Federal Communications Commission DA 11-1835
Before the
Federal Communications Commission
Washington, DC 20554
In the Matter of
Requests for Review of
Decisions of the
Universal Service Administrator by
Lower Merion School District
Ardmore, Peimsylvania
File No. SLD-42 1438
Bethel School District
Spanaway, Washington
Tuslaw Local School District
Massillon, Ohio
Independent School District of Boise City
Boise, Idaho
Schools and Libraries Universal Service
Support Mechanism
File No. SLD-459587
File No. SLD-399944
File No. SLD-4 10686
CC Docket No. 02-6
ORDER
Adopted: November 1, 2011 Released: November 1, 2011
By the Deputy Chief, Telecommunications Access Policy Division, Wireline Competition Bureau:
1. We grant the appeals filed by Lower Merion School District (Lower Merion), the Bethel
School District (Bethel), and Tuslaw School District (Tuslaw) of decisions of the Universal Service
Administrative Company (USAC) for funding years 2004 and 2005, denying funding under the E-rate
program (more formally known as the schools and libraries universal service program).1 These applicants
were denied funding because USAC determined that they sought E-rate funding for dark fiber when dark
fiber was not an eligible service. Consistent with the Commission's Third Report and Order, and based
on our review of the records for these appeals, we find that these petitioners have demonstrated that they
Letter from Christopher Stoffere, Lower Merion School District, to Office of the Secretary, Federal
Communications Commission, CC Docket No. 02-6 (filed Nov. 14, 2005) (Lower Merion Request for Review);
Letter from J.B. Fitzpatrick, Bethel School District, to Federal Communications Commission, CC Docket No. 02-6
(filed Sept. 7, 2006) (Bethel Request for Review); Letter from Linda Schreckinger Sadler, on behalf of Tuslaw
Local School District, to Office of the Secretary, Federal Communications Commission, CC Docket No. 02-6 (filed
Apr. 22, 2005) (Tuslaw Request for Review). Section 54.719(c) of our rules provides that any person aggrieved by
an action taken by a division of USAC may seek review from the Commission. 47 C.F.R. § 54.7 19(c).
Federal Communications Commission DA 11-1835
may have sought funding for lit fiber.2 We grant these appeals and remand the underlying applications to
USAC for further action consistent with this order. We also deny the appeal filed by the Independent
School District of Boise City (Boise ISD).3
2. Dark fiber was eligible for E-rate funding prior to 2004. Recently, the Sixth Report and
Order reinstated dark fiber as a service eligible for E-rate support.5 For the period between funding year
2004 through funding year 2011, however, schools and libraries were permitted to receive support for
services using fiber but only if the fiber was lit. Schools and libraries were required to purchase a
functioning service from either a telecommunications service provider or Internet access provider, which
in turn was responsible for providing both the fiber and the equipment to light the fiber.6 The Third
Report and Order clarified that, in cases in which a school or library had previously purchased equipment
to light fiber, the school or library was permitted to trade in such equipment to the service provider and
lease it back.7
3. We determine that good cause exists to grant and remand these appeals. First, we find
that Lower Merion properly converted its agreement for dark fiber with its service provider to an
agreement for lit fiber through a minor contract modification and transfer of equipment, consistent with
2 See, e.g., Schools and Libraries Universal Service Support Mechanism, CC Docket No. 02-6, Third Report and
Order and Second Further Notice of Proposed Rulemaking, 18 FCC Rcd 26912, 26934, paras. 76-77 (2003) (Third
Report and Order).
Letter from Jim Marconi, The Independent School District of Boise City, to Office of the Secretary, Federal
Communications Commission, CC Docket No. 02-6 (filed Sept. 7, 2005) (Boise ISD Request for Review).
