Before the
FEDERAL COMMUNICATIONS COMMISSION
Washington, D.C. 20554

In the Matter of

Federal-State Joint Board

CC Docket No. 96-45 on Universal Service

To the Joint Board:

NATIONAL SCHOOL BOARDS ASSOCIATION, AMERICAN LIBRARY ASSOCIATION, INCLUDING THE AMERICAN ASSOCIATION OF SCHOOL LIBRARIANS, A DIVISION OF ALA, NATIONAL EDUCATION ASSOCIATION, CONSORTIUM FOR SCHOOL NETWORKING, COUNCIL OF CHIEF STATE SCHOOL OFFICERS, EDUCATION LEGISLATIVE SERVICES, INC., NATIONAL ASSOCIATION OF INDEPENDENT SCHOOLS, NATIONAL ASSOCIATION OF SECONDARY SCHOOL PRINCIPALS, AMERICAN FEDERATION OF TEACHERS, AFL-CIO, ASSOCIATION FOR THE ADVANCEMENT OF COMPUTING IN EDUCATION, NATIONAL ASSOCIATION OF ELEMENTARY SCHOOL PRINCIPALS, AMERICAN ASSOCIATION OF SCHOOL ADMINISTRATORS, AMERICAN PSYCHOLOGICAL ASSOCIATION, ASSOCIATION FOR SUPERVISION AND CURRICULUM DEVELOPMENT, COUNCIL FOR AMERICAN PRIVATE EDUCATION, COUNCIL FOR EDUCATIONAL DEVELOPMENT AND RESEARCH, EDUCATIONAL TESTING SERVICE, GLOBAL VILLAGE SCHOOLS INSTITUTE, NATIONAL ASSOCIATION OF STATE BOARDS OF EDUCATION, NATIONAL PARENTS AND TEACHERS ASSOCIATION, NATIONAL RURAL EDUCATION ASSOCIATION, TECHNOLOGY AND INNOVATIONS IN EDUCATION, TRIANGLE COALITION FOR SCIENCE AND TECHNOLOGY EDUCATION, AND UNITED STATES DISTANCE LEARNING ASSOCIATION

Summary

The joint commenters described in Appendix A, representing the interests of public and private schools and libraries, urge the Federal-State Joint Board to recommend that the Commission adopt rules fully and aggressively implementing the universal service provisions of the Telecommunications Act of 1996 (the "1996 Act"). In adopting the 1996 Act, Congress acknowledged the importance of education to the future economic development of the nation. It is no longer enough to ensure the availability of residential telephone service. Today's globally competitive economy requires that all schools and libraries have access to modern telecommunications technology at affordable rates for two reasons. First, telecommunications technology can improve the quality, efficiency, and responsiveness of the educational system. Second, the effective use of advanced telecommunications technology is already an essential employment skill.

In adopting the 1996 Act, Congress recognized that the current telecommunications infrastructure in schools and libraries is inadequate. Only 9% of classrooms are connected to the Internet, and many schools and libraries continue to have no access at all. In addition, unless the needed services are affordable, they might as well not be available. Many schools and libraries do not provide their students and patrons with adequate access because they cannot afford the connections they need to perform their functions properly. Ensuring affordability is also critical to ensure that services are available on an equitable basis across the country.

The 1996 Act provides that core residential services must be available to all -- including schools and libraries -- at "just, reasonable and affordable" rates. In addition, certain special services must be provided to schools and libraries at affordable rates. The 1996 Act does not define "special services," but to meet the statutory goals, the Commission should define special services broadly to include all the services necessary to ensure that schools and libraries have the ability to take advantage of all the benefits of advanced telecommunications for educational purposes.

Therefore, special services should include, at a minimum, local and long distance transmission services to provide two-way voice and data communication throughout the world, access to information services throughout the world, and additional services covered by Section 254(h). Such "covered services" include (i) unbundled broadband switching and transmission capacity capable of delivering high quality video; and (ii) classroom and library access, including high-speed, broadband circuits to the building "demarcation" point, and inside wiring to all classrooms, offices, libraries, and computer work stations.

Schools and libraries need, not particular technologies or technical solutions, but the ability to perform certain functions. The best approach will depend on what is practical and cost-effective in a given situation. For this reason, and to impose economic discipline on users, the Commission should include a full range of service options up to and including the highest level described above.

