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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 In the Matter of ) ) Federal-State Joint Board on ) CC Docket No. 96-45 Universal Service ) ) FOURTEENTH ORDER ON RECONSIDERATION Adopted: September 21, 1999 Released: November 3, 1999 By the Commission: Commissioner Ness issuing a statement; Commissioner Furchgott-Roth concurring in part, dissenting in part, and issuing a statement; Commissioner Powell concurring in the result. I. INTRODUCTION 1. In this Order, we reconsider the Commission's conclusion in the Universal Service Orde that only eligible telecommunications carriers (ETCs) may be credited by the Universal Service Administrative Company (USAC) for serving eligible rural health care providers pursuant to section 254(h)(1)(A) of the Communications Act of 1934 (Act), as amended. We find that the Commission's initial interpretation of section 254(h)(1)(A) was too narrow, and that the record compels us to reconsider our earlier interpretation. We conclude that all telecommunications carriers that provide supported services to eligible rural health care providers at a discount, pursuant to section 254(h)(1)(A),4 are entitled to have the total amount of the discount treated as a contribution to the preservation and advancement of universal service. Accordingly, we direct USAC to apply, as a credit against a carrier's universal service contribution obligation, the amount equal to the difference between the lower, urban rate that a carrier charges eligible health care providers for supported telecommunications services and the higher, rural rates that would normally be charged to these customers. In addition, a telecommunications carrier may request reimbursement if its total universal service credit exceeds its contribution obligation. 2. We emphasize that an entity must be a "telecommunications carrier" in order to be able to use discounted service to satisfy its obligation to contribute to universal service. We also reiterate that universal service support is available to reduce the cost of the distance-based component of services that are based on a unit of distance, such as mileage-based charges under section 254(h)(1)(A). We, therefore, direct USAC to treat the requests for support from eligible health care providers receiving telecommunications service from non-ETCs, the same as it treats those from health care providers receiving telecommunications service from ETCs. II. TELECOMMUNICATIONS CARRIERS PROVIDING SERVICES PURSUANT TO SECTION 254(h)(1)(A) A. Background 1. Universal Service Order 3. Section 254(h)(1)(A) governs the provision of telecommunications services for health care providers that serve rural areas. That section provides, in part: In the Universal Service Order, the Commission read section 254(h)(1)(A) in conjunction with section 254(e) and determined that only those telecommunications carriers that had been designated as ETCs by their state commissions would be permitted to receive universal service support for serving health care providers6 Section 254(e) reads, in part: "After the date on which Commission regulations implementing this section take effect, only an eligible telecommunications carrier designated under section 214(e) shall be eligible to receive specific Federal universal service support.7 According to the statute, in order to be designated as an ETC, a carrier must offer the services that are supported by federal universal service support mechanisms and advertise the availability of such services and the charges for these services using media of general distribution 8 The Commission concluded "only eligible telecommunications carriers, as defined in section 254(e), shall be eligible to receive support for providing eligible services to health care providers under section 254(h)(1)(A).9 4. The Commission also compared section 254(h)(1)(A) with section 254(h)(1)(B), which concerns universal service support for carriers serving eligible schools and libraries 10 The Commission noted that the language "notwithstanding the provisions of subsection (e) of this section" prefaces section 254(h)(1)(B)(ii), a provision that permits carriers serving schools and libraries to receive reimbursement for offering discounts. Thus, the statute extends to telecommunications carriers that have not been designated as ETCs. Examining the language of section 254(h)(1)(B)(ii), the Commission concluded: "[u]nlike section 254(h)(1)(B), section 254(h)(1)(A) does not contain an exception to the eligibility requirements of section 254(e). Therefore, we conclude that only eligible telecommunications carriers, as defined in section 254(e), shall be eligible to receive support for providing eligible services to health care providers under section 254(h)(1)(A).11 The Commission found that the omission of an exemption from the eligibility requirement of section 254(e) in section 254(h)(1)(A) meant that only an ETC could be credited for serving rural health care providers at urban rates. 