already 
provides real-time medical care to patients in rural emergency 
departments utilizing specially-trained nurse practitioners linked with 
their collaborating physicians. The Commission finds this experience, 
and the experiences cited in other applications, will further the goals 
of the 2006 Pilot Program Order by ensuring that applicants have the 
necessary experience to successfully implement telemedicine/telehealth 
programs within their states or regions.
    37. Project Management. To ensure proper network oversight and 
implementation, in the 2006 Pilot Program Order, the Commission 
instructed applicants to provide project management plans which outline 
leadership and management structures, work plans, schedules, and 
budgets. Selected participants provided project management plans that 
demonstrate a strong commitment to the success of their proposed 
networks. For example, Southwest Alabama Mental Health Consortium sets 
forth a detailed management structure, budget, and schedule, and its 
work plan provides for: Establishment of a legal partnership; selection 
of a service provider based on Commission requirements; installation of 
WAN and connection to Internet2; monthly project assessment meetings; 
implementation of telehealth and telemedicine services; implementation 
evaluation; and project continuation to achieve goals and objectives. 
Missouri Telehealth Network describes in detail the program manager's 
responsibilities; provides a month-by-month project timeline; and lists 
specific funding amounts requested for network costs, equipment, 
connections, and operation.
    38. Coordination. To ensure efficiencies and avoid duplication of 
efforts or network facilities, in the 2006 Pilot Program Order, the 
Commission instructed applicants to indicate how their proposed 
telemedicine program will be coordinated throughout the state or 
region. In general, selected participants sufficiently described such 
coordination. Notably, New England Telehealth Consortium (NETC) members 
represent 57 hospitals, three universities, 57 behavioral health sites, 
eight correctional facilities' clinics, 81 federally qualified health 
care centers, six health education sites, and two health research sites 
throughout Maine, Vermont and New Hampshire. Each NETC member, through 
its representation on the NETC Board of Directors, will be able to 
provide input into critical NETC decisions including network 
implementation priority among the various sites and telemedicine 
programs implemented as a result of this network. According to NETC, 
all members have agreed in writing that an Executive Committee will 
facilitate efficient management of the organization between meetings of 
the full Board. Rural Nebraska Healthcare Network (RNHN), a non-profit 
membership organization consisting of nine local hospitals and their 
associated clinics in the Panhandle of Nebraska, has coordinated health 
care efforts in the Panhandle since 1996. RNHN plans to utilize and 
enhance its existing regional coordination for programs and services by 
employing a system of Regional Leadership Teams that will draft 
regional priorities and be responsible for communication between all 
participants. The Regional Leadership Teams also will coordinate with 
the Board of Directors which includes the Chief Executive Officer of 
each member hospital.
    39. Self Sustainability. A primary goal of the Pilot Program is to 
ensure the long-term success of rural health care networks and to 
prevent wasteful allocation of limited universal service funds. 
Accordingly, in the 2006 Pilot Program Order, the Commission sought 
assurances from applicants that their proposed networks will be self 
sustaining once established. To the extent a network is not self 
sustainable once established, that may be an indicia of non-compliance 
with the terms of this Order and may be considered as part of any Pilot 
Program audits and oversight. Generally, selected participants provided 
sufficient evidence that their proposed networks

[[Page 8677]]

will be self sustaining by the completion of the Pilot Program. For 
example, Heartland Unified Broadband Network identifies three possible 
scenarios for network sustainability for Year Three and beyond, 
including: Reliance on the existing RHC support mechanism; reliance on 
fees from network partners; and reduction (not elimination) of 
bandwidth should full funding be unavailable. Wyoming Telehealth 
Network envisions some ongoing costs covered by the existing RHC 
support mechanism or state funding, and plans to use as a model 
Nebraska's statewide telehealth network which is supported through a 
combination of existing RHC support mechanisms, state funding through 
the Nebraska universal service program, and minimal consortium fees.
    40. USAC Application Process. As described in detail above, the 
Commission finds that selected participants have sufficiently set forth 
how they will meet the overall Pilot Program's goals and objectives, 
and how their networks will meet the detailed Program criteria set 
forth in the 2006 Pilot Program Order. Although the Commission finds 
that the selected applications overall satisfy the criteria set forth 
in the 2006 Pilot Program Order, additional information will be needed 
from many applicants to ensure funds are disbursed and used consistent 
with section 254 of the 1996 Act, this Order, and the Commission's 
rules and orders. Accordingly, as described more fully below, each 
selected participant will be required to comply with this Order, and to 
thoroughly and clearly provide all necessary information with its forms 
and other data through the USAC administrative process. These 
additional requirements will ensure that Pilot Program funds are 
appropriately disbursed and will prevent, to the extent possible, 
waste, fraud, and abuse.

D. Denied Applications

    41. In this section, the Commission denies 12 applications because 
these applicants do not demonstrate that they overall satisfy the 
goals, objectives, and other criteria of the 2006 Pilot Program Order. 
Unlike the applications selected for participation above, the 12 
applications the Commission denies either have substantial deficiencies 
across the range of criteria established in the 2006 Pilot Program 
Order or seek funding for costs that are well beyond the scope of the 
2006 Pilot Program Order. Accordingly, the Commission finds that these 
applications do not warrant further participation in the Rural Health 
Care Pilot Program.
    42. OpenCape Corporation Application. OpenCape fails to satisfy the 
goals and objectives of the 2006 Pilot Program Order because, among 
other things, its application seeks support focused not for a network 
dedicated to telehealth, but instead for a network for use by public 
schools, community colleges, and commercial firms. In fact, in the 
application, health care is only mentioned once and the letters of 
support and funding in the OpenCape application appear to be limited to 
school districts, community colleges, and the towns that would be 
served by the network. To the extent OpenCape seeks funding for 
schools, it may do so through the universal service support mechanism 
for schools and libraries (E-Rate program). Significantly, none of the 
seven members of the proposed board is affiliated with a health care 
provider; none of the 41 entities listed as supporting the network is a 
health care provider; and none of the six entities providing funds to 
cover the 15 percent minimum funding contribution is a health care 
provider. The seven board members primarily come from education 
backgrounds. OpenCape's application is also deficient because it fails 
to provide adequate details of its costs. For example, the budget 
provided with OpenCape's application provides information on tasks it 
will perform, but does not provide costs associated with those tasks. 
For instance, OpenCape states that it will perform a wireless 
engineering study and a topography study, but does not provide the 
costs associated with these studies. In addition, OpenCape does not 
adequately identify its source of the financial support and anticipated 
revenues that will pay for costs not covered by the Pilot Program, but 
instead merely indicates that it will pursue grants, donations and 
earmarks for capital funding of the full implementation. Not only does 
this show that OpenCape does not presently know who will pay for its 
share of the costs, the Commission cannot even determine from the 
application whether its expectations to obtain funding are realistic 
because OpenCape provides little to no evidence of its ability to 
secure funding from these sources. Rather, OpenCape merely explains 
that its federal and state legislative delegations generally (but not 
for its specific Pilot Program application) have shown an interest in 
expanding access to underserved regions of Massachusetts. Accordingly, 
the Commission denies OpenCape's request to participate in the Pilot 
Program.
    43. North Link of Northern Enterprises, Inc. Application. North 
Link of Northern Enterprises, Inc. (North Link of Northern Enterprises) 
seeks $2.5 million in funding for a project generally described as 
connecting eight hospitals and medical centers to the regional fiber 
optic backbone to promote the use of a photo archiving system (PAS), 
virtual intensive care units, and teleconferencing. However, beyond the 
vague description of the project, North Link of Northern Enterprises 
does not provide sufficient information to determine how the project 
will advance the goals of the 2006 Pilot Program Order. Notably, like 
OpenCape's application, North Link of Northern Enterprises fails to 
provide budget information that would permit the Commission to assess 
whether the application comports with program requirements including, 
in particular, whether the funding request is for eligible services. 
Additionally, the work plan submitted by North Link of Northern 
Enterprises fails to provide specific details on the phases of 
construction anticipated by Northern Enterprises. Instead, the work 
plan merely states that Phase I, which consists of laying 75 miles of 
the 400 miles of fiber optics, will begin June 4, 2007, with the 
balance of the project completed by 2009. The Commission therefore 
denies North Link of Northern Enterprises' request for Pilot Program 
participation because it does not demonstrate it is qualified to be 
eligible for its broad request for funding.
    44. Illinois Hospital Association Application. The Commission also 
denies the application of Illinois Hospital Association because it 
seeks funding primarily for costs that are beyond the scope of the 
Pilot Program. In particular, Illinois Hospital Association states that 
it seeks over $800,000 for its proposed project to provide greater 
access to the existing state broadband network, Illinois Century 
Network, for rural health care providers to promote the use of 
telehealth and telemedicine throughout the state. The funding, however, 
is primarily for staff support and customer premises equipment, which 
are outside the scope of the Pilot Program. Thus, the Commission denies 
this application for participation in the Pilot Program. The Commission 
notes, however, that the Illinois Rural HealthNet Consortium and the 
Iowa Health System will be participants in the Pilot Program and will 
offer services in Illinois. The Commission also notes that the two main 
proposed recipients in Illinois Hospital Association's application, 
University of Illinois College of Medicine at Rockford and Southern

[[Page 8678]]