The 1996 Act does not specify how the discount for special services is to be calculated. The legislative history gives the Commission considerable flexibility in this regard. We propose a method that is based on the competitive market price or a surrogate for the market price for each service (if no such market price is readily ascertainable), and then provides for a discount from the competitive market price to a level that will ensure affordability to the large majority of schools and libraries. We further propose to allow the carrier, at such time as sufficient data is available, to establish a floor for the rate for a particular special service at the Total Service Long Run Incremental Cost of providing that service. Finally, to further ensure that the goals of the legislation are met, we also propose an additional lifeline subsidy to schools and libraries in very poor areas.

Summary

Introduction

I. IN ADOPTING THE TELECOMMUNICATIONS ACT OF 1996, CONGRESS ACKNOWLEDGED THE IMPORTANCE OF EDUCATION TO THE FUTURE ECONOMIC DEVELOPMENT OF THE NATION.

II. MODERN TELECOMMUNICATIONS TECHNOLOGY IS ESSENTIAL TO A MODERN EDUCATIONAL SYSTEM.

1. Telecommunications Technology Can Improve the Quality, Efficiency, and Responsiveness of the Educational System.
2. Proficiency with Advanced Is a Vital Employment Skill that Will only Grow in Importance.
3. In Adopting the Snowe-Rockefeller-Exon-Kerrey Amendment, Congress Recognized that the Current Level of Technology Available in Most Schools and Libraries Is Inadequate, not just in Rural or High-Cost Areas, but across the Nation.
4. School- and Library-Based Networks Offer New and Enhanced Roles for Those Institutions as Learning Centers in Their Communities.

III. THE LAW REQUIRES "UNIVERSAL SERVICE."

1. Core Services Must Be Available to All -- Including Schools and Libraries -- at "Just, Reasonable and Affordable" Rates.
2. The 1996 Act Requires Provision of Additional "Special Services" to Schools and Libraries at Discounted Rates to Assure "Affordable" Access and Use.

IV. THE COMMISSION SHOULD DEFINE "SPECIAL SERVICES" TO ENSURE AFFORDABLE CLASSROOM AND LIBRARY ACCESS TO MODERN TELECOMMUNICATIONS.

1. Special Services Should Include All Telecommunications Services Up to and Including Those Available Today at the More Advanced Schools and Libraries.
2. The Definition of Special Services Should Evolve over Time and Should Be Technologically Neutral.
3. Introducing Advanced Technology Nation-Wide Will Be a Gradual Process.

V. THE PROPOSED PRICING MECHANISM FOR "SPECIAL SERVICES."

1. The Rate for Special Services Should Be Based on a Market Rate.
2. A Benchmark Price Based on Prices Where Effective Competition Exists May Be Used as a Surrogate for the Competitive Market Price.
3. The Total Service Long Run Incremental Cost May Be Used as a Floor Under the Discounted Rate, if the Carrier Presents Sufficient Data.
4. Providers of Special Services Should be Selected on the Basis of Competitive Bids.
5. Under Either Rate Proposal, a "Safety Net" for Poor Schools and Libraries Would Reduce the Discounted Price Further To Ensure Affordability for All.
6. Sharing of Facilities with Noneducational Users.

• VI. THE JOINT BOARD SHOULD RECOMMEND REGULATORY MEASURES TO ENHANCE ACCESS TO ADVANCED SERVICES.

Conclusion

Introduction

The joint commenters, representing public and private schools and libraries, urge the Federal-State Joint Board to recommend that the Commission adopt rules fully and aggressively implementing the full intent of the universal service provisions of the Telecommunications Act of 1996 (the "1996 Act"). We are encouraged by the breadth of the Commission's Notice of Proposed Rulemaking and Order Establishing the Joint Board (the "NPRM") initiating this proceeding, and we urge the Commission to establish a standard of service to schools and libraries that will provide the full benefit of advanced telecommunications at the most affordable price.

IN ADOPTING THE TELECOMMUNICATIONS ACT OF 1996, CONGRESS ACKNOWLEDGED THE IMPORTANCE OF EDUCATION TO THE FUTURE ECONOMIC DEVELOPMENT OF THE NATION.

MODERN TELECOMMUNICATIONS TECHNOLOGY IS ESSENTIAL TO A MODERN EDUCATIONAL SYSTEM.