2. Report to Congress 5. Pursuant to Congress's directive12 in its April 10 Report to Congress, the Commission examined, among other things, "who is eligible under sections 254(e), 254(h)(1), and 254(h)(2) . . . to receive specific federal universal service support for the provision of universal service and the consistency with which the Commission has interpreted each of those provisions of section 254.13 Noting that its conclusion that only ETCs should be eligible to receive support pursuant to section 254(h)(1)(A) was opposed by several commenter14 and was the subject of pending petitions for reconsideration, the Commission found that its original interpretation of the statute was reasonable, but "committed to taking a fresh look at this issue in the reconsideration proceedings.15 6. In the April 10 Report to Congress, the Commission recognized that its interpretation of section 254(h)(1)(A) would reduce opportunities for competition among telecommunications carriers16 The Commission also acknowledged that health care providers would have little flexibility because they are limited to purchasing supported services from ETCs17 The Commission noted that it might be possible to address these concerns pursuant to its forbearance authority under section 10 of the 1996 Act18 3. The Impact of the ETC Requirement 7. In December 1998 the Commission instructed USAC to, among other things, evaluate ways to improve opportunities for eligible rural health care providers (RHCPs) to take advantage of the universal service support mechanism19 On March 5, 1999, USAC submitted a report that indicates that the Commission requirement that a carrier obtain ETC status, in order to receive universal service support for providing telecommunications service at urban rates to RHCPs, severely limits the benefits available to RHCPs20 USAC reports that as many as 35 percent of RHCPs may have failed to complete the application process because of the difficulties presented by the Commission's narrow interpretation of the ETC requirement21 8. According to the USAC Report, the cost of the service provided by interexchange carriers (IXCs) must often be excluded from the calculation of the urban-rural rate differential because many IXCs are non-ETCs22 The Office for the Advancement of Telehealth (OAT) asserts, however, that IXCs provide the "critical link" between local exchange carriers (LECs) in rural areas23 Citing a study performed by the University of Missouri24 OAT argues that, absent support for the non-ETC segment of services provided to RHCPs, the rates available to some RHCPs as a result of their participation in the program are often not reasonably comparable to the low rates charged for similar services in urban areas25 Moreover, in some cases, the rates that RHCPs can receive from the program are even higher than the rates that some RHCPs can obtain on their own26 9. In addition, the Missouri PSC argues that the ETC requirement defeats the purpose of requiring RHCPs to participate in a competitive bidding process27 Specifically, the Missouri PSC notes that the Commission rules direct an RHCP to participate in a competitive bidding process to select the telecommunications carrier offering to the RHCP the most cost-effective method of acquiring the requested services28 According to the Missouri PSC, there is only one ETC that serves the rural areas of Missouri, and because it is the only one eligible to receive reimbursement, the competitive bidding process does not help the RHCPs find the carrier offering the most cost- effective method of acquiring the services29 10. The USAC report also states that the ETC requirement unnecessarily complicates the application process because it requires agreements between multiple local and long distance carriers, as well as extensive coordination30 Specifically, the USAC Report states that, [c]oordination between multiple telecommunication companies requires the rural provider to rely on employees of the companies to help complete forms and develop adjusted rate schedules. This adds time and complexity to the application process31 11. The Missouri PSC argues that these complications lessen the usefulness of the telecommunications services that the RHCPs receive. According to the Missouri PSC comments, the health care services network for services such as Telemedicine is more reliable when service is provided by a single entity through end-to-end service rather than multiple carriers providing baseline service with long-distance connections. A network problem can be remedied with a single phone call instead of multiple calls to different carriers to identify the exact location and cause of the network problem. This is crucial when emergency medical consultations are at risk (i.e., Telemedicine)32 The Missouri PSC, thus, concludes that the Commission should permit non-ETCs providing telecommunications services to RHCPs to receive reimbursement for their services because connections between the rural and urban areas, for health care services, are often most successfully provided by IXCs, and would permit more entities an opportunity to offer affordable access to modern telecommunications services33 12. Finally, it appears that, for some RHCPs, excluding non-ETCs from receiving any benefit for providing service at urban rates may be tantamount to excluding the eligible RHCPs themselves from participating in the rural health care program. The OAT comments explain that this is because, in places such as Alaska, parts of Arizona, and the Pacific Basin, IXCs (most of which are non-ETCs) may be the only carriers available to provide the telecommunications services necessary for telemedicine34 In support of its conclusions, OAT refers to the experience of RHCPs in the Washington, Wyoming, Alaska, Montana, and Idaho Rural Telemedicine Network (WWAMI), and those in the northeast corner of Arizona35 According to OAT, WWAMI