Illinois School of Medicine, are also included in Illinois Rural 
HealthNet Consortium's application.
    45. Institute for Family Health Application. Similarly, the 
Institute for Family Health in New York seeks $2.4 million in funding 
for its proposed network that would extend its current electronic 
health records (EHR) and practice management system from its New York 
City-based urban network to rural health centers throughout the Mid-
Hudson Valley region. Of the requested Pilot Program funding, over 75 
percent is for costs that are beyond the scope of the Pilot Program, 
including customer premises equipment such as personal computers and 
server hardware, personnel costs, and $1.5 million in funding for 
software licenses. Accordingly, the Commission declines to select 
Institute for Family Health to participate in the Pilot Program.
    46. Valley View Hospital Application. The Valley View Hospital in 
Colorado's application also fails to qualify for participation in the 
Pilot Program because it seeks funding primarily for ineligible Pilot 
Program costs. Specifically, Valley View Hospital seeks $195,000 in 
funding for the rental of an RP-7 robotic system, which is a tele-
operated, mobile robotic system that enables remote presence. As stated 
above, the Pilot Program funding will promote the utilization of 
dedicated broadband capacity to provide health care services. Valley 
View Hospital, however, seeks funding not for network design or build-
out, but for medical equipment, which is specifically excluded from 
funding. The Commission finds, therefore, that participation in the 
Pilot Program by Valley View Hospital is not appropriate.
    47. Alabama Rural Health Network. The application submitted by the 
Alabama Department of Economic and Community Affairs (Alabama Rural 
Health Network) also seeks funding for ineligible Pilot Program costs. 
In particular, ADECA seeks $91,275 in funding, of which $45,000 is for 
a category simply labeled ``contractual.'' The rest of the funding is 
divided amongst personnel costs, travel, ``fringe benefits,'' and 
``indirect costs.'' None of these costs are eligible costs for which 
Alabama Rural Health Network could receive reimbursement. Further, none 
of those costs appear to be associated with network design or 
deployment of infrastructure. Instead, Alabama Rural Health Network's 
application appears to be seeking funding for a survey it will conduct 
of the state's hospitals to determine their needs, and an evaluation of 
the state's broadband providers to determine their capabilities. These 
deficiencies in Alabama Rural Health Network's proposal warrant its 
exclusion from participation in the Pilot Program.
    48. Pioneer Health Network Application. Pioneer Health Network's 
application states that it seeks to develop a health information system 
focusing on health information technology (such as patient level health 
and quality information exchange and establishing a health information 
environment that emphasizes security and privacy of patient data and 
that leverages technologies that are enhanced by the evolving 
interoperability standards) as opposed to telehealth and telemedicine 
applications. Beyond this general description, Pioneer Health Network 
does not provide any details concerning its proposal except to indicate 
the project involves software applications, as opposed to network 
infrastructure (which the applicant states will largely be provided by 
the existing statewide backbone). Because the Pilot Program does not 
fund medical software applications, the Commission declines to find 
Pioneer Health Network eligible for funding.
    49. Taylor Regional Hospital Application. Taylor Regional 
Hospital's application is so vague in providing overall details about 
how it qualifies for participation in the Pilot Program that the 
Commission denies its application. In particular, Taylor Regional 
Hospital's application fails to specify the amount of funding it seeks, 
specifying only that its proposed project would cost $7,200 per year. 
In addition, Taylor Regional Hospital fails to provide any detail 
supporting its costs for the Commission to determine whether these 
costs are associated with network design or network costs. Taylor 
Regional Hospital's stated objective is to use the funding to enhance 
its imaging distribution system, community-wide scheduling system, and 
its Laboratory Information System. It is unclear from the application 
whether such enhancements would require network upgrades or whether 
they are software application upgrades, which would be ineligible for 
support. Moreover, Taylor Regional Hospital does not identify the 
health care providers it seeks to connect. Instead, Taylor Regional 
Hospital states that the facilities that will be included in the 
network are ``Taylor Regional Hospital and all the affiliates 
associated with [it].'' This omission on the part of Taylor Regional 
Hospital makes it impossible, among other things, to determine whether 
there will be a de minimis number of the rural health care providers; 
identify network configuration; and to ensure that the proposed project 
is consistent with the goals, objectives, and other criteria of the 
2006 Pilot Program Order. Thus, the Commission denies this application.
    50. United Health Services Application. Similarly, United Health 
Services of New York (United Health Services) provides such inadequate 
detail of its network costs that it does not merit further 
participation in the Pilot Program. Notably, United Health Services 
provides no budget, but instead merely lists its monthly connectivity 
costs, without specifying whether the costs would support an existing 
network or construction of a new network. The Commission notes that 
United Health Services does include a management and work plan and 
schedule. However, without a budget, the Commission is not able to 
identify how United Health Services intends to allocate the funding for 
each phase of the plan. In addition, its application fails to include 
financial data or to detail in any meaningful way its proposed network 
build-out and costs. Consequently, the Commission finds Pilot Program 
participation by United Health Services would not be consistent with 
the 2006 Pilot Program Order.
    51. World Network Institutional Services Application. World Network 
Institutional Services (WNIS) also fails to detail its costs or almost 
any other aspect of its proposal in its cursory four-page application 
to adequately assess its qualifications for participation in the Pilot 
Program. WNIS seeks $100 million in funding but fails to provide a 
budget breaking out its cost estimates. Additionally, WNIS does not 
provide any detail as to which health care facilities it would include 
in its network, preventing the Commission, among other things, from 
determining whether the network would serve more than a de minimis 
number of rural health care providers. Rather, WNIS states that a list 
will be provided in ``later correspondence'' (which was never 
provided). Further, WNIS fails to provide specific information on how 
it will pay for its portion of the costs of the network. Instead, WNIS 
offers that its financial support will come from ``advertisers and 
users.'' Based on these deficiencies and the overall vagueness of the 
application, the Commission declines to include WNIS as a participant 
in the Pilot Program.
    52. Hendricks Regional Health Application. Hendricks Regional 
Health (Hendricks), like WNIS, fails to provide a work plan that 
sufficiently details the management/leadership structure, work plan, or 
budget. In particular, Hendricks provides no budget information in its

[[Page 8679]]

application. The only estimate in its application is for the per mile 
cost of deploying the fiber optic cable it seeks, which is $50,000 per 
mile for approximately 58 miles. And, even this information is not 
accompanied by any specific detail or documentation. The Commission 
also has concerns about the work plan presented by Hendricks. Instead 
of providing detailed information, Hendricks provides a vague timeline 
with no additional information to support its assumptions on deployment 
of the fiber optic cable. Like Taylor, United Health, and WNIS, the 
deficiencies in Hendricks's application do not warrant its 
participation in the Pilot Program.
    53. Southwest Pennsylvania Regional Broadband Health Care Network 
Application. Similarly, the application submitted by Southwest 
Pennsylvania Regional Broadband Health Care Consortium (Southwest 
Pennsylvania Regional Broadband Health Care Network) fails to provide 
information that sufficiently details its work plan or budget. 
Specifically, Southwest Pennsylvania Regional Broadband Health Care 
Network offers a budget that fails to provide any line-item details. 
Rather, Southwest Pennsylvania Regional Broadband Health Care Network 
indicates that it intends to build 180 miles of fiber optic cable and 
states that it will need $7.2 million in funding to do so. Southwest 
Pennsylvania Regional Broadband Health Care Network provides no detail 
on how it arrived at this figure or what it includes. SW Pennsylvania 
Consortium also provides no information regarding the on-going cost of 
operating its network. Because there are no details in its budget, the 
Commission is also not able to determine what network equipment 
Southwest Pennsylvania Regional Broadband Health Care Network intends 
to purchase. Additionally, Southwest Pennsylvania Regional Broadband 
Health Care Network's fails to document its funding sources. It, 
instead, lists the facilities that would join the network and assigns 
an annual cost of $5,456.95 to each facility for five years without 
providing detail on where the entities will get the additional money or 
providing letters of support from these entities. Moreover, like 
Hendricks, Southwest Pennsylvania Regional Broadband Health Care 
Network's work plan represents nothing more than a timeline. Finally, 
the Commission notes that of the 99 facilities listed in its 
application, only five are eligible rural health care providers. Given 
the amount of funding requested, the lack of financial and other detail 
needed to justify funding, and the small percentage of rural health 
care providers that will be connected, the Commission finds Pilot 
Program participation would not be consistent with the 2006 Pilot 
Program Order.
    54. Finally, as noted above, in the 2006 Pilot Program Order, one 
of the purposes of the Pilot Program was to encourage health care 
providers to aggregate their connection needs to form a comprehensive 
statewide or regional dedicated health care network. The applications 
that the Commission is approving in this Order have fulfilled that 
purpose and together will cover 42 states and three United States 
territories. The Commission encourages those eligible health care 
providers that are part of the denied applications to pursue ways to be 
included in the approved consortia in their states or regions. The 
Commission also encourages the rural health care facilities in the 
denied applications to contact USAC to discuss their possible 
participation in the existing RHC support mechanism. In addition, after 
three years, the Commission intends to revisit its rules and determine 
how to improve the current program. The Commission encourages the 
denied applicants to participate in any subsequent proceedings and 
reapply at that time.

E. Pilot Program Administration

    55. In this section, the Commission discusses several issues 
related to the effective administration of the Pilot Program. The 
Commission first provides clarification regarding what entities are 
eligible health care providers for purposes of the Pilot Program, which 
services are eligible and ineligible for Pilot Program support, and 
which sources of funding are eligible and ineligible for selected 
participants' 15 percent minimum funding contribution. The Commission 
also provides specific guidance concerning selected participants' 
compliance with the submission of program forms to the USAC. For 
example, in order to receive universal service support, selected 
participants must submit with the required USAC Forms, detailed 
worksheets concerning their proposed network costs, certifications 
demonstrating universal service support will be used for its intended 
purposes, letters of agency from each participating health care 
provider, and detailed invoices showing actual incurred costs of 
project build-out. As discussed below, selected participants that fail 
to comply with these procedures and the other program requirements the 
Commission discusses here will be prohibited from receiving support 
under the Pilot Program. Finally, the Commission addresses various 
requests for waiver of Commission rules filed by applicants. Among 
other things, the Commission denies waiver requests of the Commission's 
rule requiring that Pilot Program selected participants competitively 
bid their proposed network projects. In doing so, the Commission 
reaffirms that the competitive bidding process remains an important 
safeguard to ensuring universal service support is used wisely and 
efficiently ensuring that the most cost effective service providers are 
selected by selected participants, and the Commission discusses the 
factors on which selected participants should rely in making their cost 
effectiveness determinations in the competitive bidding process.
1. Eligible Health Care Providers
    56. As stated above, the existing RHC support mechanism utilizes 
the statutory definition of ``health care provider'' established in 
section 254(h)(7)(b) of the 1996 Act. Excluded from the list of 
eligible health care providers are nursing homes, hospices, other long-
term care facilities, and emergency medical service facilities. 
Although emergency medical service facilities are not eligible 
providers for purposes of the RHC Pilot Program, Pilot Program funds 
may be used to support costs of connecting emergency medical service 
facilities to eligible health care providers to the extent that the 
emergency medical services facility is part of the eligible health care 
provider. Additionally, pharmacies are excluded from the definition of 
health care providers. Accordingly, under the RHC Pilot Program, only 
eligible health care providers and consortia that include eligible 
health care providers may apply for and receive discounts. 
Additionally, applicants, as well as individual health care facilities 
included in an application, that have been convicted of a felony, 
indicted, suspended, or debarred from award of federal or state 
contracts, or are not in compliance with FCC rules and requirements 
shall not be eligible for discounts under the Pilot Program. To the 
extent that the applications the Commission selects herein contain 
ineligible health care providers, such providers may participate but 
must be treated by the applicant and by USAC as if the providers were 
for-profit entities and therefore are ineligible to receive any support 
associated with their portion of the Pilot Program network. Further, 
selected participants

[[Page 8680]]