The availability of K-12 classrooms, [and] libraries . . . to obtain access to advanced telecommunications services is critical to ensuring that these services are available on a universal basis. . . . This universal access will assure that no one is barred from benefiting from the power of the Information Age.¹

Telecommunications Technology Can Improve the Quality, Efficiency, and Responsiveness of the Educational System.

To supplement paragraph 72 of the NPRM, we wish to point out some specific examples of improvements achieved through the use of telecommunications technology:

• Guilford County, North Carolina, has equipped all of its schools with interactive, broadcast-quality distance learning facilities, connected all of its classrooms with fiber optics, and installed an OC-3 fiber line to link its network to the public switched network. Attendance rates are up, discipline problems are down, and the County has reduced staff travel and the busing of students for special classes.²


• In Union City, New Jersey, the introduction of computers and Internet access has led to marked improvement in the English language skills of the student body, 75% of whom do not speak English at home. The use of e-mail has encouraged students to develop their writing skills, the ease of on-line research has improved the quality of research projects, and standardized test scores have gone from well below the state average to above average. KickStart Report at 37.
• The State of Maryland has developed "Sailor," a state-wide telecommunications infrastructure connecting public libraries across the state and allowing patrons remote access. Every Maryland resident can now reach the Internet and information about state and local events, affairs, and resources with a local phone call. KickStart Report at 52.
• The Southeast Kansas Interactive Distance Learning Network operates a fiber optic network that can carry up to 16 channels of video simultaneously, and has been used to conduct an interactive town hall meeting with the area's Congressman by linking ten school sites. In addition to increasing the range of available courses, the network has been used for special programs such as video conferences between American and Russian students. See articles attached as Appendix C.
• Beaver High School and three other Oklahoma schools have established an interactive distance learning network that is also being used for weekly teacher training sessions. NSBA telephone survey.
• Approximately 200 public libraries now maintain World Wide Web sites, including the Alachua County Library District in Gainesville, Florida, the St. Charles City-County Library District in St. Peters, Missouri, and the Seattle Public Library in Seattle, Washington. By establishing Web sites, these libraries have extended their reach beyond their geographic boundaries and made their electronic holdings available to a new class of world-wide patrons.

Proficiency with Advanced Telecommunications Is a Vital Employment Skill that Will only Grow in Importance.

The effective use of advanced telecommunications technology is already an essential employment skill, as important as the traditional "three R's." "As businesses lean more heavily on telecommunications and electronic technology, American workers must increasingly learn the ways of electronic communications just to carry out their day-to-day responsibilities."³ For example, in 1993, 47% of jobs required computer or networking capability.⁴ In 1984, that figure was only 25%. McKinsey Report at 7. One study has forecast that by the year 2000 60% of jobs will require computer and advanced telecommunications skills. Id. Just as important, such jobs will pay 10-15% more than jobs that do not require those skills. Id. These facts alone justify the introduction of advanced telecommunications services into all schools and libraries as quickly as possible.

Providing all schools and libraries with the ability to impart these skills is not a luxury. If those institutions are to perform their functions properly, they must have the necessary facilities, or we will all pay a price. For instance, American businesses are already losing $25-30 billion a year through poor product quality, low productivity, and absenteeism attributable to the current lack of information literacy. America's Children at 7. Businesses spend additional sums training and retraining workers to the levels they need. Id. These expenses add to the price of products all Americans buy and make our products less competitive in the world market. In short, there is no doubt that proficiency with advanced telecommunications is already a critical job skill that must be distributed as widely as possible.

In Adopting the Snowe-Rockefeller-Exon-Kerrey Amendment, Congress Recognized that the Current Level of Technology Available in Most Schools and Libraries Is Inadequate, not just in Rural or High-Cost Areas, but across the Nation.