covers 20 percent of the continental United States, and the areas are primarily rural or frontier country36 The OAT comments state that one-half of WWAMIs network partners are ineligible under the current Commission rules because they use either AT&T, Sprint, or other IXCs37 OAT reports that the most remote and active site participating in WWAMI has a monthly line charge of $1,250 for the service it receives from AT&T, and the other sites have bills that range from $280-$1,120 per month (all of which are either ISDN or Sw-56 lines)38 OAT further reports that the northeast corner of Arizona is one of the areas in the state with the greatest need for telemedicine, and it falls within the Navajo and Hopi reservations39 The OAT comments indicate that the Arizona Telemedicine Program serves two sites in this region, and these sites have no choice but to use an IXC40 The IXC, in turn, must work with four different LECs to provide dedicated T1 circuits to the RHCPs41 These circuits cost approximately $5,000 per month for each site42 The OAT comments conclude that excluding IXCs from receiving any benefit for serving RHCPs, costs the Arizona Telemedicine Program a minimum of $100,000 per year43 13. After assessing the impact of the ETC requirement since the release of the Universal Service Order, numerous parties have argued that the Commission's initial interpretation of section 254(h)(1)(A) was incorrect as a matter of law, and inconsistent with the plain language of the statute44 These parties buttress their arguments with evidence, such as discussed above, that the Commission's interpretation of the statute frustrates the underlying intent of Congress because it prevents some telecommunications carriers from receiving a credit against their universal service contribution obligations when they provide telecommunications services to health care providers located in rural areas at lower, urban rates. These parties also established a record demonstrating that, in some rural areas, only a non-ETC can provide the needed services, thus making it impossible for some eligible RHCPs to take advantage of the universal service support mechanism that was intended for their benefit45 B. Discussion 14. In light of the record developed by USAC, OAT, and other parties regarding the impact of the Commission's interpretation of section 254(h)(1)(A), and facts that were not apparent at the time the Commission adopted the Universal Service Order, we reconsider the Commission's initial interpretation of this section of the statute. Our initial interpretation of section 254(h)(1)(A) was based on the statutory language in the context of section 254 as a whole. After taking a fresh look at the statutory language, and considering the arguments set forth in the record, however, we conclude that the Commission read the statute too narrowly when it concluded that ETCs are the only class of telecommunications carriers that may receive any credit against their universal service contribution obligations in exchange for serving rural health care providers at discounted rates. The new interpretation we adopt in this Order fully comports with the language and the structure of the statute. 15. Section 254(h)(1)(A) requires that "a telecommunications carrier shall" serve rural health care providers "at rates that are reasonably comparable to rates charged for similar services in urban areas in that State.46 Thus, section 254(h)(1)(A) imposes a service obligation on all telecommunications carriers, not just ETCs. Our rules already reflect this statutory requirement47 Section 254(h)(1)(A) further states that "[a] telecommunications carrier providing service under this paragraph shall be entitled to have an amount equal to the difference, if any," between the urban and rural rates "treated as a part of its obligation to participate in the mechanisms to preserve and advance universal service.48 The Commission initially believed that there is some tension between this statement, which seems to indicate that all carriers providing discounts to rural health care providers are entitled to be credited for those discounts pursuant to the mechanism established by section 254(h)(1)(A), and section 254(e), which limits the payment of specific federal universal service support to ETCs. In the Universal Service Order, the Commission read section 254(e) as the overriding command, thus concluding that only ETCs should "be eligible to receive support" for providing discounted services to rural health care providers49 Upon reexamination, however, we now conclude that all carriers required to provide discounts are also entitled to have these "in kind" contributions recognized as contributions to universal service, and these "in kind" contributions may be used to reduce or otherwise satisfy a carrier's obligation to contribute to universal service. We also conclude that acknowledging a telecommunications carrier's contribution in this fashion is not the same as giving a carrier "specific Federal universal service support," and, therefore, is not a violation of section 254(e). 16. The statute is unambiguous in requiring that all carriers provide discounts to rural health care providers upon request. Some parties apparently believe that only ETCs are required to provide discounts to rural health care providers 50 but that view is contradicted by the clear requirement of section 254(h)(1)(A) that "a telecommunications carrier shall" provide such discounts51 The Commission's original interpretation, we now realize, would lead to the untenable conclusion that, although all carriers must provide discounts, only some of them will have the full value of those discounts recognized as contributions to the preservation and advancement of universal service. 