Federal Communications Commission DA 08-1192
Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of
Federal-State Joint Board on Universal Service
Changes to the Board of Directors for the National 
Exchange Carrier Association, Inc.
Nominations for Two Board Member Positions on 
the Universal Service Administrative Company 
Board of Directors
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CC Docket No. 96-45
CC Docket No. 97-21
ORDER
Adopted: May 20, 2008  Released: May 20, 2008
By the Chief, Wireline Competition Bureau:
I. INTRODUCTION
1. In this order, we waive on our own motion1 sections 54.702(b)(1) and 54.703(c) of the 
Commission’s rules that specify that one member of the Universal Service Administrative Company 
(USAC) Board of Director’s shall be nominated by and shall represent “interexchange carriers with more 
than $3 billion in annual operating revenues.”2 For the reasons described below, we find good cause 
exists to waive these rules to enable the Chairman of the Commission to designate a member USAC 
Board of Directors for the seat from an interexchange carrier (IXC), regardless of its annual operating 
revenues.3  
2. In 1997, the Commission established the initial composition of the USAC Board of 
Directors.4 The Commission required that the board be comprised of “17 directors that will represent a 
cross-section of industry and beneficiary interests.”5 In particular, the Commission allocated two of the 
17 seats on the USAC Board of Directors to IXC representatives, with one seat representing IXCs with 
more than $3 billion in annual operating revenues and one seat representing IXCs with less than $3 billion 
  
1 See 47 C.F.R. § 1.3.
2 See 47 C.F.R. §§ 54.703(b)(1), (c).
3 This order does not affect the allocation of a seat on USAC Board of Directors for an IXC with less than $3 billion 
in annual operating revenues.  See id.
4 Federal-State Joint Board on Universal Service; Changes to the Board of Directors of the National Exchange 
Carrier Association, CC Docket Nos. 96-45, 97-21, Report and Order and Second Order on Reconsideration, 12 
FCC Rcd 18400, 18420-23, paras. 33-40 (1997) (Second Order on Reconsideration).
5 Id. at para. 33.
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in annual operating revenues.6 In determining the composition of the USAC Board of Directors, the 
Commission’s “objective [was] to enable USAC’s Board to achieve a balance of broad industry and 
beneficiary representation and administrative efficiency so that the Board can implement the [universal 
service fund mechanisms] in a neutral and efficient manner.”7 In addition, the Commission determined 
that a board of at least this size was necessary “to assure balanced representation of both industry and 
beneficiary interests.”8 In 1998, the Commission increased the minimum size of the USAC Board of 
Directors from 17 to 19 members.9
3. The Commission’s rules require that the relevant industry or non-industry groups represented 
on the USAC Board of Directors submit nominations to the Commission for their respective board seats.10  
These rules further require that “[t]he Chairman of the Federal Communications Commission shall review 
the nominations submitted by industry and non-industry groups and select each direct of the [USAC] 
Board of Directors.”11
4. The Commission’s rules regarding the composition of, and the process for appointment to, 
the USAC Board of Directors have remained in place since 1998.  The Commission, however, is 
presently considering whether to make changes in the composition of the USAC Board of Directors.  
Specifically, in 2005, the Commission sought comment “on whether the current board composition results 
in effective, efficient, and competitively neutral management of [the universal service fund].”12
5. On March 24, 2008, the Commission’s Office of the Managing Director released a Public 
Notice seeking nominations for two USAC Board of Director members, one for competitive local 
exchange carriers and one for IXCs (other than Bell Operating Companies) with more than $3 billion in 
annual operating revenues.13 The IXC board seat is currently vacant.14 On April 23, 2008, XO 
Communications (XO) submitted the nomination of Rex Knowles for the vacant IXC seat.15 Although 
XO is an IXC, its annual operating revenues appear to be less than $3 billion.16 For the reasons described 
below, we find good cause to waive sections 54.703(b)(1) and 54.703(c) of the Commission’s rules so 
  