or individual health care facilities that are part of the network of a 
selected participant that are delinquent in debt owed to the Commission 
shall be prohibited from receiving universal service Pilot Program 
support until full payment or satisfactory arrangement to pay the 
delinquent debt(s) is made. Also, selected participants or individual 
health care facilities included in the network of a selected 
participant that are barred by the General Services Administration 
(GSA) from receiving federal contracts, subcontracts, and certain types 
of federal assistance shall be prohibited from receiving universal 
service Pilot Program support until the GSA determines that they are 
eligible for federal contracts, subcontracts, and certain types of 
federal assistance.
    57. Participation of State Organizations and Entities as Consortia 
Members. State organizations and entities may apply for funding on 
behalf of consortia members, but cannot themselves receive funding for 
services under the Pilot Program unless they satisfy the statutory 
definitions for health care provider under section 254(h)(7)(b) of the 
1996 Act. In addition, state organizations or entities that provide 
eligible service offerings are eligible to be selected as a service 
provider by a Pilot Program selected participant through the 
competitive bidding processes. Notably, the Commission previously 
determined that the term ``health care provider'' should be interpreted 
narrowly and, in the past, excluded potential entities from the 
eligible health care provider definition when not explicitly included 
in the statutory definition by Congress. Despite the limitations of 
section 254(h)(7)(b), however, the Commission's rules allow eligible 
health care providers to join consortia with other eligible health care 
providers; with schools, libraries, and library consortia eligible 
under Subpart F of 47 CFR part 54; and with public sector 
(governmental) entities to order telecommunications services. As state 
organizations or entities constitute ``public sector (governmental) 
entities,'' they may join consortia under the Commission's rules.
    58. Therefore, although state organizations and entities do not 
constitute eligible health care providers, the Commission finds they 
may apply on behalf of eligible health care providers as part of a 
consortium (e.g., as consortia leaders) to function, for example, in an 
administrative capacity for eligible health care providers within the 
consortium. In doing so, however, state organizations and entities are 
prohibited from receiving any funding from the Pilot Program. The 
Commission notes that in the E-Rate context, it has explicitly required 
state telecommunications networks that secure discounts under the 
universal service support mechanisms on behalf of eligible schools and 
libraries, or consortia that include an eligible school or library, to 
pass on these discounts to the eligible schools or libraries. The 
Commission clarifies here and makes explicit that any discounts, 
funding, or other program benefits secured by a state entity or 
organization or other ineligible entity functioning as a consortium 
leader under the Pilot Program must be passed on to consortia members 
that are eligible health care providers. In addition, the Commission 
also finds that, like state entities, other not-for-profit ineligible 
entities may apply on behalf of eligible health care providers as part 
of a consortium (i.e., as consortia leaders), and otherwise function in 
an administrative capacity for eligible health care providers within 
the consortium. Like state organizations and entities, these not-for-
profit entities are prohibited from receiving any funding from the 
Pilot Program.
2. Rural Health Care Pilot Program Network Components Eligible and 
Ineligible for Support
    59. In the 2006 Pilot Program Order, the Commission stated that 
funding provided under the Pilot Program would be used to support the 
costs of constructing dedicated broadband networks that connect health 
care providers in a state or region, and that connect such state and 
regional networks to the public Internet, Internet2, or NLR. The 
Commission explained that eligible costs include those for initial 
network design studies. The Commission stated in the 2006 Pilot Program 
Order that it would fund necessary network design studies for selected 
participants, as these studies would enhance access to advanced 
telecommunications and information services by enabling applicants to 
determine how best to deploy an efficient network that includes 
multiple locations and various technologies. Several applicants 
requested funding for network design studies. For example, Kentucky 
Behavioral Telehealth Network proposes to complete a network design 
study in Year One, and in Year Two build out the designed network to 
link the existing statewide network of regional behavioral health 
providers with rural health care providers to improve access to a full 
range of medical care. And, Penn State Milton S. Hershey Medical Center 
plans in Year One to connect several rural hospitals to the Medical 
Center and to conduct a comprehensive inventory and capacity analysis 
of additional facilities it seeks to add in Year Two. For purposes of 
the Pilot Program, the Commission clarifies that funding for network 
design studies includes costs paid to a consultant to analyze both 
technical and non-technical requirements and develop feasible network 
designs based on the analyses. The Commission further explained that 
eligible costs also include those for deploying transmission facilities 
and providing access to advanced telecommunications and information 
services, including non-recurring and recurring costs. The Commission 
notes that in the 2006 Pilot Program Order, it stated that authorized 
purposes include the costs of ``advanced telecommunications and 
information services.'' The Commission clarifies here that, consistent 
with the Act, authorized purposes include the costs of access to 
advanced telecommunications services. In light of the many applications 
the Commission received seeking funding and the wide range of network 
and related components for which support is sought, the Commission 
further clarifies the services eligible and ineligible for support to 
ensure that the Pilot Program operates to facilitate the goals of the 
2006 Pilot Program Order. The Commission thus clarifies that eligible 
non-recurring costs include those for design, engineering, materials 
and construction of fiber facilities or other broadband infrastructure, 
and the costs of engineering, furnishing (i.e., as delivered from the 
manufacturer), and installing network equipment. Recurring and non-
recurring costs of operating and maintaining the constructed network 
are also eligible once the network is operational. Further, to the 
extent that a selected participant subscribes to carrier-provided 
transmission services (e.g., SONET, DS3s) in lieu of deploying its own 
broadband network and access to advanced telecommunications and 
information services, the costs for subscribing to such facilities and 
services are also eligible.
    60. Ineligible costs include costs that are not directly associated 
with network design, deployment, operations and maintenance. These 
ineligible costs include, but are not limited to:
     Personnel costs (including salaries and fringe benefits), 
except for those personnel directly engaged in designing, engineering, 
installing, constructing, and managing the dedicated broadband network. 
Ineligible costs of this category include, for example, personnel to 
perform program management and

[[Page 8681]]

coordination, program administration, and marketing.
     Travel costs.
     Legal costs.
     Training, except for basic training or instruction 
directly related to and required for broadband network installation and 
associated network operations. For example, costs for end-user 
training, e.g., training of health care provider personnel in the use 
of telemedicine applications, are ineligible.
     Program administration or technical coordination that 
involves anything other than the design, engineering, operations, 
installation, or construction of the network.
     Inside wiring or networking equipment (e.g., video/Web 
conferencing equipment and wireless user devices) on health care 
provider premises except for equipment that terminates a carrier's or 
other provider's transmission facility and any router/switch that is 
directly connected to either the facility or the terminating equipment.
     Computers, including servers, and related hardware (e.g., 
printers, scanners, laptops) unless used exclusively for network 
management.
     Helpdesk equipment and related software, or services.
     Software, unless used for network management, maintenance, 
or other network operations; software development (excluding 
development of software that supports network management, maintenance, 
and other network operations); Web server hosting; and Website/Portal 
development.
     Telemedicine applications and software; clinical or 
medical equipment.
     Electronic Records management and expenses.
     Connections to ineligible network participants or sites 
(e.g., for-profit health care providers) and network costs apportioned 
to ineligible network participants.
     Administration and marketing costs (e.g., administrative 
costs; supplies and materials (except as part of network installation/
construction); marketing studies, marketing activities, or outreach 
efforts; evaluation and feedback studies).
    61. USAC may only fund eligible costs as described in this Order 
and is prohibited from funding ineligible costs or providing funding to 
ineligible participants. The Commission requires, as discussed below, 
Pilot Program participants to identify and detail all ineligible costs, 
including costs apportioned to for-profit and other ineligible network 
participants or sites, in their line-item network cost worksheets 
submitted to USAC with FCC Forms 465 and 466-A, and to clearly 
demonstrate that Pilot Program support amounts will not be used to fund 
ineligible costs. The Commission notes that some applicants sought 
waivers of the 2006 Pilot Program Order, if necessary, for certain 
costs. To the extent that these costs constitute ineligible costs, as 
described in this Order, selected participants may not request or 
receive Pilot Program funds to support these costs. Accordingly, the 
Commission denies these applicants' requests to expand the scope of 
funding available under the 2006 Pilot Program Order. The Commission 
notes that if a product or service contains both eligible and 
ineligible components, costs should be allocated to the extent that a 
clear delineation can be made between the eligible and ineligible 
components. The clear delineation must have a tangible basis and the 
price for the eligible portion must be the most cost-effective means of 
receiving the eligible service. If the ineligible functionality is 
ancillary to an eligible component, the costs need not be allocated to 
the ineligible functionality. An ineligible functionality may be 
considered ``ancillary'' if (1) a price for the ineligible component 
that is separate and independent from the price of the eligible 
components cannot be determined, and (2) the specific package remains 
the most cost-effective means of receiving the eligible services, 
without regard to the value of the ineligible functionality.
3. Eligible Sources for 15 Percent of Non-Funded Costs
    62. The Commission finds that selected participants' minimum 15 
percent contribution of eligible network costs must be funded by an 
eligible source as described in this Order. Selected participants are 
required to identify with specificity their source of funding for the 
minimum 15 percent contribution of eligible network costs in their 
submissions to USAC, as discussed below. The Commission emphasizes that 
selected participants' 15 percent contributions must go towards 
eligible network costs only, as described in this Order. In order to 
ensure that the Pilot Program operates consistent with the goals and 
objectives of the 2006 Pilot Program Order and that funds are used to 
the benefit of public and non-profit health care providers, the 
Commission places limitations on from what source selected participants 
may derive their minimum 15 percent contribution of eligible network 
costs. Only funds from an eligible source will apply towards selected 
participants' required 15 percent minimum contribution. Eligible 
sources include the applicant or eligible health care provider 
participants; state grants, funding, or appropriations; federal 
funding, grants, loans, or appropriations except for RHC funding; and 
other grant funding, including private grants. The Commission stresses 
that participants who do not demonstrate that their 15 percent 
contribution comes from an eligible source or whose minimum 15 percent 
funding contribution is derived from an ineligible source will be 
denied funding by USAC. Ineligible sources include in-kind or implied 
contributions; a local exchange carrier (LEC) or other telecom carrier, 
utility, contractor, or other service provider; and for-profit 
participants. Moreover, selected participants may not obtain any 
portion of their 15 percent contribution from the existing RHC support 
mechanism. The Commission finds that these limitations on sources are 
necessary to ensure that participating health care providers adequately 
invest in their network projects to ensure efficiency in both cost and 
design and to assume some minimal level of risk. Requiring participants 
to have a vested interest in the approved network project safeguards 
against program manipulation and protects against waste, fraud, and 
abuse. The Commission recognizes that some selected participants 
identified improper sources for their participant contribution in their 
Pilot Program applications; however, the Commission allows those 
selected participants to amend their project proposals in their 
submissions to USAC solely for the purpose of coming into compliance 
with the requirements of this Order. Applicants so amending their 
applications are prohibited from using this opportunity to increase in 
any way the amount of support they are seeking.
4. Cost Effectiveness
    63. Consistent with existing rules and requirements, selected 
participants must comply with the competitive bidding process to select 
a service provider for their proposed projects. As part of this 
requirement, the Commission reiterates that each selected participant 
is required to certify to USAC that the service provider it chooses is, 
to the best of the applicant's knowledge, the most cost-effective 
service or facility provider available. The Commission has defined 
``cost effective'' for purposes of the existing RHC support mechanism 
as ``the method that costs the least after consideration of the 
features, quality of transmission, reliability, and other factors that 
the health care provider

[[Page 8682]]