17. The evidence in the record indicating that rural health care providers have had to rely upon non-ETCs for the services that they require highlights this problematic result. For example, OAT notes that in parts of Alaska, Arizona, and the Pacific Basin the carriers designated as ETCs are incapable of providing certain eligible telecommunications services that the health care providers need for the provision of health care services52 Several commenters contend that, in some rural areas, only interexchange carriers, which will not generally be designated as ETCs, are capable of offering advanced services such as T-1 or fractional T-1 bandwidth connections53 These comments emphasize that our existing rules create an anomaly: ETCs are the only carriers that can be credited for serving eligible health care providers at discounted rates, but these carriers often are incapable of providing the services that are "necessary for the provision of health care." 18. We agree with the suggestion of the State of Alaska that the restriction in section 254(e) that limits the receipt of "specific Federal universal service support" to ETCs is distinguishable from the provision in section 254(h)(1)(A)54 Section 254(h)(1)(A) refers not to receipt of support, but to having the amount of the discount "treated as a service obligation." We interpret "treated as a service obligation" to mean that the value of any discount given is treated in the same manner as a cash payment into the universal service fund. In other words, we believe that, pursuant to section 254(h)(1)(A), a carrier may contribute to universal service either in cash or in kind, with the in kind contribution being via the provision of telecommunications services at reduced rates. Accordingly, if a carrier satisfies its obligation to contribute to universal service by providing telecommunications service at the urban rate to a RHCP, crediting the carrier for the full amount of the discount it provides acknowledges this as a form of payment of the carrier's contribution obligation, consistent with section 254(h)(1)(A), as it is not reasonably viewed as giving the carrier "specific Federal universal service support." Viewed in this way, section 254(e) does not prevent a non-ETC from receiving full credit for its compliance with the requirements of the statute. 19. Section 254(h)(1)(A) provides that each carrier "shall be entitled to have an amount Equal to the difference, if any," between the urban and rural rates "treated as a part of its obligation to participate in the mechanisms to preserve and advance universal service.55 Thus, we believe we must ensure that every carrier providing discounted service to RHCPs is in some way given credit for the full value of this contribution to universal service. In order to do this, we conclude that each carrier should first be entitled to an offset against its assessed universal service contribution amount. In the event that the value of its "service obligation" exceeds the amount of its required contribution, we conclude that we should refund the difference to the carrier. Such refunds, as noted above, would satisfy the carrier's entitlement to have the value of the discount treated as a service obligation; it would not constitute the receipt of specific universal service support. Given the specific statutory obligation to provide discounts, coupled with the specific statutory entitlement to have the value of those discounts treated as universal service contributions, we believe that both offsets, and refunds where necessary, are required in order to satisfy the requirements of section 254(h)(1)(A). 20. We recognize, as we did in our earlier order, that section 254(h)(1)(B), which addresses discounts provided to schools and libraries, provides an explicit exemption from section 214(e), while section 254(h)(1)(A) does not. We nevertheless conclude, as discussed above, that no such explicit exemption is necessary in order to implement the offsets and refunds, where necessary, as described above. As to offsets, we note that section 254(h)(1)(B) provides for offsets (which we have always interpreted as applying to all carriers) without providing an exemption from section 214(e), offering further evidence that offsets do not constitute the receipt of specific federal universal service support. As to reimbursement, the schools and libraries provision does provide an exemption from 214(e), which raises the issue of whether refunds to non-ETCs pursuant to the RHCP provisions would require a similar exemption. We conclude, however, that no such exemption is necessary. 21. We note first that sections (A) and (B) differ in their description of how carriers will be credited for their contributions made in the form of discounts. Section (B) refers to reimbursement "utilizing the [universal service] mechanisms," but section (A) contains no parallel language, referring instead to the amount of the discount being "treated as a service obligation." And given the directive that carriers "shall be entitled" to have the amount of discounts treated as a service obligation, we believe that it would contravene the language and intent of the statute to prohibit some non-ETC carriers from receiving full credit for their participation. Refunds in such instances serve effectively as simply a return of overpayment of a carrier's universal service obligation, rather than as receipt of universal service support, making an exception to 254(e) unnecessary. 