6 Id. at para. 35.
7 Id. at para. 34.
8 Id.
9 Federal-State Joint Board on Universal Service; Changes to the Board of Directors of the National Exchange 
Carrier Association, CC Docket Nos. 96-45, 97-21, Third Report and Order in CC Docket No. 97-21, Fourth Order 
on Reconsideration in CC Docket No. 97-21, and Eighth Order on Reconsideration in CC Docket No. 96-45, 13 
FCC Rcd 25058, 25071-74, paras. 22-29 (1998) (USAC Appointment Order) (adding a second board member 
representing rural health care providers and a seat on the board for the USAC Chief Executive Officer); see 47 
C.R.R. § 54.703(b).
10 47 C.F.R. § 54.703(c)(1); Second Reconsideration Order, 12 FCC Rcd at 18423-24, para. 38.
11 47 C.F.R. § 54.703(c)(3); Second Reconsideration Order, 12 FCC Rcd at 18424, para. 39.
12 Comprehensive Review of Universal Service Fund Management, Administration, and Oversight, WC Docket Nos. 
05-195, 03-109, 02-60, CC Docket Nos. 02-6, 97-21, 96-45, Notice of Proposed Rulemaking and Further Notice of 
Proposed Rulemaking, 20 FCC Rcd 11308, 11315-16, at para. 15 (1995) (Comprehensive Review Notice). 
13 The Office of Managing Director Seeks Nominations for Two Board Member Positions on the Universal Service 
Administrative Company Board of Directors, CC Docket Nos. 96-45, 97-21, Public Notice, 23 FCC Rcd 4919 
(2008).
14 See id.
15 Letter from Heather Burnett Gold, Senior Vice President, External Affairs, XO Communications, to Daniel 
Gonzalez, Chief of Staff, Office of the Chairman, FCC, CC Docket Nos. 96-45, 97-21 (filed Apr. 23, 2008).
16 See XO Holdings Inc., 2007 Annual Report, at F-3 (filed Mar. 17, 2008), available at 
http://www.xo.com/SiteCollectionDocuments/about-xo/investor-relations/Annual_Reports/10-
K_2008_03_17_FY2007.pdf. 
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that the Chairman may consider the nomination of Rex Knowles for the vacant non-Bell Operating 
Company IXC board seat.
II. DISCUSSION
6. On our own motion, we find that there is good cause to waive sections 54.703(b)(1) and 
54.703(c) of the Commission’s rules to the extent described below.17 Waiver of these rules will further 
the goals of universal service by enabling the Chairman of the Commission to designate members of the 
USAC Board of Directors in a manner that meets the Commission’s stated objective of best reflecting a 
cross-section of the communications industry (as well as non-industry), while recognizing that this 
industry has changed since the Commission determined the current composition of the Board.18  
7. Because of significant changes in the communications marketplace and, in particular, to the 
IXC marketplace since the Commission adopted the current structure for the USAC Board of Directors in 
1997, we find it in the public interest to waive the requirements that one member of the Board be 
nominated by and represent an interexchange carrier that has in excess of $3 billion in annual operating 
revenues.  Notably, the three largest IXCs in 1997 and 1998 when the current rules were established, 
AT&T, MCI, and Sprint, now operate extensively in different lines of business that would have different 
representation on the USAC Board of Directors.  For example, AT&T and MCI from the late 1990s are 
now part of the two largest Bell Operating Companies (AT&T and Verizon), which have their own seats 
on the USAC Board of Directors.  Indeed, today the Bell Operating Company representative on the 
USAC Board of Directors is an AT&T employee.  In addition, Sprint, another of the three largest IXCs 
from the time the rules were established, is a wireless provider today. With the largest IXCs from the 
period when the current board configuration was established now operating significant lines of business 
other than IXCs, we find it appropriate and in the public interest to waive the $3 billion revenue threshold 
for the vacant seat on the USAC Board of Directors that is currently allocated to IXCs.  In so doing, the 
Chairman will be able to consider the full panoply of qualified IXC nominees for the USAC Board of 
Directors.19
8. Finally, in light of the changes in the configuration of the communications market discussed 
in this order and otherwise, we encourage interested parties to update the record in the Comprehensive 
Review Notice with regard to whether the Commission should modify its rules regarding the composition 
of the USAC Board of Directors to better ensure “the effective, efficient, and competitively neutral 
management of the [universal service fund].”20
III. ORDERING CLAUSES
9. Accordingly, IT IS ORDERED, pursuant to sections 1, 4(i), 5(c), and 254 of the 
Communications Act of 1934, as amended, 47 U.S.C. §§ 151, 154(i), 155(c), 214, and 254, and sections 
0.91, 0.291, and 1.3 of the Commission’s rules, 47 C.F.R. §§ 0.91, 0.291, and 1.3, that sections 
54.703(b)(1) and 54.703(c), 47 C.F.R. §§ 54.703(b)(1), (c) ARE WAIVED to the extent described herein. 
  
17 The Commission may waive any provision of its rules on its own motion and for good cause shown.  47 C.F.R. § 
1.3.  The Commission may exercise its discretion to waive a rule where the particular facts make strict compliance 
inconsistent with the public interest.  Northeast Cellular Telephone Co. v. FCC, 897 F.2d 1164, 1166 (D.C. Cir. 
1990) (Northeast Cellular).  In addition, the Commission may take into account considerations of hardship, equity, 
or more effective implementation of overall policy on an individual basis. WAIT Radio v. FCC, 418 F.2d 1153, 
1159 (D.C. Cir. 1969); Northeast Cellular, 897 F.2d at 1166.  Waiver of the Commission’s rules is therefore 
appropriate only if special circumstances warrant a deviation from the general rule, and such deviation will serve the 
public interest.  Northeast Cellular, 897 F.2d at 1166.  
18 See USAC Appointment Order, 13 FCC Rcd at 25071-74, paras. 22-29 (1998) (USAC Appointment Order).
19 See 47 C.F.R. § 54.703(c)(3).
20 See Comprehensive Review NPRM, 20 FCC Rcd at 11315-16, para. 15.
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10. IT IS FURTHER ORDERED that, pursuant to sections 0.91, 0.291 and 1.102 of the 
Commission’s rules, 47 C.F.R. §§ 0.91, 0.291, 1.102, this Order SHALL BE EFFECTIVE upon release.
FEDERAL COMMUNICATIONS COMMISSION
Dana R. Shaffer
Chief
Wireline Competition Bureau