deems relevant to * * * choosing a method of providing the required 
health care services.'' In selecting the most cost-effective bid, in 
addition to price, the Commission requires selected participants to 
consider non-cost evaluation factors that include prior experience, 
including past performance; personnel qualifications, including 
technical excellence; management capability, including solicitation 
compliance; and environmental objectives (if appropriate). The 
Commission has previously concluded that non-price evaluation factors, 
such as prior experience, personnel qualifications, and management 
capability, may form a reasonable basis on which to evaluate whether a 
bid is cost effective. Because designing and constructing a new network 
or building upon an existing network represents a substantial 
undertaking that requires technical expertise, training, and skills of 
a different level than those services supported by the existing RHC 
support mechanism, the Commission makes consideration of these factors 
mandatory for selected participants.
    64. The existing RHC support mechanism, unlike the schools and 
libraries universal service support (E-Rate) program, does not require 
participants to consider price as the primary factor in selecting 
service providers. The Commission has stated that applicants to the RHC 
support mechanism should not be required to use the lowest-cost 
technology because factors other than cost, such as reliability and 
quality, may be relevant to fulfill their telemedicine needs. This 
rationale remains appropriate for the Pilot Program. Thus, selected 
participants are not required to select the lowest bid offered, and 
need not consider price as the sole primary factor in selecting bids 
for construction of their broadband networks and the services provided 
over those networks. The applications selected for participation in the 
Pilot Program serve a variety of telemedicine and telehealth needs and 
entail complex network design, as well as infrastructure planning and 
construction. In developing a telemedicine network infrastructure, 
selected participants may find non-cost factors to be as or more 
important than price. For example, selected participants may find 
technical excellence and personnel qualifications particularly relevant 
in determining how to best meet their health care and telemedicine 
needs. Requiring applicants to use the lowest cost technology available 
could result in selected participants being relegated to using obsolete 
or soon-to-be retired technology. In addition, initially higher cost 
options may prove to be lower in the long-run, by providing useful 
benefits to telemedicine in terms of future medical and technological 
developments and maintenance. Thus, the Commission does not require 
selected participants to make price the sole primary factor in bid 
selection, but it must be a primary factor.
5. Network Modifications
    65. Selected participants shall follow the network design plan 
outlined in their applications. Nevertheless, the Commission recognizes 
that selected participants may find it necessary or desirable to modify 
the network design plans set forth in their Pilot Program applications. 
For example, less expensive network components that may be available 
since applications were compiled may permit selected participants to 
acquire higher capacity at lower prices. Alternatively, selected 
participants may be able to add health care providers to their network 
within the available maximum support amounts. Although network 
modifications may deviate from a selected participant's initial 
application, to the extent a modification results in a supported 
network only connecting a de minimis number of rural health care 
providers, the modification may result in adjustment of available 
support or denial of participation in the Pilot Program for a selected 
participant. Therefore, to the extent a selected participant wishes to 
upgrade, replace technology, or add eligible health care providers to 
its proposed network prior to commencing and completing the competitive 
bidding process, it may receive support to do so as long as that 
support does not exceed the maximum available support amount and the 
support is used for eligible expenses. The Commission also notes that 
selected participants, including health care provider consortium 
members, may decline to participate in the Pilot Program, if they 
choose, subject to the restrictions noted in this Order. However, once 
a service provider is selected and an FCL is issued by USAC, selected 
participants' support will be capped at the FCL amount, and the 
selected participant may only modify the network within that support 
amount. Any modifications that would increase the amount of support 
needed above the maximum available support amount for the selected 
participant in this Order will not be funded by the Pilot Program. 
After the issuance of the FCL, selected participants must complete the 
project for which funding is awarded.
6. Public Safety and Coordination for Emergencies
    66. In 2004, the President issued an Executive Order calling for 
the development and implementation of a national interoperable health 
information technology infrastructure. A key element of this plan is 
the NHIN initiative which promotes a ``network of networks,'' where 
state and regional health information exchanges and other networks that 
provide health information services work together, through common 
architecture (services, standards, and requirements), processes and 
policies to securely exchange information. In response to the Pilot 
Program, HHS has identified ways the Pilot Program and the NHIN can 
advance the provision of critical patient information to clinicians at 
the point of care to enable vital links for disaster preparedness and 
emergency response, improve healthcare, population health, and 
prevention of illness and disease.
    67. The Commission agrees with HHS that the Pilot Program can 
advance the goals of the NHIN initiative. Accordingly, selected 
participants shall use Pilot Program funding in ways to ensure their 
funded projects are consistent with HHS's health IT initiatives in 
several areas: Health IT standards; certification of electronic health 
records (EHRs), personal health records (PHRs), and networks; the NHIN 
architecture; the National Resource for Health Information Technology; 
and the Public Health Information Network (PHIN). In particular, where 
feasible, selected participants shall: (1) Use health IT systems and 
products that meet interoperability standards recognized by the HHS 
Secretary; (2) use health IT products certified by the Certification 
Commission for Healthcare Information Technology; (3) support the NHIN 
architecture by coordinating activities with the organizations 
performing NHIN trial implementations; (4) use resources available at 
HHS's Agency for Healthcare Research and Quality National Resource 
Center for Health Information Technology; (5) educate themselves 
concerning the Pandemic and All Hazards Preparedness Act and coordinate 
with the HHS Assistant Secretary for Public Response as a resource for 
telehealth inventory and for the implementation of other preparedness 
and response initiatives; and (6) use resources available through HHS's 
Centers for Disease Control and Prevention PHIN to facilitate 
interoperability with public health and emergency organizations. In 
addition, as

[[Page 8683]]

part of the Pilot Program quarterly reporting requirements, selected 
participants shall inform the Commission whether or how they have 
complied with these initiatives. The Commission finds that expecting 
selected participants to comply with these HHS initiatives likely will 
result in more secure, efficient, effective, and coordinated use of 
Pilot Program funding and the supported networks. Finally, selected 
participants shall coordinate in the use of their health care networks 
with HHS and, in particular, with CDC in instances of national, 
regional, or local public health emergencies (e.g., pandemics, 
bioterrorism). In such instances, where feasible, selected participants 
shall provide access to their supported networks to HHS, including CDC, 
and other public health officials.
7. Forms and Related Program Requirements
    68. Selected participants are required to follow the normal RHC 
support mechanism procedures. USAC currently provides funds directly to 
the telecommunications service providers, not to the applicant. The 
Commission reminds selected participants and service providers that 
universal service support received by service providers must be 
distributed to or credited against the portion of the project approved 
for eligible health care providers only. In instances where credits 
cannot be issued to a service provider, selected participants may 
receive payment directly from USAC, provided the selected participant 
complies with the administrative requirements in this Order. Under the 
current program, to obtain discounted telecommunications services, 
applicants must file certain forms with USAC. The Commission notes that 
all selected participants must obtain FCC registration numbers (FRNs). 
An FRN is a 10-digit number that is assigned to a business or 
individual registering with the FCC. This unique FRN is used to 
identify the registrant's business dealings with the FCC. Selected 
participants may obtain an FRN through the Commission's Web site. 
Selected participants may obtain a single FRN for the entire 
application or consortium (i.e., each health care provider does not 
need a separate FRN). First, applicants file FCC Form 465 with USAC to 
make a bona fide request for supported services. FCC Form 465 is the 
means by which an applicant requests bids for supported services and 
certifies to USAC that the applicant is eligible to benefit from the 
RHC support mechanism. USAC posts the completed FCC Form 465 on its Web 
site and an applicant must wait at least 28 days from the date on which 
its FCC Form 465 is posted on USAC's the Web site before making 
commitments with the selected service provider(s). Next, after the 28 
days have expired, an applicant submits FCC Form 466 and/or 466-A. 
These forms are used to indicate the type(s) of service ordered by the 
applicant, the cost of the ordered service, information about the 
service provider(s), and the terms of the service agreement(s). Each 
applicant must certify, on the FCC Form 466 and 466-A, that the 
applicant has selected the most cost-effective method of providing the 
selected service(s). FCC Form 467 is the next and final form an 
applicant submits. FCC Form 467 is used by the applicant to notify USAC 
that the service provider has begun providing the supported service. An 
applicant must submit one FCC Form 467 for each FCC Form 466 and or 
466-A that the applicant submitted to USAC. FCC Form 467 is also used 
to notify USAC when the applicant has discontinued the service or if 
the service was or will not be turned on during the funding year. The 
Commission reminds selected participants that all health care providers 
participating in the RHC Pilot Program must maintain documentation of 
their purchases of service for five years from the end of the funding 
year, which must include, among other things, records of allocations 
for consortia and entities that engage in eligible and ineligible 
activities. Upon request, beneficiaries must make available all 
documents and records that pertain to them, including those of 
contractors and consultants working on their behalf, to the 
Commission's Office of Inspector General, to USAC, and to their 
auditors. This record retention requirement also applies to service 
providers that receive support for serving rural health care providers.
    69. The Commission recognizes that due to the unique structure of 
the Pilot Program, selected participants may have difficulty in 
preparing the required RHC forms to be submitted to USAC. The 
Commission therefore finds it necessary to provide guidance regarding 
how these forms should be completed to minimize the possibility of 
unintentional error on the part of selected participants. The 
Commission also takes this opportunity to provide further guidance on 
Pilot Program requirements and additional data that must be submitted 
with the FCC RHC forms. In addition, the Commission directs USAC to 
conduct a targeted outreach program to educate and inform selected 
participants on the Pilot Program administrative process, including the 
various filing requirements and deadlines, in order to minimize the 
possibility of making inadvertent ministerial, or clerical errors in 
completing the required forms.
    70. FCC Form 465 Process. To ensure a fair and transparent bidding 
process, the Commission directs selected participants to clearly 
identify, on form Line 29 (description of Applicant's 
telecommunications/Internet needs) of the FCC Form 465, the bids the 
applicant is requesting for the network it intends to construct under 
the three-year Pilot Program. The Commission reiterates that selected 
participants cannot receive support that exceeds the amount designated 
in Appendix B. For selected participants seeking funding in the first 
year of the Pilot Program (Funding Year 2007), they should indicate 
that Funding Year 2007 is the year for which they are seeking support 
in Line 26 of the FCC Form 465. Selected participants should also 
indicate if they will be seeking funding for Year Two (Funding Year 
2008) and/or Year Three (Funding Year 2009) of the Pilot Program in 
Line 29 of FCC Form 465 in their filings in Year One. Selected 
participants should also indicate the Year(s) for which each health 
care provider is seeking funding in the FCC Form 465 attached 
spreadsheet, discussed further below.
    71. Selected participants are not required to submit multiple FCC 
Forms 465 for each participating health care provider, although they 
may choose to do so. The Commission notes that vendors or service 
providers participating in the competitive bid process are prohibited 
from assisting with or filling out a selected participants' FCC Form 
465. Specifically, for purposes of administrative efficiency, selected 
participants may submit one master FCC Form 465, provided the 
information contained in the FCC Form 465 identifies each eligible 
health care provider participating in the Pilot Program and is included 
in an attached Excel or Excel compatible spreadsheet. Appendix E of 
this Order provides a spreadsheet for selected participants. The 
Commission notes also that Southern Ohio Healthcare Network requests a 
waiver of the number of locations permitted per FCC Form 465. Because 
the Commission permits selected participants to submit a single master 
FCC Form 465 with attachment that identifies each eligible health care 
provider participating, it denies this waiver request as moot. The 
Commission also requires selected

[[Page 8684]]