22. The record supports the conclusion that the Commission's initial interpretation of section 254(h)(1)(A) produces results that are inconsistent with the statutory goals56 It is a well- settled rule of statutory construction that the plain language of a statute must not be applied in a manner that produces results that are inconsistent with the clear intent of Congress57 To the extent that a statutory provision is reasonably subject to more than one interpretation, we must choose the one that produces results most consistent with the underlying statutory purpose. We agree with the parties who argue that it is "counterproductive" to the 1996 Act's goal of competitio58 to permit only ETCs to receive support for serving health care providers59 The Secretary of Health and Human Services previously observed that "[i]f these additional [non- eligible] providers cannot provide discounted service, there will be no price competition in most rural areas.60 USAC and several of the commenters have since documented the lack of significant competition, and the negative impact that it has had on the competitive bidding process and the RHCPs' ability to select the most cost effective method of satisfying their telecommunications service needs61 We concur with the State of Alaska that the effects of our original interpretation have been contrary to Congress's intent "to expand the availability of telemedicine throughout the Nation.62 Accordingly, we conclude that any telecommunications carrier may take advantage of the mechanism found in section 254(h)(1)(A) when it provides telecommunications services at urban rates to health care providers located in rural areas. Our decision today will increase the effectiveness of the competitive bidding process, and assist RHCPs in getting affordable access to modern telecommunications services. As we noted earlier, we are persuaded that the statutory interpretation discussed above is consistent with the language of the statute and achieves the statutory goals of section 254 more completely than did the Commission's initial interpretation. We simply find no sound policy basis to support an interpretation that would obligate all carriers to contribute, yet create arbitrary distinctions between ETCs and non-ETCs, and between those whose contributions are greater or lesser than their obligations, when it comes time to acknowledge those contributions. III. ELIGIBLE TELECOMMUNICATIONS SERVICES 23. It is important to note that we are not, in this Order, altering the scope of services that eligible rural health care providers will be able to purchase at urban rates. We reiterate that interLATA toll charges will not be supported by universal service support mechanisms 63 with the limited exception of the support available pursuant to section 254(h)(2) for toll charges incurred by accessing an Internet service provider64 Although IXCs, which might not be ETCs, can benefit from the service obligation mechanism of section 254(h)(1)(A) when they serve eligible health care providers, we do not expand the category of supported services to include interLATA toll charges65 The distance-based component of services that are supported must be based on a unit of distance, such as mileage-based charges66 no per-minute, interLATA toll charges are supported under section 254(h)(1)(A). Because the rates charged for dedicated connections are generally mileage-based, dedicated connections, such as a dedicated T-1 connection between a rural health care provider and an urban hospital, will be supported. IV. CONCLUSION 24. In this Order we reconsider the Commission's earlier conclusion under section 254, that only carriers that have been certified as ETCs may receive a credit or reimbursement, from the universal service support mechanisms, for providing telecommunications services to rural health care providers. We conclude that a better interpretation is one that permits all telecommunications carriers to be credited for providing telecommunications services at urban rates to rural health care providers, whether or not the carrier has been designated as an ETC. The ETC restriction has limited the benefits available to rural health care providers. Because this rule will relieve rural health care providers of this restriction, it may be made effective in less than 30 days, consistent with 5 U.S.C. section 553(d)67 We also find good cause under section 553(d) to depart from the 30 day requirement, in order to ensure that rural health care providers receive the full benefit of the universal service support mechanism as soon as possible68 Accordingly, the changes adopted in this order shall be effective immediately upon publication in the Federal Register. These rules shall be applied prospectively to all future commitments of support for the benefit of rural health care providers, including all pending requests therefor. V. SUPPLEMENTAL FINAL REGULATORY FLEXIBILITY ANALYSIS 25. In compliance with the Regulatory Flexibility Act (RFA)69 this Supplemental Final Regulatory Flexibility Analysis (SFRFA) supplements the Final Regulatory Flexibility Analysis (FRFA) included in the Universal Service Order70 only to the extent that changes to that Order adopted here on reconsideration require changes in the conclusions reached in the FRFA. As required by section 603 RFA, 5 U.S.C.  603, the FRFA was preceded by an Initial Regulatory Flexibility Analysis (IRFA) incorporated in the Notice of Proposed Rulemaking and Order Establishing the Joint Board (NPRM), and an IRFA, prepared in connection with the Recommended Decision, which sought written public comment on the proposals in the NPRM and the Recommended Decision71 A. Need for and Objectives of this Order. 