This inadequacy extends to all types of facilities and services, including transmission lines to the building, networks inside the building, terminal equipment, and information services. For example, as noted in the NPRM, only 9% of all instructional rooms (classrooms, media centers and computer labs) are currently on the Internet.⁵ In addition, many of the computers installed in schools could not connect to any internal or external network. McKinsey Report at 32. While 49% of schools have local area networks, half of those are used only for administrative purposes and less than 10% of school networks were used to connect computers in all classrooms. Id. at 33. Similarly, while nearly all schools have telephones, only 12% of classrooms have telephones -- and those rooms without telephones generally have no telephone lines. Id. In a report on school facilities, the General Accounting Office found that over half of all schools reported "insufficient capability in modems, phone lines for modems, phone lines for instruction, conduits/raceways, and fiber optics."⁶

For reasons we will discuss later, we are primarily concerned with the improvement of external connections and internal networks. External connections are obviously critical, because they are the means for the delivery of information to and from the Internet and other sources. Schools face a problem familiar to anybody who has conducted on-line research from a home computer. As reported in the Wall Street Journal on December 27, 1995, it takes approximately 2.3 minutes to download a 2MB image over a typical residential 14.4 Kbps line. A more complex image requiring 16 MB would take 18.5 minutes, and a short video clip could take 1.4 hours. These are clearly not useful speeds. Even over a 56 Kbps line, a simple image takes 35.7 seconds. Few people -- and children least of all -- have the patience to sit in front of a computer terminal waiting for images to appear at such slow speeds. But fewer than 5% of schools have ISDN or T-1 connections; indeed, such connections may not be available at all to as many as one-third of all schools. McKinsey Report at 32-33. Thus, schools need dramatically improved transmission capacity.

Internal networks are equally important to the business of teaching and learning. All rooms in a school must be connected -- classrooms, libraries, labs and offices -- or even the best outside connections will be of little use. This allows for more spontaneity in the use of the technology, since it can then occur at any time during the school day and not just when a media center or lab is available, or during a weekly class visit to the library. For students to learn how to do research on-line and get the most out of that experience, they must have more than an occasional turn at the keyboard. And for parents, teachers and administrators to make the best use of e-mail and other services, all classrooms and offices must be connected to each other and to the outside world.

Libraries also suffer from inadequate telecommunications capabilities. Some libraries have tried to meet the challenge of keeping up with technological changes by offering their patrons Internet access -- but most do not. Only 23.3% of public libraries offered direct access in 1995, although somewhat more allow patrons to access the Internet with the assistance of a staff member and over two-thirds have staff access. PLA/PLDS, Technology in Public Libraries 1995 Survey, Statistical Report 1995 Public Library Data Services (1995). But the vast majority of these libraries face the same access problems as schools; slow transmission speeds sharply reduce the utility of the technology they have. Libraries also need to increase their networking capacity to improve efficiency and make their resources available to more people.

Finally, unless the needed services are affordable, they might as well not be available. Many institutions have found that they cannot keep up with the demand for their services, but also cannot afford the connections that would meet that demand.⁷ Ensuring affordability is also critical to ensure that services are available on an equitable basis across the country. As non-profit institutions that provide vital public services, it is in the interest of all Americans that schools and libraries have affordable access to telecommunications at rates that will ensure that all parts of the country share the benefits.

The Snowe-Rockefeller Amendment, embodied in new Section 254(h) of the Communications Act added by the 1996 Act, recognizes these deficiencies by expanding the concept of universal service to include access to advanced telecommunications services for schools and libraries. In the floor debate prior to passage of the 1996 Act, Senator Snowe said:

Central to the concept of universal service is access for public institutions, which provide services to a broad segment of our population. We must ensure that key institutions in our society -- schools, libraries, and rural hospitals -- are also assured affordable access to telecommunications services. . . . If we want young people to actively use the technology of the future so it becomes second nature to them, then we must ensure that schools are part of the national information infrastructure.⁸

School- and Library-Based Networks Offer New and Enhanced Roles for Those Institutions as Learning Centers in Their Communities.

First, access to the Internet through schools and libraries -- or other access points such as community colleges and community centers -- can become a cost-effective way for the country to expand subscribership to all Americans, including those who cannot afford the proper equipment. Second, schools and libraries can become community hubs for those who do have the proper equipment. Parents can communicate better with teachers, and other residents can get quick, easy access to information about community events and local issues through community networks and local bulletin boards. Third, schools and libraries can address the peculiar problems of rural areas. K-12 schools, libraries, teachers, parents, and other citizens in these areas have to pay substantially more than their urban counterparts to reach on-line information services and the Internet. A school or library in Java, South Dakota, or Rochester, Vermont, for example, could become the access point for the entire community to reach on-line information without paying prohibitive long distance toll charges.

THE LAW REQUIRES "UNIVERSAL SERVICE."