participants to provide a brief explanation for each health care 
provider participating in the network, identifying why each health care 
provider is eligible under section 254 of the 1996 Act and the 
Commission's rules and orders. This information should be included in 
an attachment to the FCC Form 465 submitted to USAC. The Commission 
notes also that FCC Form 465 requires applicants to certify that the 
health care provider is located in a rural area. As described above, 
the Pilot Program is open to all eligible public and non-profit health 
care providers. Therefore, the Commission clarifies that a 
participating non-rural eligible health care provider need not certify 
that it is located in a rural area. Consistent with USAC procedures, 
electronic signatures are permissible for purposes of the FCC Form 465 
attachment. Selected participants that anticipate competitively bidding 
out their entire approved network project need only submit FCC Form 465 
and the attached spreadsheet in Year One (or the first year they intend 
to competitively bid the project). Selected participants that 
anticipate competitively bidding their network project each Funding 
Year of the Pilot Program (e.g., Year One, Year Two, and Year Three) 
shall submit a new FCC Form 465 within the appropriate Funding Year 
window(s) and requisite attachments for each stage. Selected 
participants whose network projects include both an initial network 
design study and network construction based on that initial network 
design study are required to competitively bid the network construction 
portion of the project separate from the initial network design study. 
To the extent that a selected participant seeks to add, remove, or 
substitute a health care provider in its proposed network after a 
funding commitment has been made by USAC, the selected participant must 
file an amended FCC Form 465 Attachment providing any new FCC Form 465 
information in order to allow USAC to determine its statutory 
eligibility. The Commission notes, however, once USAC has issued an 
FCL, program support for the relevant Pilot Program Funding Year is 
capped at that amount. In addition, along with its FCC Form 465 and 
related spreadsheet, each selected participant must also submit a copy 
of the most recent record version of its application previously 
submitted to the Commission as of the release date of this Order (as 
modified by, or consistent with, this Order, if applicable). Selected 
participants must also provide sufficient information to define the 
scope of the project and network costs to enable an effective 
competitive bidding process. The Commission notes that selected 
participants may not pre-qualify service providers for the competitive 
bidding process.
    72. Finally, the Commission requires each applicant to include with 
its FCC Form 465 a Letter of Agency (LOA) from each participating 
health care facility to authorize the lead project coordinator to act 
on its behalf, to demonstrate that each health care provider has agreed 
to participate in the selected participant's network, and to avoid 
improper duplicate support for health care providers participating in 
multiple networks. The Commission has affirmed USAC's requirement that 
an applicant applying as a consortium in the E-Rate program must submit 
an LOA from each of its members expressly authorizing the applicant to 
submit an applicant on its behalf. LOAs should include, at a minimum: 
The name of the entity filing the application (i.e., lead applicant or 
consortium leader); name of the entity authorizing the filing of the 
application (i.e., the participating health care provider/consortium 
member); the relationship of the facility to the lead entity filing the 
application; the specific timeframe the LOA covers; the signature, 
title and contact information (including phone number, physical 
address, and e-mail address) of an official who is authorized to act on 
behalf of the health care provider/consortium member; signature date; 
and the type of services covered by the LOA. For health care providers 
located on tribal lands, LOAs must also be signed by the appropriate 
management representative of the health care facility. In most cases, 
this will be the director of the facility. If the facility is a 
contract facility that is run solely by the tribe, the appropriate 
tribal leader, such as the tribal chairperson, president, or governor, 
shall also sign the LOA, unless the health care responsibilities have 
been duly delegated to another tribal government representative. The 
Commission notes that a number of selected participants have included 
health care provider participants in their networks that are also 
participating in another selected participant's proposed network. 
Although the Commission does not prohibit a health care provider from 
participating in more than one selected participant's supported 
project, it is prohibited from receiving support for the same or 
similar services. Specifically, network costs for participation in one 
project must be separate and distinct from network costs resulting from 
participation in any other project.
    73. SPIN Requirement. All service providers that participate in the 
RHC Pilot Program are required to have a Service Provider 
Identification Number (SPIN). SPINs must be assigned before USAC can 
authorize support payments; therefore, all service providers submitting 
bids to provide services to selected participants will need to complete 
and submit a Form 498 to USAC for review and approval if selected by a 
participant before funding commitments can be made. Only service 
providers that have not already been assigned a SPIN by USAC will need 
to complete and submit a Form 498. Form 498 can be found on the USAC 
Web site on its forms page.
    74. FCC Form 466-A Process. Selected participants should submit an 
FCC Form 466-A to indicate the type(s) of network construction ordered, 
the cost of the ordered network construction, information about the 
service provider(s), and the terms of the service agreements. To the 
extent a selected participant files an FCC Form 466 instead of an FCC 
Form 466-A, USAC may permit the selected participant to amend its 
filing by submitting an FCC Form 466-A to replace the FCC Form 466. The 
Commission notes that although the title of this Form is ``Internet 
Services Funding Request and Certification Form,'' selected 
participants should use the FCC Form 466-A for all eligible funding 
requests under the Pilot Program because it is suitable for Pilot 
Program purposes. Selected participants are not required to submit 
multiple FCC Forms 466-A for each participating health care provider 
location, although they may choose to do so. Specifically, for purposes 
of administrative efficiency, selected participants may submit one 
master FCC Form 466-A, provided the information contained in the FCC 
Form 466-A identifies the location of each health care provider 
participating in the Pilot Program and is included in an attached Excel 
or Excel compatible spreadsheet. Appendix F of this Order provides a 
spreadsheet for selected participants. Consistent with USAC procedures, 
electronic signatures are permissible for purposes of the FCC Form 466-
A attachment. Selected participants seeking funding for Year One of the 
Pilot Program (Funding Year 2007) should indicate this in Line 16. For 
selected participants that seek to receive support under Year One of 
the Pilot Program, the due date is June 30, 2008, consistent with 
Commission rules. Thereafter, the due date for each year of the Pilot 
Program corresponds with the

[[Page 8685]]

existing RHC support mechanism deadline. Thus, the FCC Form 466-A is 
due on June 30, and the FCC Form 465 is due 28 days prior, on June 2. 
Selected participants seeking funding for Year Two (Funding Year 2008) 
and/or Year Three (Funding Year 2009) of the Pilot Program should 
indicate the applicable Funding Years in their description in Box 17. 
In addition, on Line 18 of FCC Form 466-A, upon request, selected 
participants should provide documentation to allow USAC to clearly 
identify allocated eligible costs related to the provision of services 
for each health care provider.
    75. Along with its FCC Form 466-A, a selected participant must 
submit to USAC a copy of the contracts or service agreements with the 
selected service provider(s). Selected participants shall also include 
a detailed line-item network costs worksheet that includes a breakdown 
of total network costs (both eligible and ineligible costs). Selected 
participants choosing to submit multiple FCC Forms 466-A need only 
submit one master network costs worksheet. Selected participants' 
network costs worksheet submissions shall demonstrate how ineligible 
(e.g., for-profit) participants will pay their fair share of network 
costs. Selected participants shall identify these costs with 
specificity in their network costs worksheet submissions. USAC may 
reject line-item worksheets that lack sufficient specificity to 
determine that costs are eligible under this Order or the 1996 Act. 
Selected participants shall also identify in their network costs 
worksheet Pilot Program the applicable maximum funding amounts pursuant 
to this Order. In addition, each selected participant must identify 
with specificity its source of funding for its 15 percent contribution 
of eligible network costs in its line-item network costs worksheet 
submitted to USAC. A network costs worksheet for submission to USAC is 
attached to this Order at Appendix G. Selected participants must use 
this worksheet when submitting their funding requests to USAC.
    76. A selected participant requesting funds for a multi-year 
contract (e.g., Year One and Year Two, or Year One, Two, and Three) 
should indicate this in its initial network costs worksheet 
submissions. Although a selected participant may utilize a multi-year 
contract, USAC may commit funding for only a single year in that year's 
FCL for the participant, i.e., USAC shall issue a separate FCL upon 
receiving the FCC Form 466-A and related attachments on an annual basis 
for the applicable funding year. A participant using multi-year 
contracts is not required to re-bid the contract in subsequent Pilot 
Program funding years, but it must submit a network costs worksheet and 
FCC Form 466-A to USAC for commitment approval for each funding year it 
participates in the Pilot Program. A selected participant who seeks 
funding for a multi-year agreement may only modify its network 
(including adding, deleting, or substituting health care providers) to 
the extent that funding does not exceed the funding year amount listed 
in the selected participant's initial network costs worksheet for the 
applicable funding year.
    77. Selected participants alternatively may choose to competitively 
bid their projects in phases (e.g., Year One--network design study; 
Year Two--network construction and installation) for each year that 
they participate in the Pilot Program, in which case selected 
participants shall submit FCC Forms 465 and 466-A and the requisite 
attachments, as described in this Order, for each year they 
participate. Selected participants that elect to request funding for a 
single year (e.g., Year One), but intend to request funding for 
additional Pilot Program Years (e.g., Year Two or Year Three) should 
submit a detailed line-item network costs worksheet for the additional 
Pilot Program Years for which it intends to request funding in Year 
One.
    78. The Commission requires selected participants and participating 
service providers (once selected through the competitive bidding 
process) to file a certification with their FCC Form 466-A with the 
Commission and with USAC stating that all federal RHC Pilot Program 
support provided to selected participants and participating service 
providers will be used only for the eligible Pilot Program purposes for 
which the support is intended, as described in this Order, and 
consistent with related Commission orders, section 254(h)(2)(A) of the 
1996 Act, and Sec.  54.601 et seq. of the Commission's rules. For 
selected participants, certifications shall be filed by the lead 
applicant, as well as the legally and financially responsible 
organization, if not the same entity. Pilot Program support amounts 
shall only be committed by USAC to the extent that the requisite 
certification has been filed. The certification must be filed with both 
the Office of the Secretary of the Commission, clearly referencing WC 
Docket No. 02-60, and with USAC in the form of a sworn affidavit 
executed by a corporate officer attesting to the use of the Pilot 
Program support for the approved Pilot Program purposes for which 
support is intended. Selected participants and participating service 
providers must also send a courtesy copy of their certifications to 
Antoinette Stevens, (202) 418-7387, [email protected] in the 
Telecommunications Access Policy Division, Wireline Competition Bureau, 
Federal Communications Commission, 445 12th Street, SW., Washington, DC 
20554. Failure to certify will result in suspension of processing of 
the selected participant's forms and support. Upon receipt and approval 
of a selected participant's FCC Form 466-A, USAC will then issue a FCL 
for each Pilot Program funding year. USAC shall also provide the lead 
project coordinator with a copy of an FCL concerning any funding 
request for which it is the lead project coordinator.
    79. FCC Form 467 Process. The Commission also finds that it is 
necessary to provide selected participants with guidance regarding how 
to fill out FCC Form 467 for reimbursement. In the third box of Block 3 
on FCC Form 467, selected participants are asked to indicate, among 
other things, whether ``service was not (or will not be) turned on 
during the funding year.'' Selected participants should leave the third 
box of Block 3 blank. Instead, the Commission directs selected 
participants to notify USAC and the Commission, in writing, when the 
approved network project has been initiated within 45 calendar days of 
initiation. Selected participants must file a copy of this notice with 
the Commission in WC Docket No. 02-60. Selected participants must also 
send a courtesy copy of this notification to Antoinette Stevens, (202) 
418-7387, [email protected] in the Telecommunications Access 
Policy Division, Wireline Competition Bureau, Federal Communications 
Commission, 445 12th Street, SW., Washington, DC 20554. If the selected 
participant's network build-out has not been initiated within six 
months of the FCL sent by USAC to the selected participant and service 
provider(s) approving funding, the selected participant must notify 
USAC and the Commission within 30 days thereafter explaining when it 
anticipates that the approved network project will be initiated. Upon 
receipt and approval of a selected participant's FCC Form 467, USAC 
will then issue a Health Care Provider Support Schedule to the health 
care provider and the service provider. The purpose of the support 
schedule is to provide a detailed report of the approved service(s) and 
support information for each health care provider and service

[[Page 8686]]