26. The Commission is required by section 254 of the Communications Act of 1934, as amended by the 1996 Act, to promulgate rules to implement properly the universal service provisions of section 254. On May 8, 1997, the Commission adopted rules whose principle goal is to reform our system of universal service support mechanisms so that universal service is preserved and advanced as markets move toward competition. In this Order, we reconsider one aspect of those rules. In order to permit all telecommunications carriers that provide telecommunications services to health care providers pursuant to section 254(h)(1)(A) to have their contributions treated as part of their obligation to participate in the mechanisms to preserve and advance universal service, we reconsider our initial conclusion that only telecommunications carriers designated as "eligible" pursuant to section 254(e) can receive a credit against their universal service contribution obligation for providing services at lower, urban rates to rural health care providers. B. Summary and Analysis of the Significant Issues Raised by Public Comments in Response to the IRFA. 27. No party commented in response to either IRFA on the issues addressed in this Order. C. Description and Estimates of the Number of Small Entities to Which the Rules Adopted in This Order will Apply. 28. In the FRFA at paragraphs 890-925 of the Universal Service Order, we described and estimated the number of small entities that would be affected by the new universal service rules. The rules adopted herein may apply to the same entities affected by the universal service rules. We therefore incorporate by reference paragraphs 890-925 of the Universal Service Order72 D. Summary Analysis of the Projected Reporting, Record keeping, and Other Compliance Requirements and Significant Alternatives. 29. In the FRFA to the Universal Service Order, we described the projected reporting, Record keeping, and other compliance requirements and significant alternatives associated with the Carrier Eligibility and Health Care Provider sections of the Universal Service Order. Because the rules adopted herein may only affect those requirements in a marginal way, we incorporate by reference paragraphs 938-942 and 968-976 of the Universal Service Order, which describe those requirements and provide the following analysis of the new requirements adopted herein73 30. Under the rules adopted herein, we eliminate the requirement that a telecommunications carrier must be an eligible telecommunications carrier under section 54.201(a)(3) of the Commission's rules in order to receive a credit against its universal service contribution obligation for serving eligible health care providers. This revision will benefit health care providers by expanding the category of telecommunications carriers that can benefit from universal service support mechanisms, and, thus, promote competition among carriers serving eligible health care providers. As a result of this rule change, health care providers are likely to receive multiple bids for the supported services they request through the competitive bid process set forth in section 54.603 of the Commission's rules74 E. Steps Taken to Minimize the Significant Economic Impact on a Substantial Number of Small Entities Consistent with Stated Objectives. 31. In the FRFA to the Universal Service Order, we described the steps taken to minimize the significant economic impact on a substantial number of small entities consistent with stated objectives associated with the Carrier Eligibility and Health Care Provider Sections of the Universal Service Order. Because the rules adopted herein may only affect those requirements in a marginal way, we incorporate by reference paragraphs 938-942 and 968-976 of the Universal Service Order, which describe those requirements and provide the following analysis of the new rules adopted herein. 32. As described above, our decision to modify our rules to permit all telecommunications carriers that service eligible health care providers pursuant to section 254(h)(1)(A) of the Act and sections 54.601-54.625 of the Commission's rules will promote competition among telecommunications carriers serving eligible health care providers and, thus, will offer health care providers, which are likely to be small entities, the services they require for the provision of health care services. VI. ORDERING CLAUSES 33. IT IS ORDERED that, pursuant to the authority contained in sections 1-4, 10, 201- 202, 214, 220, and 254 of the Communications Act of 1934, as amended, 47 U.S.C.  151-154, 160, 201-202, 214, 220 and 254, and sections 1.3 and 1.103 of the Commission's rules, 47 C.F.R.  1.3 and 1.103, this ORDER is ADOPTED. The requirements adopted in this ORDER shall be effective immediately upon publication in the Federal Register. They shall be applied prospectively to all future commitments of support for the benefit of rural health care providers, including all pending applications. 