The Eligible Services List (ESL) for funding year 2003 stated that "[s]ervice providers can lease fiber capacity that
does not include modulating electronics to schools and libraries, if the applicant provides the electronics to modulate
the fiber." See Eligible Services List of the Schools and Libraries Support Mechanism (dated Oct. 18, 2002) at 33,
http://www.usac.org/ res/documents/sllpdf'ESLarchive/EligibleServicesList 101 802.pdf (last visited Oct. 20,
2011). The ESL for funding year 2004 stated that "[t]he FCC has not resolved whether unlit dark fiber is a
telecommunications service. Pending resolution of this issue, it is not eligible for funding." See Eligible Services
List of the Schools and Libraries Support Mechanism (dated Oct. 10, 2003) at 30,
http://www.usac.org/ res/documents/sl/pdfYESL archive/EligibleServicesList 101003 .pdf (last visited Oct. 20,
2011). See also Third Report and Order, 18 FCC Rcd at 26934, paras. 76-77.
See Schools and Libraries Universal Service Support Mechanism, A National Broadband Plan for Our Future, CC
DocketNo. 02-6, GN DocketNo. 09-51, Sixth Report and Order, 25 FCC Rcd 18762, 18766-18773, paras. 9-19
(2010) (Sixth Report and Order).
6 See Third Report and Order, 18 FCC Rcd at 26934, para. 76.
See Third Report and Order, 18 FCC Rcd at 26934, para. 76, n.155. To the extent that a contract modification was
necessary to achieve this transaction, such a contract modification was deemed a minor contract modification under
section 54.500(g) of the Commission's rules if this was within the scope of the original contract and the change had
no effect or had a negligible effect on price, quantity, quality, or delivery under the original contract. Id. For
example, such a change could fit within the minor contract modification rule if the original contract was for the
provision of high bandwidth transmission capability. Id.
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Federal Communications Commission DA 11-1835
the requirements of the Third Report and Order.8 We direct USAC to accept Lower Merion's contract
modification and reconsider Lower Merion's application for funding.9
4. Second, we find that Bethel and Tuslaw sought funding for lit fiber, not dark fiber, from
their service providers.10 In Bethel's appeal, it claims that it was not requesting dark fiber in its FCC
Form 471, but was requesting a leased wide area network (WAN). Bethel supports this claim with
documents demonstrating that its service provider in 2005 provided an internet connection to transport
voice and data services using fiber. Bethel also attaches its service provider's invoice from October 2005,
which describes the provided service as "WAN Transport - Monthly Lease."1 USAC denied funding
because Bethel mistakenly included outdated invoices for dark fiber in its application for funding year
2005, when its other documentation for funding year 2005 supports Bethel's claim that it sought funding
for a leased WAN. We grant Bethel's appeal because the record reflects that Bethel inadvertently
attached to its funding year 2005 E-rate application outdated invoices reflecting dark fiber services from
2004, which led to the funding denials for funding year 2005.12 We also grant Tuslaw's appeal. Tuslaw
claims that the use of the term "dark fiber" in its E-rate application was in error and that it received a lit
fiber service for Internet access during the time period in question.13 In support of this claim, it has
submitted a copy of its contract with its service provider which states that Tuslaw's service provider is
activating fiber at four of the Tuslaw School District school buildings.'4 Therefore, we remand the
81d On appeal to USAC and the Commission, Lower Merion submitted documentation to show that it had
converted its agreement with Sunesys prior to funding year 2004. Lower Merion Request for Review at 4; see also
Letter from Christopher Stoffere, Lower Merion School District, to Schools and Libraries Division, Universal
Service Administrative Company (filed June 15, 2005).
We also grant a waiver to Lower Merion because it missed the deadline for filing its appeal with the Commission
by three days. Section 54.720 of the Commission's rules provides parties with 60 days to appeal a decision by
USAC to either USAC or the Commission. 47 C.F.R. § 54.720. The Commission may waive any provision of its
rules on its own motion and for good cause shown. 47 C.F.R. § 1.3. A rule may be waived 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, 1157, (D.C. Cir. 1969), aff'd, 459 F.2d 1203 (D.C. Cir. 1972). In sum, waiver is
appropriate if special circumstances warrant a deviation from the general rule, and such deviation would better serve
the public interest than strict adherence to the general rule. Northeast Cellular, 897 F.2d at 1166; Network IP v.
FCC, 548 F.3d 116, 127-28 (D.C. Cir. 2008). Accord, NetworklP, LLCv. FCC, 548 F.3d 116, 127 (D.C. Cir.