provider. The service provider uses the support schedule to determine 
how much credit the health care provider will receive each month. Once 
the service provider receives the schedule, the provider must start 
applying program discounts to the health care provider during the next 
possible billing cycle based on the schedule. Selected participants 
must complete build-out of the networks funded by this Pilot Program 
within five years from the date of the initial FCL, after which the 
funding commitments made in this Order will no longer be available. It 
is appropriate to allow five years for selected participants to build 
out their Pilot Program networks. Unlike the E-Rate program and the 
existing RHC support mechanism which does not have deadlines for 
submitting invoices to USAC, the Pilot Program, in keeping with its 
limited scope, imposes a five-year invoicing deadline. The Commission 
finds this time period sufficient for network build-outs. Further, 
selected participants may not receive any Pilot Program support after 
the expiration of the invoice deadline, which is five years from 
receipt of their initial FCL for all Pilot Program funding years. To 
the extent that a Pilot Program participant fails to meet this build-
out deadline, the Commission intends also to require the applicant 
repay any Pilot Program funds already disbursed. In addition, selected 
participants shall also notify the Commission and USAC in writing upon 
completion of the pilot project construction and network buildout. 
Selected participants must file a copy of this notice with the 
Commission in WC Docket No. 02-60. Selected participants must also send 
a courtesy copy of this notification to Antoinette Stevens, (202) 418-
7387, [email protected] in the Telecommunications Access 
Policy Division, Wireline Competition Bureau, Federal Communications 
Commission, 445 12th Street, SW., Washington, DC 20554.
    80. USAC Outreach. In addition to the filing requirements discussed 
above, each selected participant shall provide to USAC within 14 
calendar days of the effective date of this Order the name, mailing 
address, e-mail address, and telephone number of the lead project 
coordinator for the Pilot Program project or consortium. Within 30 days 
of the effective date of this Order, USAC shall conduct an initial 
coordination meeting with selected participants. USAC shall further 
conduct a targeted outreach program to educate and inform selected 
participants on the Pilot Program administrative process, including 
various filing requirements and deadlines, in order to minimize the 
possibility of selected participants making inadvertent ministerial, or 
clerical errors in completing the required forms. The Commission also 
directs USAC to notify selected participants when each funding year 
begins. The Commission expects that these outreach and educational 
efforts will assist selected participants in meeting the Pilot 
Program's requirements. Further, the Commission believes such an 
outreach program will increase awareness of the filing rules and 
procedures and will improve the overall efficacy of the Pilot Program. 
The Commission also encourages selected participants to contact USAC 
with questions prior to filing their FCC forms. The direction the 
Commission provides USAC will not lessen or preclude any of its review 
procedures. Indeed, the Commission retains its commitment to detecting 
and deterring potential instances of waste, fraud, and abuse by 
ensuring that USAC scrutinizes Pilot Program submissions and takes 
steps to educate selected participants in a manner that fosters 
appropriate Pilot Program participation.
    81. As part of its outreach program, USAC shall also conduct 
educational efforts to inform selected participants of which network 
components are eligible for RHC Pilot Program support in order to 
better assist selected participants in meeting the Pilot Program's 
requirements. When USAC has reason to believe that a selected 
participant's funding request includes ineligible network components or 
ineligible health care providers, USAC shall: (1) Inform the selected 
participant promptly in writing of the deficiencies in its funding 
request, and (2) permit the selected participant 14 calendar days from 
the date of receipt of notice in writing by USAC to revise its funding 
request to remove the ineligible network components or facilities for 
which Pilot Program funding is sought or allow the selected participant 
to provide additional documentation to show why the components or 
facilities are eligible. To the extent a selected participant does not 
remove ineligible network components or facilities from the funding 
request, USAC must deny funding for those components or facilities. The 
14-day period should provide sufficient time for selected participants 
to modify their funding requests to remove ineligible services.
    82. Selected participants must submit complete and accurate 
information to USAC as part of the application and review process. 
Selected participants, however, will be provided the opportunity to 
cure ministerial and clerical errors on their FCC Forms and 
accompanying data submitted to USAC pertaining to the Pilot Program. 
USAC shall inform selected participants within 14 calendar days in 
writing of any and all ministerial or clerical errors that it 
identifies in a selected participant's FCC Forms, along with a clear 
and specific explanation of how the selected participants can remedy 
those errors. USAC shall also inform selected participants within this 
same 14 calendar days in writing of any missing or incomplete 
certifications. Selected participants will be presumed to have received 
notice five days after such notice is postmarked by USAC. USAC shall, 
however, continue to work beyond the 14 days with selected participants 
attempting in good faith to provide documentation. Selected 
participants shall have 14 calendar days from the date of receipt of 
notice in writing by USAC to amend or re-file their FCC Forms for the 
sole purpose of correcting the ministerial or clerical errors 
identified by USAC. Selected participants shall not be permitted to 
make material changes to their applications. Selected participants 
denied funding for errors other than ministerial or clerical errors are 
instructed to follow USAC's and the Commission's regular appeal 
procedures. Selected participants that do not comply with the terms of 
this Order, section 254 of the 1996 Act, and Commission rules and 
orders will be denied funding in whole or in part, as appropriate.
    83. Disbursement of Pilot Program Funds. USAC will disburse Pilot 
Program funds based on monthly submissions (i.e., invoices) of actual 
incurred eligible expenses. The Commission notes that several 
applicants requested that awarded funds be distributed in a specific 
manner, departing from established USAC precedents. For the reasons 
explained herein, Pilot Program funds will be distributed as described 
in this Order. Service providers are only permitted to invoice USAC for 
eligible services apportioned to eligible health care provider network 
participants. Service providers shall submit detailed invoices to USAC 
on a monthly basis for actual incurred costs. This invoice process will 
permit disbursement of funds to ensure that the selected participants' 
network projects proceed, while allowing USAC and the Commission to 
monitor expenditures in order to ensure compliance with the Pilot 
Program and prevent waste, fraud, and abuse. USAC shall respond to 
service provider

[[Page 8687]]

invoices in accordance with its current invoicing payment plan. USAC 
follows a bi-monthly invoicing cycle. Invoices received from the 1st 
through the 15th of the month will be processed by the 20th of the 
month. Invoices received from the 16th through the 31st of the month 
will be processed by the 5th of the following month. The Commission 
directs USAC to modify its current sample ``RHCD Service Provider 
Invoice'' for purposes of the Pilot Program to ensure consistency with 
this Order. In doing so, USAC shall ensure that invoices reflect total 
incurred eligible costs, including those eligible costs for which 
selected participants will be responsible, to enable USAC to adjust 
disbursements to service providers to 85 percent or less of eligible 
incurred costs. All invoices shall also be approved by the lead project 
coordinator authorized to act on behalf the health care provider(s), 
confirming the network build-out or services related to the itemized 
costs were received by each participating health care provider. The 
lead project coordinator shall also confirm and demonstrate to USAC 
that the selected participant's 15 percent funding contribution has 
been provided to the service provider for each invoice. Further, the 
Commission expects USAC to review data submitted by Pilot Program 
participants to ensure that participants' data submissions are 
consistent with invoices submitted as well as to ensure that network 
deployments are proceeding according to the approved dedicated network 
plans. Finally, the Commission directs USAC to conduct random site 
visits to selected participants to ensure support is being used for its 
intended purposes, as well as to conduct site visits as necessary and 
appropriate based on USAC's review of the selected participants' data 
submissions. If funding is disbursed to any service provider and the 
approved network project is abandoned or left incomplete, the 
Commission permits USAC to pursue recovery of funds from the selected 
participant's financially and legally responsible organization, 
eligible health care providers, or service provider, as appropriate. In 
addition, as discussed infra, the Commission may seek recovery of 
funds, assess forfeitures, or impose fines if it determines that Pilot 
Program support has been used in violation of Commission rules or 
orders, or section 254 of the 1996 Act.
8. Waivers
    84. In the 2006 Pilot Program Order, the Commission indicated that, 
after they are selected, the selected participants would work within 
the confines of the existing RHC support mechanism, including the 
requirement ``to comply with the existing competitive bidding 
requirements, certification requirements, and other measures intended 
to ensure funds are used for their intended purposes.'' The Commission 
indicated, however, that it would waive additional program rules if 
such waivers are necessary for the successful operation of the Pilot 
Program. After reviewing the applications and the requested rule 
waivers, the Commission finds that selected participants have not 
demonstrated good cause exists to warrant waiving certain Commission 
rules, including the competitive bidding rules and the rule prohibiting 
resale of telecommunications services or network capacity. Among other 
reasons, the Commission finds requiring selected participants to comply 
with these rules will further the goals and principals of the 2006 
Pilot Program Order and protect against waste, fraud, and abuse. For 
the reasons discussed below, however, the Commission finds good cause 
to waive the program application deadline and to clarify other 
administrative rules related to participation in the Pilot Program.
a. Competitive Bidding
    85. Pursuant to Sec. Sec.  54.603 and 54.615 of the Commission's 
rules, each eligible health care provider must participate in a 
competitive bidding process and follow any additional applicable state, 
local, or other procurement requirements to select the most cost-
effective provider of services eligible for universal service support 
under the RHC support mechanism. The Commission previously granted a 
limited waiver of the rural health care program's competitive bidding 
and cost-effectiveness rules to allow selected participants to pre-
select Internet2 or NLR. The Commission clarifies that this waiver only 
applies to pre-selecting Internet2 or NLR and that selected 
participants must follow the competitive bidding rules for all other 
service requests. To satisfy the competitive bidding requirements, 
selected participants must submit an FCC Form 465 that includes a 
description of the services for which the health care provider is 
seeking support and wait at least 28 days from the date on which this 
information is posted on the USAC's website before making commitments 
with the selected service provider. After selecting a service provider, 
the participant must certify that it selected the most cost-effective 
method of providing service. A selected Pilot Program participant may 
select a service provider(s) that may be part of a pre-existing 
contract(s), provided that the selection of the provider(s) complies 
with the terms of this Order, including the Commission's competitive 
bidding rules. Construction or services completed prior to compliance 
with the competitive bidding requirements are not eligible for Pilot 
Program funding. Various selected participants request a waiver of 
these competitive bidding requirements. The majority of these selected 
participants argue that waivers are necessary because they have pre-
selected their preferred service provider or would like to select 
service providers without the burden or uncertainty of the competitive 
bidding process. Other selected participants argue that waivers are 
necessary because they have already contracted with service providers. 
For the reasons discussed below, the Commission does not find selected 
participants have demonstrated good cause exists for waiving the 
competitive bidding rules.
    86. In establishing the competitive bidding process, the Commission 
determined that a competitive bidding requirement was necessary to 
``help minimize the support required by ensuring that rural health care 
providers are aware of cost-effective alternatives'' and ``ensure that 
the universal service fund is used wisely and efficiently.'' The 
selected participants requesting waivers identify service providers 
they would like to provide service or those that are already providing 
service but give no assurance that they are aware of other alternatives 
or that the identified providers offer the most cost-effective method 
of providing service. For example, Rural Nebraska Healthcare Network 
claims that the competitive bidding process is unnecessary because 
Mobius Communications Company is ``uniquely positioned to bury fiber 
and maintain the system in western Nebraska'' but does not demonstrate 
that Mobius is the most cost-effective choice because it does not 
explain whether it sought bids from, or even considered providers other 
than Mobius. Similarly, Rural Wisconsin Health Cooperative requests a 
waiver of the competitive requirements because it has ``identified 
Charter Communications as the optimal provider'' but does not explain 
if it considered or is aware of other providers or why Charter 
Communications is superior to other potential providers. The 
competitive bidding requirements are not unduly burdensome because, if 
the service provider the selected participant

[[Page 8688]]