34. IT IS FURTHER ORDERED that, pursuant to the authority contained in sections 1- 4, 10, 201-202, 214, 220, and 254 of the Communications Act of 1934, as amended, 47 U.S.C.  151-154, 160, 201-202, 214, 220 and 254, and section 1.103 of the Commission's rules, 47 C.F.R.  1.103, that Part 54 of the Commission's rules, 47 C.F.R. IS AMENDED as set forth in Appendix A attached hereto. 35. IT IS FURTHER ORDERED that the rule changes set forth in Appendix A ARE EFFECTIVE immediately upon publication in the Federal Register. The rule changes adopted here will be applied prospectively to all future commitments of support for the benefit of rural health care providers, including all pending applications. FEDERAL COMMUNICATIONS COMMISSION Magalie Roman Salas Secretary Appendix A -- RULE CHANGES Part 54 of Title 47 of the Code of Federal Regulations is amended as follows: Part 54 -- UNIVERSAL SERVICE 1. The authority for part 54 continues to read as follows: Authority: 47 USC Secs. 1, 4(i), 201, 205, 214, and 254 unless otherwise noted.  54.201 Definition of eligible telecommunications carriers, generally. 2. Amend section 54.201(a) by revising section 54.201(a)(3) to read as follows: (a) * * * (1) * * * (2) * * * (3) This paragraph does not apply to offset or reimbursement support distributed pursuant to subpart G of this part. (4) * * * * * * * *  54.621 Access to advanced telecommunications and information services. 3. Amend section 54.621 by removing paragraph 54.621(b) and redesignating paragraph 54.621(a) as 54.621 to read as follows:  54.621 Access to advanced telecommunications and information services. Each eligible health care provider that cannot obtain toll-free access to an Internet service provider shall be entitled to receive the lesser of the toll charges incurred for 30 hours of access per month to an Internet service provider or $180 per month in toll charge credits for toll charges imposed for connecting to an Internet service provider. Appendix B -- PARTIES FILING IN RESPONSE TO PETITIONS FOR RECONSIDERATION OF ELIGIBILITY OF TELECOMMUNICATIONS CARRIERS SERVING HEALTH CARE PROVIDERS FILED BY GENERAL COMMUNICATIONS, INC. AND THE ALASKA PUBLIC UTILITY COMMISSION (includes only those parties who referred to this issue) (JULY 19, 1997 PUBLIC NOTICE) CC Docket No. 96-45 Report No. 2212 Party Document Filed State of Alaska Consolidated Opposition to and Comments of the State of Alaska on Petitions for Reconsideration General Communications, Inc. Comments of General Communications, Inc. on the Petitions for Reconsideration Reply of General Communications, Inc. GE American Communications, Inc. GE American Communications, Inc. Reply to Comments on Petitions for Clarification or Reconsideration Appendix C -- PARTIES FILING COMMENTS ON ELIGIBILITY OF TELECOMMUNICATIONS CARRIERS SERVING HEALTH CARE PROVIDERS IN RECORD COMPILED FOR REPORT TO CONGRESS ON UNIVERSAL SERVICE (includes only those parties who addressed this issue) (JANUARY 5, 1998 PUBLIC NOTICE) CC Docket No. 96-45 DA 98-2 Party Document Filed Missouri Public Service Commission Initial Comments of the Missouri Public Service Commission on Universal Service Nebraska Public Service Commission Comments by Nebraska Public Service Commission Arizona Corporation Commission Reply Comments of the Arizona Corporation Commission State Members of the Federal-State Joint Board on Universal Service Comments of the State Members of the  254 Federal-State Joint Board on Universal Service Appendix D -- PARTIES FILING COMMENTS AND REPLY COMMENTS IN RESPONSE TO UNIVERSAL SERVICE ADMINISTRATIVE COMPANY REPORT TO THE FCC: EVALUATION OF THE RURAL HEALTH CARE PROGRAM (includes only those parties who referred to this issue) (MARCH 17, 1999 PUBLIC NOTICE) CC Docket Nos. 96-45 and 97-21 DA 99-521 Party Document Filed Office for the Advancement of Teleheath, Health Resources Administration, HHS Letter to William E. Kennard, Chairman, Federal Communications Commission dated April 1, 1999 United States Telephone Association Comments of the United States Telephone Association Rural Utilities Service Reply Comments of the Rural Utilities Service SEPARATE STATEMENT OF COMMISSIONER SUSAN NESS Re: Changes to the Board of Directors of the National Exchange Carrier Association, Inc.; Federal-State Joint Board on Universal Service (CC Docket No. 96-45) I support today's decision to adopt modifications to the rural health care support mechanism that will streamline administrative processes and enhance the overall program. I care deeply about the success of the rural health care program and have been concerned that our efforts have thus far not been as fruitful as they could have been. We need to do more to ensure that the universal service provisions of the Telecommunications Act are implemented as Congress envisioned. More specifically, we need to ensure that our rural areas -- in this instance rural health care providers -- have access to telecommunications services "at rates that are reasonably comparable to rates charged for similar services in urban areas." With respect to the companion order on eligible telecommunications carriers (ETCs), I support the Commission's decision to reconsider the ETC requirement. Based on comments filed in this proceeding, it is clear to me that the ETC requirement we adopted previously created significant barriers for the rural health