2008). We find that good cause exists to justify a waiver of the filing deadline in section 54.720 of the
Commission's rules. 47 C.F.R. § 54.720.
'° Although USAC denied Bethel's appeal for missing the deadline for appeals, Bethel claims in its appeal to the
Commission, that despite multiple efforts, it did not obtain a copy of the Funding Commitment Decision Letter
denying its request for funding until 4 months after it had been issued. Bethel Request for Review at 1. Therefore,
as with Lower Merion, we find good cause to grant Bethel a waiver of the filing deadline in section 54.720 of the
Commission's rules. See supra note 9.
"See Web Appeal from J.B. Fitzpatrick, Bethel School District, to Schools and Libraries Division, Universal
Service Administrative Company (dated June 15, 2006) (Bethel SLD Appeal); see also Bethel Request for Review,
Attachment.
12 See, e.g., Bethel School District Funding Year 2005, FCC Form 471, Attachment: YR8-B2.16a, FRN 1278066,
Bethel School District Invoice Oct. 5, 2004 - Oct. 20, 2004.
13 See Tuslaw Request for Review at 3-4.
14 See Letter from Linda Schreckinger Sadler, Counsel for Tuslaw School District, to Cara Voth, Attorney Advisor,
Federal Communications Commission, dated July 16, 2008.
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Federal Communications Commission DA 11-1835
underlying applications for these appeals to USAC to conduct additional review or process the
applications in accordance with our findings within 90 calendar days from the release of this order.'5
5. We deny Boise ISD ' s appeal because it does not dispute that it received dark fiber from
its service provider for funding year 2004 when dark fiber was not an eligible service. Boise ISD states
that it chose dark fiber because it was the most cost-effective solution offered by its service provider.'6
While this may have been the most cost-effective solution for Boise ISD, we are unable to grant this
appeal to provide funding for an ineligible service just because it is cost-effective. Although we
encourage applicants in the E-rate program to choose services and products that are cost-effective,'7 the
service or product must be an eligible service or product in order to qualify for funding and in funding
year 2004, dark fiber was not eligible for E-rate support.
6. Accordingly, IT IS ORDERED that, pursuant to the authority contained in sections 1-4
and 254 of the Communications Act of 1934, as amended, 47 U.S.C. § 15 1-154 and 254, and pursuant to
authority delegated in sections 0.91, 0.291, and 54.722(a) of the Commission's rules, 47 C.F.R. § 0.91,
0.291, and 54.722(a), that the requests for review filed by Lower Merion School District, Bethel School
District, and Tuslaw School District ARE GRANTED and their applications ARE REMANDED to
USAC for further action consistent with this order no later than 90 calendar days from the release date of
this order.
7. Accordingly, IT IS ORDERED that, pursuant to the authority contained in sections 1-4
and 254 of the Communications Act of 1934, as amended, 47 U.S.C. § 151-154 and 254, and pursuant to
authority delegated in sections 0.91, 0.291, and 54.722(a) of the Commission's rules, 47 C.F.R. § 0.91,
0.29 1, and 54.722(a), that the requests for review filed by the Independent School District of Boise City
IS DENIED.
FEDERAL COMMUNICATIONS COMMISSION
Gina Spade
Deputy Chief
Telecommunications Access Policy Division
Wireline Competition Bureau
5 To the extent these applicants' inclusion of dark fiber in their applications was an administrative error, we direct
USAC to allow the school district to correct this error, consistent with the Commission's Bishop Perry Order.
Request for Review of the Decision of the Universal Service Administrator by Bishop Perry Middle School, Schools
and Libraries Universal Service Support Mechanism, File Nos. SLD-487 170, et aL, CC Docket No. 02-6, Order, 21
FCC Rcd 5316, 5319, paras. 8-9 (2006) (Bishop Perry Order).
i6 Boise ISD Request for Review at 2.
17 Cost-effectiveness is built into the program rules concerning competitive bidding. When selecting a provider for
services, schools and libraries are required to fully consider all bids submitted arid must select the most cost-effective
service offering. 47 C.F.R § 54.511(a). In this process, schools and libraries may consider relevant factors other
than the pre-discount prices submitted by providers, but price "should be the primary factor considered." Id.
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