identified in its application is the most cost-effective, the selected 
participant can select that service provider after completing the 
competitive bidding process; if this service provider is not the most 
cost-effective, then the competitive bidding process may identify more 
cost-effective solutions. In using the competitive bidding process, 
selected participants will thus have an opportunity to identity and 
select the most cost-effective service provider to build-out their 
proposed network projects. The competitive bidding requirements also 
will not create any unreasonable delays for selected participants 
because the selected participant must wait only 28 days from the date 
its service request is posted on USAC's website to select the most 
cost-effective method of providing service. Accordingly, the Commission 
finds selected participants have not demonstrated that special 
circumstances warrant deviation from Sec. Sec.  54.603 and 54.615 of 
the Commission's rules.
    87. Requiring all selected participants to strictly comply with the 
competitive bidding process is in the public interest because the 
competitive bidding process is vital to the Commission's effort to 
ensure that universal service funds support services that satisfy the 
exact needs of an institution in the most cost-effective manner. The 
competitive bidding requirements ensure that selected participants are 
aware of the most cost-effective method of providing service and 
ensures that universal service funds are used wisely and efficiently, 
thereby providing safeguards to protect against waste, fraud, and 
abuse. Additionally, the competitive bidding rules are consistent with 
section 254(h)(2)(A) of the 1996 Act because competitive bidding 
furthers the requirement of ``competitively neutrality'' by ensuring 
that universal service support does not disadvantage one provider over 
another, or unfairly favor or disfavor one technology over the other. 
The Commission finds that it is in the public interest and consistent 
with the 2006 Pilot Program Order to require all participants to 
participate in the competitive bidding process. None of the selected 
participants that seek a waiver of the competitive bidding process 
offer persuasive evidence to the contrary. Accordingly, the Commission 
does not find good cause exists to waive the Commission's competitive 
bidding rules.
    88. Heartland Unified Broadband Network seeks a waiver of Sec.  
54.611 of the Commission's rules to allow it to be reimbursed for 
equipment that it has already ordered. The Commission denies this 
waiver as moot because, as explained above, all selected participants 
are required to comply with the competitive bidding requirements that 
require soliciting bids prior to entering into agreements with 
providers. The Commission also denies this waiver because it is 
inconsistent with the Pilot Program goal to only fund the construction 
of new broadband facilities.
    89. To further prevent against waste, fraud, and abuse, the 
Commission requires participants to identify, when they submit their 
Form 465, to USAC and the Commission any consultants, service 
providers, or any other outside experts, whether paid or unpaid, who 
aided in the preparation of their Pilot Program applications. Pilot 
Program participants must also retain records and make available all 
document and records that pertain to them, including those of 
contractors and consultants working on their behalf, to the 
Commission's OIG, to the USF Administrator, and to their auditors. The 
Commission also notes that sanctions, including enforcement action, are 
appropriate in cases of waste, fraud, and abuse. For example, Rocky 
Mountain HealthNet identifies service provider participants and a 
consultant who helped prepare its application. Also, Northeast 
HealthNet identifies a consultant who helped prepare its applications. 
Identifying these consultants and outside experts could facilitate the 
ability of USAC, the Commission, and law enforcement officials to 
identify and prosecute individuals that may seek to manipulate the 
competitive bidding process or engage in other illegal acts. To ensure 
selected participants comply with the competitive bidding requirements, 
they must disclose all of the types of relationships explained above.
b. Restriction on Resale
    90. Section 254(h)(3) of the 1996 Act provides that 
``[t]elecommunications services and network capacity provided to a 
public institutional telecommunications user under this section may not 
be sold, resold, or otherwise transferred by such user in consideration 
for money or any other thing of value.'' The Commission interpreted 
this section to restrict the resale of any services purchased pursuant 
to the section 254(h) discount for services under the RHC support 
mechanism. Rural Nebraska Healthcare Network seeks a waiver, if 
necessary, of the resale prohibition set forth in Sec.  54.617(a) of 
the Commission's rules. Rural Nebraska Healthcare Network argues that 
this rule should not be interpreted to prohibit the provision of 
capacity to for-profit entities or to the fiber strands ownership plan 
detailed in its application.
    91. As an initial matter, the Commission notes that although the 
Commission has authority to waive regulatory requirements, it does not 
have authority to waive a requirement imposed by statute. Although 
Rural Nebraska Healthcare Network couches its request as one of waiver 
of the Commission's rules, it is actually requesting a waiver of the 
statute. The implementation of rule 54.617(a) flowed directly from the 
plain meaning of the statute. Thus, regardless of whether the 
Commission were to waive the rule, the statutory prohibition on resale 
would still remain. The Commission concludes, because rule 54.617(a) is 
based on a statute, it cannot be waived.
    92. The Commission further notes that, the prohibition on resale 
does not prohibit for-profit entities, paying their fair share of 
network costs, from participating in a selected participant's network. 
Section 254(h)(3) of the 1996 Act and Sec.  54.617(a) of the 
Commission's rules are not implicated when for-profit entities pay 
their own costs and do not receive discounts provided to eligible 
health care providers. A selected participant cannot sell its network 
capacity supported by funding under the Pilot Program but could share 
network capacity with an ineligible entity as long as the ineligible 
entity pays its fair share of network costs attributable to the portion 
of network capacity used. To the extent participants connect to for-
profit entities they may do so as long as they comply with Sec.  54.617 
and any other applicable Commission rules.
    93. To prevent against violation of the prohibition on resale of 
supported services and to further prevent against waste, fraud, and 
abuse, the Commission requires participants to identify all for-profit 
or other ineligible entities, how their fair share of network costs was 
assessed, and proof that these entities paid or will pay for their 
costs. Specifically, as part of their reporting requirements in 
Appendix D of this Order, selected participants must: Provide project 
contact and coordination information; identify all health care 
facilities included in the network; provide a network narrative; 
provide a diagram of the planned network indicating those facilities 
currently in place; identify the non-recurring and recurring costs; 
describe how costs have been apportioned and the sources of the funds 
to pay them; identify any technical or non-technical requirements or 
procedures necessary for ineligible entities to connect to the

[[Page 8689]]

participant's network; provide an update on the project management 
plan; provide information on the network's self sustainability; and 
provide detail on how the supported network has advanced telemedicine 
benefits.
c. Eligibility
    94. Texas Health Information Network Collaborative and Virginia 
Acute Stroke Telehealth Project request that the Commission expand the 
list of facilities eligible for support. Section 254(h)(7)(b) of the 
1996 Act defines health care providers. The Commission adopted Sec.  
54.601 of its rules based on a plain reading of the statute. In the 
2006 Pilot Program Order, the Commission explained that it would use 
the definition of health care provider found in Sec.  54.601 of the 
Commission rules to determine what facilities are eligible for support. 
As explained above, the Commission does not have authority to waive a 
requirement imposed by statute. The Commission concludes, because Sec.  
54.601 is based on a statutory requirement, the Commission cannot waive 
Sec.  54.601 and expand the types of health care facilities that are 
eligible for support under the Pilot Program. The Commission finds 
however, although emergency medical service facilities themselves are 
not eligible providers for purposes of the RHC Pilot Program, Pilot 
Program funds may be used to support costs of connecting emergency 
medical service facilities to eligible health care providers to the 
extent that the emergency medical services facility is part of the 
eligible health care provider.
d. Service Eligibility
    95. The Missouri Telehealth Network and Iowa Health System seek a 
waiver of Sec.  54.601(c) of the Commission's rules to ensure that 
funding under the Pilot Program is not restricted to funding available 
under the existing RHC support mechanism. Section 54.601 of the 
Commission's rules identifies which services are supported under the 
existing RHC support mechanism. Because the Pilot Program provides 
funding to cover the costs associated with different facilities and 
services than does the existing support mechanism, the Commission finds 
that it is necessary to waive this section of our rules. Specifically, 
Pilot Program funding is not limited to the provision of 
telecommunications services and Internet access, but rather includes 
funding of infrastructure deployment and network design studies, as 
well. Accordingly, the Commission finds good cause exists to waive 
Sec.  54.601(c) of the Commission's rules to enable selected 
participants to receive support for the eligible support described 
above.
e. Filing Deadline
    96. The deadline for receipt of Pilot Program applications was May 
7, 2007. A number of applicants filed their applications one day after 
the deadline on May 8, 2007. Some of these applicants filed petitions 
with the Commission seeking a waiver of the May 7, 2007, filing 
deadline. For example, Texas Health Information Collaborative seeks a 
waiver because it contends it attempted to file its application 
electronically before the deadline but, due to technical difficulties, 
its application was received at 12:02 a.m. on May 8, 2007. Also, 
Western Carolina University contends it should be granted a waiver 
because technical difficulties prevented it from timely filing its 
application.
    97. The Commission finds that good cause exists to accept late 
filed applications because the applicants provide information and seek 
funding for projects that further the goals of the Pilot Program to 
stimulate deployment of innovative telehealth, and in particular, 
telemedicine services to those areas of the country where the need for 
those benefits is most acute. Furthermore, the late filed applications 
will help further the goals of the Pilot Program because they provide 
the Commission with information about how to revise the existing RHC 
support mechanism. Accepting these applications has not caused any 
delay; indeed, the Commission finds it significant that none of the 
applicants missed the filing deadline by more than one day. Moreover, 
many of the late applications were mailed before the deadline but 
received after the deadline, while other applicants tried 
unsuccessfully to file their applications electronically before the 
deadline. Accordingly, the Commission waives the May 7, 2007, deadline 
and accepts the applications filed after the deadline. The Commission 
waives this request for all applicants that filed late. This waiver, 
however, is not an ongoing waiver. The Commission will not consider 
applications that have yet to be filed. Further, the Commission 
clarifies that in supra Part D, the Commission denies United Health 
Services' application based on a review of its application, not because 
it was received after the filing deadline.
f. Distributing Support
    98. Section 54.611 of the Commission's rules sets forth how a 
telecommunications service provider may receive universal service 
support for providing service to an eligible health care provider. 
Pursuant to Sec.  54.611, a telecommunications carrier providing 
services eligible for rural health care universal support shall offset 
the amount eligible for support against its universal service 
obligation. If the total amount of support owed to the carrier exceeds 
its universal service payment obligation, calculated on an annual 
basis, the carrier is entitled to receive the differential as a direct 
reimbursement. Any reimbursement due a carrier, however, shall be made 
after the offset is credited against the carrier's universal service 
obligation. Any reimbursement shall be submitted to a carrier no later 
than the first quarter of the calendar year following the year in which 
the costs for the services were incurred.
    99. Some selected participants have requested a waiver of Sec.  
54.611. These selected participants claim that a different type of 
distribution process is needed for the Pilot Program. For example, 
Rural Nebraska Healthcare Network argues that a waiver is necessary 
because the offset provision cannot be applied to non-
telecommunications carriers and support must be distributed in a manner 
that allows for the buildout of the proposed networks to proceed 
immediately. Similarly, the California Healthcare Network argues that 
Sec.  54.611 should be waived to allow non-telecommunications carriers 
to receive funding under the Pilot Program and to allow ``USAC to pay 
vendor(s) monthly based on invoiced amounts.''
    100. The Commission finds good cause exists to waive Sec.  54.611 
of the rules, as described herein. The Commission agrees with those 
applicants that argue that a waiver is necessary for non-
telecommunications carriers seeking funding. As explained above, 
section 254(h)(2)(A) does not limit support to only eligible 
telecommunications carriers. Because the rule is drafted to apply to 
eligible telecommunications carriers only, the Commission finds it 
necessary and in the public interest to waive it for non-eligible 
telecommunications carriers selected to participate in the Pilot 
Program.
    101. The Commission also finds that good cause exists to waive this 
rule to permit both telecommunications carriers and non-
telecommunications carriers to be distributed support in the same 
manner. Because Sec.  54.611 requires USAC to reimburse carriers the 
first quarter of the calendar year following the year in which costs 
were incurred, providers receiving support under the Pilot Program 
could be owed millions of

[[Page 8690]]