care providers that were meant to benefit under the program. Although our earlier decision reflected a prudent approach based on our knowledge at that time, I believe that the expanded interpretation of the rural health care provisions is supported by the statutory language and reflects policy determinations that will better effectuate the goals of the 1996 Act. For these reasons, I vote in favor of both reconsideration orders, and I am optimistic that our actions today will infuse new life into the rural health care program. SEPARATE STATEMENT OF COMMISSIONER HAROLD FURCHTGOTT-ROTH CONCURRING IN PART AND DISSENTING IN PART Re: Federal-State Joint Board on Universal Service, CC Docket No. 96-45 I agree with the Commission's conclusion that a telecommunications carrier is entitled to have the value of the discounts that it offers to rural health care providers pursuant to section 254(h)(1)(A) treated as an offset to its obligation to contribute to universal service support mechanisms. I cannot, however, endorse the Commission's decision to permit a telecommunications carrier to obtain a refund of the amount by which the value of these services may exceed the carrier's universal service support obligation, regardless of whether that carrier is also an eligible telecommunications carrier under section 214(e). This construction of the statute is inconsistent with the plain language of sections 254(e) and 254(h)(1). Congress drew a distinction between permitting a telecommunications carrier to offset the discounts it might offer under section 254(h) against its universal service contribution, on the one hand, and allowing a carrier to be reimbursed directly from the universal service support fund, on the other. A telecommunications carrier may, without regard to section 254(e) or its eligibility under section 214(e), offset the value of the discount it offers under section 254(h) against its universal service obligation. But with respect to direct reimbursements, Congress clearly intended that -- unless the statute provides explicitly to the contrary -- "only an eligible telecommunications carrier designated under section 214(e) shall be eligible to receive specific Federal universal service support." Section 254(h)(1)(B) exemplifies this legislative intent. Under this provision, a carrier may elect to have the discount it offers to schools and libraries treated as an offset to its universal service obligation, or it may, "notwithstanding the provisions of [section 254(e)]," choose to "receive reimbursement utilizing the support mechanisms to preserve and advance universal service." Taken together, sections 254(e) and 254(h)(1)(B) compel the conclusion that a carrier may receive a disbursement from the universal service support mechanism only if permitted by section 254(e) or if the statute explicitly excuses the carrier from section 254(e)'s requirements. Section 254(h)(1)(A) provides that a telecommunications carrier that offers discounted services to rural health care providers may have that discount "treated as a service obligation as a part of its obligation to participate in the mechanisms to preserve and advance universal service." Section 254(h)(1)(A) does not exempt carriers from section 254(e)'s requirements -- indeed, it does not even mention the provision. In light of the statutory distinction drawn in section 254(h)(1)(B), the omission cannot be deemed an oversight. Congress quite plainly did not intend for ineligible carriers to receive reimbursement directly from the universal service support fund for the discounts those carriers may offer to rural health care providers. The language that Congress used to describe the treatment of the discount that a telecommunications carrier offers to rural health care providers reinforces this conclusion. Specifically, the provision states that the discount may be treated as "part of" the carrier's universal service obligation, indicating that Congress intended only to permit ineligible carriers to use the discount partially to offset their universal service support obligations, not as a means directly to obtain universal service funding. The Commission acknowledges that "section 254(h)(1)(B) . . . provides an explicit exemption from section 214(e), while section 254(h)(1)(A) does not." But it reasons that refunds under section 254(h)(1)(A) "serve effectively as simply a refund for overpayment of a carrier's universal service obligation, rather than as receipt of universal service support." If this were the case, however, it would not have been necessary for section 254(h)(1)(B) expressly to exempt carriers from section 254(e)'s requirements in order to permit them to receive disbursement from universal service support funds. Sections 254(e) and 254(h)(1)(B) make clear that only those telecommunications carriers that meet section 214(e)'s requirements are entitled to receive reimbursement from the universal service support mechanism, unless the statute explicitly exempts ineligible carriers from section 254(e)'s requirements. Section 254(h)(1)(A) contains no such express exemption. I therefore respectfully dissent from the Commission's conclusion that a telecommunications carrier that is ineligible to receive universal service funding under section 254(e) may nevertheless receive reimbursement for the amount by which the value of the discount that it offers rural health care providers exceeds that carrier's universal service support obligation.