1. Core Services Must Be Available to All -- Including Schools and Libraries -- at "Just, Reasonable and Affordable" Rates.
   Subsection 254(b) of the 96 Act defines the Universal Service "Principles" to be applied by the Commission and Joint Board. Principle (1) provides that "quality services should be available at just, reasonable, and affordable rates." Principle (3) provides that "consumers" in rural and high-cost areas should have access to services that are "reasonably comparable" to services provided in urban areas and "at rates that are reasonably comparable to rates charged for similar services in urban areas."⁹ Subsection (c)(1)(C) provides that "Federal universal service support mechanisms" are generally available only for telecommunications services that "have ... been subscribed to by a substantial majority of residential consumers...." [emphasis added]. But subsection (c)(1)(C) does not say that only residential consumers may receive the benefit of those support mechanisms, and Principle (3) plainly refers to all consumers in rural and high cost areas, as well as low-income consumers. NPRM at [[paragraph]][[paragraph]] 71, 82. In other words, schools and libraries, as consumers of telecommunications services, are entitled to a reduced rate for those services that the Commission decides to include within the definition of universal service. Some would recommend free core services for schools and libraries and this recommendation deserves further study.
   
2. The 1996 Act Requires Provision of Additional "Special Services" to Schools and Libraries at Discounted Rates to Assure "Affordable" Access and Use.

Special services must be provided to schools and libraries at affordable rates. Principle (6) provides that libraries and schools, including classrooms, "should have access to advanced telecommunications services as described in subsection (h)." Subsection (c)(3) authorizes the Commission to "designate additional services for such support mechanisms ... for the purposes of subsection (h)." [emphasis added]. The legislative history indicates that under subsection (c)(3) the Commission is to define universal service more expansively ("different" and "separately") for schools, libraries, and health care facilities.¹⁰

Subsection (h) provides for preferential and affordable rates to schools and libraries. See Conf. Rpt. at 133. Subsection (h)(1)(B) refers to a request for "any of [a carrier's] services that are within the definition of universal service . . . ." Thus, subsection (h)(1)(B) requires carriers to provide "special services" designated under subsection (c)(3), to educational providers and libraries at affordable prices. See NPRM at [[paragraph]][[paragraph]] 71 and 82.

THE COMMISSION SHOULD DEFINE "SPECIAL SERVICES" TO ENSURE AFFORDABLE CLASSROOM AND LIBRARY ACCESS TO MODERN TELECOMMUNICATIONS.

Expanding the reach of advanced telecommunications into the schools and libraries is in the interest of the computer and telecommunications industries because it expands their current and potential markets. It is also in the interest of business in general because increased technical skills will mean a better-prepared workforce.

1. Special Services Should Include All Telecommunications Services Up to and Including Those Available Today at the More Advanced Schools and Libraries.

Some schools and libraries have already installed advanced telecommunications networks. There will always be innovators who move ahead of the pack -- but their current efforts set the norm for tomorrow. As the innovators leave a technology behind, the majority adopts the old cutting edge as the standard. The Commission should take this phenomenon into account in defining special services. By the time the Commission adopts a standard and educational institutions have begun to implement the standard, the leaders will have moved on to something else. By adopting the current standard available at the more advanced institutions, however, the Commission will ensure that the definition of special services is not outmoded before it has even been implemented. This is important because demand for bandwidth tends to increase as users learn to depend on the technology. See Lyndes Decl.

If a service is available now in the more advanced schools and libraries, it must be incorporated into the special service standard to ensure that adequate educational services are available to all parts of the Nation. If the Commission adopts anything less, it will be establishing a standard that will deny most schools and libraries affordable access to services that will shortly be the de facto standard for those with the resources to implement it. Otherwise, most schools and libraries will always be two steps behind, and the central purpose of the legislation will not be achieved. Moreover, if a service is commercially available in an area, there should be a presumption that the service should also be available to schools and libraries as a special service.