dollars by the time they are reimbursed in full. Such a delay in 
reimbursement could jeopardize the timely deployment of selected 
participants' broadband networks, which would be contrary to the goals 
of the Pilot Program to stimulate deployment of broadband 
infrastructure necessary to support telemedicine services to those 
areas of the country where the needs for those benefits is most acute. 
Additionally, Sec.  54.611 could produce an inequitable result by 
depriving providers of the funding flow needed to continue to perform 
their service contracts with selected participants because, among other 
things, service providers may potentially be unable to meet their 
payment obligations to vendors without finding other means of financial 
support. Waiving Sec.  54.611 also serves the public interest because 
it promotes the goals of section 254 of the 1996 Act to enhance access 
to advanced telecommunications and information services for health care 
providers. Accordingly, the Commission finds good cause exists to waive 
Sec.  54.611 and instructs all participants, service providers, and 
USAC to follow the support distribution method outlined in this Order.
g. Funding Year 2006 Deadline
    102. Selected participants also request that the Commission waive 
the Funding Year 2006 deadline. Section 54.623(c)(3) of the 
Commission's rules establishes June 30 as the deadline for all required 
forms to be filed with USAC for the funding year that begins on the 
previous July 1. Therefore, for funding year 2006, the deadline is June 
30, 2007. Although participants were selected after the June 30, 2007 
deadline, a waiver of Sec.  54.623 is not necessary because, as 
detailed in supra section III.B, Funding Year 2006 Pilot Program 
support will be rolled over to Funding Year 2007, and Year One of the 
RHC Pilot Program will begin in Funding Year 2007. The Commission 
therefore, finds these waiver requests are moot.
h. Other Waiver Requests
    103. The Pilot Program is broader in scope than the existing RHC 
support mechanism because it provides funding for up to 85 percent of 
eligible costs associated with the construction of dedicated broadband 
health care network capacity that connects health care providers in a 
state and region. In contrast, the existing RHC support mechanism is 
designed to ensure that rural health care providers pay no more than 
their urban counterparts for their telecommunications needs. Because 
the Pilot Program and existing RHC support mechanism support different 
network connections related to rural health care, many of the rules 
that apply to the existing program may not apply to the Pilot Program. 
Various participants note that the Commission's rules for the existing 
RHC support mechanism are either inapplicable or should be waived to 
achieve the goals of the Pilot Program. In particular, participants 
request waivers of and specific deviation from Commission rules to 
allow: (1) Funding for services supplied by providers who are not 
telecommunications carriers or Internet service providers; (2) non-
rural eligible entities to directly request funding under the Pilot 
Program; (3) selected participants to receive funding for services that 
exceed the maximum supported distance for rural health care providers 
and not base support on the difference between the urban and rural 
rate; and (4) support to be based on actual costs, not the difference 
between the urban and rural rate. The Commission agrees with these 
commenters that many of these rules may be inapplicable to the Pilot 
Program but, to the extent any rule is inapplicable, selected 
participants must follow the eligibility requirements detailed in this 
Order and section 254 of the 1996 Act.
    104. First, funding under the Pilot Program is not limited to 
telecommunications providers. As discussed above, the Commission 
established the Pilot Program under the authority of section 
254(h)(2)(A) of the 1996 Act, which does not limit support to only 
eligible telecommunications carriers. In the 2006 Pilot Program Order, 
the Commission explained that eligible health care providers may choose 
any technology and provider of supported services and may utilize any 
currently available technology. Accordingly, service providers who 
participate in the competitive bidding process do not need to be 
eligible telecommunications carriers to receive Pilot Program funds. 
For example, a selected participant may choose to have the network 
design studies done by a non-telecommunications carrier. If a service 
provider is not a telecommunications carrier, certain rules providing 
support only to telecommunications carriers are inapplicable to the 
extent they do not contemplate funding to non-telecommunications 
carriers for the purpose of the Pilot Program.
    105. Second, funding under the Pilot Program is not limited to 
rural health care providers. Consistent with the mandate provided in 
section 254(h)(2)(A) and general principles of universal service, in 
the 2006 Pilot Program Order, the Commission opened participation in 
the Pilot Program to all eligible public and non-profit health care 
providers to promote the Pilot Program goal of stimulating the 
deployment of innovative telehealth networks that will link rural 
health care facilities to urban health care facilities and provide 
telemedicine services to rural communities. Applicants, however, were 
instructed to include in their proposed networks public and non-profit 
health care providers that serve rural areas. Accordingly, eligible 
non-rural health care providers may receive funding under the Pilot 
Program order. To the extent the rules that govern the existing RHC 
support mechanism do not contemplate funding eligible non-rural health 
care providers, they are inapplicable. Non-rural eligible health care 
providers should follow the steps detailed supra, section II.E.7.
    106. Third, the existing RHC support mechanism limits support to a 
maximum supported distance. The Pilot Program differs because it 
explicitly provides funding for deploying dedicated broadband capacity 
that connects health care providers in a state or region and does not 
set maximum supported distances. Specifically, the ``purpose of the 
pilot program is to encourage health care providers to aggregate their 
connections needs to form a comprehensive statewide or regional 
dedicated health care network.'' Accordingly, to the extent distance 
limitation rules conflict with the goals of the Pilot Program to create 
state and regional networks, the rules are inapplicable.
    107. Fourth, the Pilot Program provides funding for up to ``85% of 
an applicant's costs of deploying a dedicated broadband network, 
including any necessary network design studies, as well as the costs of 
advanced telecommunications and information services that will ride 
over the network.'' The Commission recognized that the funding 
percentage under the Pilot Program exceeds the funding percentages 
under the existing RHC support mechanism. Unlike the existing RHC 
support mechanism, the Pilot Program does not use the difference 
between the urban rate and the rural rate to calculate support. 
Accordingly, the rules for calculation of support do not apply to Pilot 
Program participants.
9. Other Administrative Issues
    108. The Commission also clarifies that selected participants may 
not receive funds for the same services under the Pilot Program and 
either the existing universal service programs--

[[Page 8691]]

which consist of the RHC support mechanism, the E-Rate program, the 
High-Cost program, and the Low Income program--or other federal 
programs, including, e.g., federal grants, awards, or loans. For 
example, funds received by Pilot Program selected participants as part 
of their participation in the existing RHC support mechanism may not be 
used by selected participants to offset costs for the same services 
incurred as a result of participation in the Pilot Program. The 
Commission, the Wireline Competition Bureau (Bureau), and Office of 
Inspector General (OIG), maintain the authority to investigate and 
enforce program violations, including against selected participants who 
violate this prohibition, and to recover funds used for unauthorized 
purposes.
    109. The Commission also seeks the timely and effective 
implementation of the three-year Pilot Program. To expedite 
implementation, and consistent with Sec. Sec.  0.91 and 0.291 of the 
Commission's rules, the Commission delegates to the Bureau the 
authority to waive the relevant sections of subpart G of part 54 of the 
Commission's rules for selected participants to the extent they prove 
unreasonable or inconsistent with the sound and efficient 
administration of the Pilot Program. In instances where a selected 
participant, including a consortium, is unable to participate in the 
Pilot Program for the three-year term due to extenuating circumstances, 
a successor may be designated by the Bureau upon request.

III. Oversight of the Pilot Program

    110. The Commission is committed to guarding against waste, fraud, 
and abuse, and ensuring that funds disbursed through the Pilot Program 
are used for appropriate purposes. In particular, the Commission 
intends to conduct audits of all selected participants and service 
providers and, if necessary, investigations of any selected 
participants and service providers to determine compliance of selected 
participants with the Pilot Program, Commission rules or orders, and 
section 254 of the 1996 Act. The beneficiary or service provider will 
be required to comply fully with the requirements of the audits 
including, but not limited to, providing full access to accounting 
systems and its reports, source documents, employees, contractors, and 
internal and external audit reports that are involved in whole or in 
part in the administration of this Pilot Program. This includes 
presenting personnel to testify, under oath, at a deposition if 
requested by of the Office of Inspector General. Such audits or 
investigations may provide information showing that a beneficiary or 
service provider failed to comply with the 1996 Act or Commission 
rules, and thus may reveal instances in which Pilot Program awards were 
improperly distributed or used. The Commission also delegates authority 
to the Bureau to revoke funding awarded to any selected participant 
making unapproved material changes to the network design plan set forth 
in their initial Pilot Program application. The Commission reiterates 
that payment may be suspended if the project appears not to be 
consistent with the approved network plan. To the extent the Commission 
finds that funds were distributed and/or used improperly, the 
Commission will require USAC to recover such funds though its normal 
processes, including adjustment of support amounts by selected 
participants or service providers in other universal service programs 
from which they receive support. The Commission intends that funds 
disbursed in violation of a Commission rule that implements section 254 
or a substantive program goal will be recovered. Sanctions, including 
enforcement action, are appropriate in cases of waste, fraud, and 
abuse, but not in cases of clerical or ministerial errors. If a 
selected participant or service provider fails to comply with 
Commission rules, orders, or mandatory filings, the Commission also has 
the authority to assess forfeitures for violations of Commission rules 
and orders. In addition, selected participants and service providers 
that willfully make false statements can be punished by fine or 
forfeiture under sections 502 and 503 of the Communications Act, or 
fine or imprisonment under Title 18 of the United States Code. Further, 
the Commission has found that ``debarment of applicants, service 
providers, consultants, or others who have defrauded the USF is 
necessary to protect the integrity of the universal service programs.'' 
Therefore, the Commission intends to suspend and debar parties from the 
Pilot Program who are convicted of or held civilly liable for the 
commission or attempted commission of fraud and similar offenses 
arising out of their participation in the Pilot Program or other 
universal service programs. The Commission emphasizes that the 
Commission retains the discretion to evaluate the uses of monies 
disbursed through the RHC Pilot Program and to determine on a case-by-
case basis whether waste, fraud, or abuse of program funds occurred and 
whether recovery is warranted. The Commission remains committed to 
ensuring the integrity of the program and will aggressively pursue 
instances of waste, fraud, and abuse under the Commission's procedures 
and in cooperation with law enforcement agencies. In doing so, the 
Commission intends to use any and all enforcement measures, including 
criminal and civil statutory remedies, available under law. The 
Commission will also monitor the use of awarded monies and develop 
rules and processes as necessary to ensure that funds are used in a 
manner consistent with the goals of the Pilot Program. Finally, the 
Commission reminds selected participants that nothing in this Order 
relieves them of their obligations to comply with other applicable 
federal laws and regulations.

IV. Reporting Requirements

    111. Upon completion of the Pilot Program, the Commission intends 
to issue a report detailing the results of the program, its status, and 
recommended changes. In addition, the Commission intends to incorporate 
any information gathered as part of the Pilot Program in the record in 
any subsequent proceeding to reform the rural health care mechanism. To 
assist the Commission in this task, the Commission requires selected 
participants to submit to USAC and the Commission quarterly reports 
containing data listed in Appendix D of this Order. These data will 
serve as a guide for further Commission action by informing the 
Commission's understanding of cost-effectiveness and efficacy of the 
different state and regional networks funded. These data will also 
enable the Commission to ensure RHC program funds are being used in a 
manner consistent with section 254 of the 1996 Act, this Order, and the 
Commission's rules and orders. In particular, collection of this data 
is critical to the goal of preventing waste, fraud, and abuse by 
ensuring that funding is flowing through to its intended purpose. Also, 
we note that selected participants will be subject to audit oversight 
as discussed and, as such, the Commission will evaluate the allocation 
methods selected by selected participants in the course of its audit 
activities to ensure program integrity and to ensure that providers are 
complying with the program's certification requirements. The 
certification requirements for rural health care providers are set 
forth at 47 CFR 54.615(c).
    112. The first quarterly report shall be due after two full 
quarters have passed following the effective date of this Order and 
shall include responsive data from

[[Page 8692]]

the effective date of the Order to the then-most recent month. These 
reports will be due on the 30th day of the month beginning each quarter 
and include data for the prior three months. Thus, reports will be due 
as appropriate on January 30 (including responsive data for the prior 
October to December), April 30 (including responsive data for the prior 
January to March), July 30 (including responsive data for the prior 
April to June), and October 30 (including responsive data for the prior 
July to September). Reports will be required for a 72-month period 
following the initial due date unless the Bureau extends this deadline. 
Quarterly reports shall also have responsive data separated by month.
    113. Failure to provide the data will result in either the 
elimination of the selected participant from the Pilot Program, loss or 
reduction of support, or recovery of prior distributions. In accordance 
with Sec.  54.619 of the Commission's rules, health care providers and 
selected participants must also keep supporting documentation for these 
reports for five years and present that information to the Commission 
or USAC upon request.

V. Procedural Matters

A. Paperwork Reduction Act Analysis

    114. This document contains new or modified information collection 
requirements subject to the Paperwork Reduction Act of 1995 (PRA), 
Public Law 104-13. It will be submitted to the OMB for review under 
section 3507(d) of the PRA. OMB, the general public, and other federal 
agencies are invited to comment on the new information collection 
requirements contained in this proceeding.

VI. Ordering Clause

    115. Pursuant to the authority contained in sections 1, 4(i), 4(j), 
10, 201-205, 214, 254, and 403 of the Communications Act of 1934, as 
amended, 47 U.S.C. 151, 154(i), 154(j), 10, 201-205, 214, 254, and 403, 
this Order is adopted. The information collection contained in this 
Order will become effective following OMB approval. The Commission will 
publish a document at a later date establishing the effective date.

    Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 08-684 Filed 2-13-08; 8:45am]
BILLING CODE 6712-01-P