Request for Review of Decisions of the Universal Service Administrator by



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Federal Communications Commission DA 12-788


Before the

Federal Communications Commission

Washington, DC 20554

In the Matter of )

)

Request for Review of Decisions of the )



Universal Service Administrator by )

)

Iowa Department of Education )



Des Moines, Iowa )

)

Adair-Casey Community School District, et al. ) File Nos. SLD-108160, et al.



Adair, Iowa )

)

Schools and Libraries Universal Service ) CC Docket No. 02-6



Support Mechanism )


order

Adopted: August 21, 2012 Released: August 21, 2012
By the Chief, Telecommunications Access Policy Division, Wireline Competition Bureau:

INTRODUCTION


1.In this Order, we grant the appeal by the Iowa Department of Education (Iowa DOE) of decisions of the Universal Service Administrative Company (USAC) denying funding under the E-rate program (more formally known as the schools and libraries universal service support mechanism) for telecommunications services provided by the Iowa Communications Network (ICN).1 As discussed in more detail below, we conclude that USAC can provide E-rate support for telecommunications services provided by ICN for funding years 1998, 1999 and 2000, so long as other requirements for funding are met, and we waive the appeal deadline applicable to the appeal filed on behalf of the applicants listed in the Appendices.

BACKGROUND


2.To be eligible for support from the E-rate program, telecommunications services must be provided to eligible applicants by a telecommunications carrier, defined as a provider of telecommunications services.2 A telecommunications service is “the offering of telecommunications for a fee directly to the public, or to such classes of users as to be effectively available directly to the public….”3 The term “telecommunications carrier” includes only entities that offer telecommunications on a common carriage basis.4

3.In February 1998, the Iowa Telecommunications and Technology Commission (ITTC), ICN’s operator, filed a petition with the Commission seeking a declaratory ruling that ICN was a telecommunications carrier eligible to receive direct reimbursement as a provider of telecommunications services to schools, libraries and rural health care providers.5 Meanwhile, many schools and libraries in Iowa sought E-rate discounts on telecommunications services to be provided by ICN.6 In January 1999, the Commission denied the ICN Petition and found that ICN was not a telecommunications carrier.7 Pursuant to the ICN Declaratory Ruling, USAC subsequently denied funding requests filed by the schools and libraries served by ICN for funding years 1998, 1999 and 2000.8 The Iowa DOE, on behalf of Iowa schools, and the State Library of Iowa appealed to USAC the decision to deny funding for Iowa school and library applicants that selected ICN as their service provider.9

4.Separately, ICN sought judicial review of the ICN Declaratory Ruling. In 2000, the United States Court of Appeals for the District of Columbia remanded the issue to the Commission for further consideration.10 In December 2000, on remand, the Commission reversed its decision in the ICN Declaratory Ruling and concluded that ICN was a telecommunications carrier for purposes of the Telecommunications Act of 1996 and therefore eligible to receive direct reimbursement from the E-rate program for discounted telecommunications services.11

5.In November 2001, with the exception of 13 appeals, USAC denied the appeals it had received on behalf of the affected Iowa schools and libraries because those appeals had not been filed with USAC within 30 days following the date the funding requests had been denied.12 One month later, the Iowa DOE asked the Commission to review the USAC denial.13


DISCUSSION


6.In this order, we grant Iowa DOE’s Request for Review and waive the 30-day appeal deadline applicable to the appeal filed on behalf of the applicants listed in the Appendices. We also find that USAC can fund E-rate support for telecommunications services provided by ICN for the funding years 1998, 1999 and 2000.

7.First, we grant a waiver of the Commission’s deadline for appeals applicable at the time the appeals at issue here were filed.14 USAC denied the ICN applicant appeals because it determined that these appeals had not been filed before the 30-day deadline.15 Waivers may be granted where applicants demonstrate good cause and where shown to be in the public interest.16 The records provided by Iowa DOE provide ample evidence that the failure to file a timely appeal was due to extraordinary circumstances, including the pending litigation leading up to the D.C. Circuit Remand.17 We find that the situation faced by Iowa DOE was both limited and compelling, and the totality of these circumstances provides a basis for granting a waiver for good cause.

8.On the merits, we find that ICN is eligible to receive USF funding for funding years 1998, 1999 and 2000, so long as other program requirements are met. In the Order on Remand, released on December 26, 2000, the Commission determined that ICN is a telecommunications carrier,18 and thus could receive direct reimbursement for the provision of discounted telecommunications services to schools and libraries.19 Although the Commission stated USAC could provide ICN direct reimbursements on a “prospective basis,” we conclude that this language was not intended to foreclose applicants from receiving E-rate discounts for services provided by ICN for funding years 1998, 1999 and 2000. First, in the Order on Remand, the Commission was focused on addressing the issues remanded by the D.C. Circuit – whether ICN properly could be classified as a common carrier. The decision made no reference to any pending applications for E-rate funds for telecommunications services provided by ICN in funding years 1998-2000, and there is no indication the Commission was aware of these applications. Second, the Commission directed USAC to provide reimbursements to ICN “in the event ICN provides supported telecommunications to eligible schools and libraries.”20 This further demonstrates that the schools and libraries that had sought E-rate funds for telecommunications services provided by ICN in funding years 1998-2000 were not considered by the Commission when it issued the Order on Remand. Indeed, the Request for Review was not before the Commission until a year after the Order on Remand. USAC denied all but 13 of the underlying funding requests on November 28, 2001, and the Iowa DOE sought review of this decision in December 2001.21

9.Moreover, there is no evidence that ICN’s status as a telecommunications carrier changed from the time it began providing telecommunications services to the applicants listed in the Appendices and the Commission’s Order on Remand. In the Order on Remand, the Commission notes that ICN was created prior to the start of the E-rate program in 1998 for the purposes of providing high-speed telecommunications services in the state of Iowa to state users including K-12 school districts, public libraries and other state agencies.22 Furthermore, in explaining its determination that ICN is a telecommunications carrier, the Commission stated that the fact that ICN was created prior to the beginning of the E-rate program is “evidence that ICN was not created for such a limited purpose as to be inconsistent with common carriage.”23 Because ICN was a telecommunications carrier providing telecommunications services prior to 1998, it was eligible to provide telecommunications services to the applicants listed in the Appendices when they requested E-rate support for telecommunications services provided by ICN in 1998, and the following years in question. Therefore, we find that the Commission’s decision in the Order on Remand that ICN was a telecommunications carrier should apply retroactively to funding years 1998 through 2000 because the decision was not based on new facts at that time, and adjudicatory rulings are presumptively retroactive.24 Furthermore, the Order on Remand lacks any analysis of why retroactive application of the determination that ICN is a telecommunications carrier would impose manifest injustice.25 The absence of any such analysis reinforces the conclusion that the Commission's reference to providing reimbursements on a prospective basis was not intended to preclude retroactive application of the classification decision to earlier periods.

10.We therefore grant the Request for Review and remand the underlying applications in the Appendices to USAC for further action consistent with this order. On our own motion, we waive any Commission rules and direct USAC to waive any procedural deadlines, such as the invoicing deadline, that might be necessary to effectuate our ruling, given the length of time that has passed since these applications were denied. To ensure that the underlying applications are resolved expeditiously, we direct USAC to complete its review and issue an award or a denial based on a complete review and analysis no later than 120 calendar days from the release date of this order. In this remand to USAC, we make no finding as to the ultimate eligibility of the petitioners’ applications. At this time, there is no evidence of waste, fraud or abuse in the record.




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