Therefore, the Commission should define special services to include, at a minimum, local and long distance transmission services to provide two-way voice and data communication throughout the world, access to information services throughout the world, and additional services covered by Section 254(h). Such "covered services" include (i) unbundled broadband switching and transmission capacity capable of delivering high quality video; and (ii) classroom and library access, including high-speed, broadband circuits to the building and internal networks to all classrooms, offices, libraries, and computer work stations. These capabilities are all in line with the goals of both the Congress and the executive branch.¹¹

The most prominent and recent discussion of the telecommunications needs of schools and libraries is the KickStart Report. The KickStart Report discusses four models for connecting schools. The "Lab Model" would provide a school access to advanced telecommunications only at the computer lab or multimedia room level. The second, the "Lab Plus" model, would put one computer into each classroom and connect each classroom with a local area network, in addition to the capacity located in the computer lab. The third model, the "Partial Classroom" model, would link half the classrooms in a school with a LAN, and put five computers in each of those rooms. The school would have a T-1 or equivalent external connection. The final or "Classroom" model is the same as the Partial Classroom model, except that all classrooms would have five computers, all of which would be connected to the LAN.

The KickStart Report also proposes a model for libraries that is the equivalent of the "Lab" model for schools, except that libraries in larger communities are presumed to have access to T-1 lines, and those in smaller communities are presumed to have access to ISDN or standard telephone service.

The covered services proposed above are similar to those included in the "Partial Classroom" and "Classroom" models, with three exceptions. First, the two KickStart models include computer hardware and other terminal equipment, which we have not included in our proposed definition of special services. Second, those models also call for provision of content, professional development and systems operations support, much of which we envision will be provided in conjunction with computer hardware contracts or through other mechanisms. And third, rather than including a T-1 line or its functional equivalent, special services should be defined as encompassing true broadband capability.¹²

Examples of current state-of-the-art functionalities already being used in some schools -- which support the proposed definition of special services set forth above -- are attached as Appendix K. These examples demonstrate that some schools are already using higher bandwidth connections than any of the KickStart models call for. In all cases, however, the 1996 Act requires institutions in all parts of the country to have access to reasonably comparable service if they desire it. Thus, in the case of libraries, the KickStart Report's transmission line standards are unacceptable because they assume lower capacity in smaller communities, which may not be adequate in many instances. In the case of schools, limiting the majority to a T-1 line is also unacceptable when some schools are already using OC-3 connections. In addition, about half of schools currently have LAN's for administrative use, and of these about 10% use the LAN to connect computers in all classrooms. These facts alone justify adoption of a standard that calls for internal networks connecting all classrooms and offices and providing broadband external connections.

We wish to emphasize that schools and libraries do not need particular technologies or technical solutions. What they need is the ability to perform certain functions; the best approach will depend on what is practical and cost-effective in a given situation. For this reason, the Commission should include a full range of service options up to and including the highest level described above.

Providing a range of options is also important to impose economic discipline on users. For example, if the Commission were to set a single standard of service, schools and libraries would tend to choose that standard even if it exceeded their actual current needs. But if an institution had the choice of a standard 56 Kbps line, 56 Kbps ISDN service, a T-1 line, or an OC-3 connection, all at different rates, it would be more likely to choose the facility that met its needs because it could use the money saved for some other purpose. Indeed, because we would specifically exclude terminal equipment from the definition of special services, such savings might well go towards purchasing hardware.

Finally, the Commission must ensure that the requirements of special needs populations are also met by the definition of special services. The foregoing definition is broad enough to accommodate the requirements of such technologies as TTY and TDD, but the Commission should consider whether the terminal equipment and services associated with those and successor technologies should be incorporated into the definition of special services.




2. The Definition of Special Services Should Evolve over Time and Should Be Technologically Neutral.

Section 254(c)(1) defines universal service as an evolving level of service, and the definition of special services should also evolve over time. Otherwise, schools will again find themselves unable to provide students with the level of technology training they require. As noted above, the cutting edge will continue to advance, and the de facto standard will advance with it, although always somewhat behind. Thus, the Commission and the Joint Board must periodically reexamine the standard as telecommunications technology evolves. We propose that the standard be reviewed and, if necessary, revised, every four years.

In addition, the Commission should not impose particular technological solutions. As telecommunications technology advances and competition develops among telecommunications providers, different approaches and opportunities will arise. Libraries and schools are primarily concerned with the ability to meet the needs of patrons, students, teachers and other stakeholders, not with favoring particular technologies. It makes no difference to an educational institution whether its traffic is carried by a cable operator or a wireless carrier, so long as it can perform its mission. Schools and libraries are also aware of the need for any solution to be economically feasible, and such factors as geographic location obviously will affect what technological solution is the most cost effective. Consequently, the definition of special services should emphasize capabilities or functionalities, rather than technology-specific solutions, such as ISDN service or T-1 service.

3. Introducing Advanced Technology Nation-Wide Will Be a Gradual Process.

A broad definition of special services will encourage the gradual development of advanced telecommunications in schools and libraries. There will not be a rush to spend as much money as possible, for three reasons. First, not all schools and libraries may need or want all covered services, or the highest level of those they do want. Creating incentives for economically rational behavior, as discussed above, will hold costs down. Second, many will not be able to take advantage of the provisions of the 1996 Act until they address other infrastructure deficiencies.¹³ Third, schools and libraries will have to find funding for hardware not included in the definition of special services before they can take advantage of most special services.

THE PROPOSED PRICING MECHANISM FOR "SPECIAL SERVICES."

1. The Rate for Special Services Should Be Based on a Market Rate.

The price of special services should follow this general rule: The price paid by a school or library should not exceed the least of (i) the carrier's present-day rate or current bid, (ii) the lowest price "charged for similar services to other parties," or (iii) a market-based price, discounted to assure affordability.
The general rule ensures that service providers cannot use the benchmark rate as an excuse to raise rates if they are already offering or have negotiated lower rates. For example, many local governments have negotiated cable franchise agreements that require the cable operator to provide free broadband connections to schools, libraries, and government offices for telecommunications purposes. Schools and libraries that are already receiving the benefit of such facilities should not be forced to pay for the service simply because the Commission has established a rate mechanism for those communities that do not already have the capability.

2. A Benchmark Price Based on Prices Where Effective Competition Exists May Be Used as a Surrogate for the Competitive Market Price.

We propose that, as the initial method of setting rates, the Joint Board consider a benchmark based on prices where there is competition, discounted to ensure affordability. Such a discounted price would also have the effect of absorbing a reasonable share of joint and common costs. Under this method, rates for special services in competitive markets would be used as surrogates for the actual market price. One method of establishing the benchmark could be by looking at average costs for bids in areas that have effective competition (such as large suburban school districts) and calculating a national median price. For services that are commercially available in competitive markets but not now widely used by schools and libraries, the national median commercial rate may also be a reasonable surrogate for the competitive price.

Once the benchmark price has been computed, it will be further reduced by the Commission for interstate services and by the state regulatory body for intrastate services as necessary to make the price affordable. The standard for affordability should be that single price that would permit use of the service by 95% of the potential user community. This discount is large enough to ensure that schools and libraries in most rural, insular and high cost areas will be able to afford service. The corresponding regulatory body would gather data based on current prices being paid by schools and libraries to establish a demand curve or each special service. As systems subscribe to each service, the data would be refined and the price point recalculated at regular intervals. Carriers would have the opportunity to demonstrate to the regulating body that the incremental cost of providing the service exceeded the discounted rate. The carrier would be compensated for any such difference between the 95% affordability price point and the carrier's TSLRIC, out of the universal service fund.

Rates in each area would be set after comparing bids received by the contracting agency to the competitive benchmark. If there is effective competition in a bidding area, the winning bid would be compared to the discounted national benchmark rate. If the competitively bid rate exceeds the discounted rate, the provider will be required to lower its price to the discounted rate. If the bid price is lower than the discounted rate, then the bid price will apply, under the general rule described above.

In areas where there is no effective competition, the discounted price should be based directly on the competitive benchmark for each service and basic service element. Any school district or library facing "above-discounted-benchmark" costs will get the service at the national benchmark price, less the discount.

3. The Total Service Long Run Incremental Cost May Be Used as a Floor Under the Discounted Rate, if the Carrier Presents Sufficient Data.

As an alternative to the competitive benchmark rate, the Commission should adopt the TSLRIC, which is discussed in more detail in separate comments filed by the American Library Association. Under this method, the provider's TSLRIC for each service would be substituted for the discounted national competitive benchmark, provided that there was sufficient information to calculate the TSLRIC and agreement on what should be included in TSLRIC. Thus, providers would submit their TSLRIC's for each service as bids and the low bidder would receive the right to serve the bidding area, subject to the conditions discussed below.

4. Providers of Special Services Should be Selected on the Basis of Competitive Bids.

Under both approaches, the provider of universal service in an area would be selected through a bidding process. Prospective service providers would submit bids to school and library districts upon the request of the contracting officer for each district, issued in accordance with local contracting procedures. Issuance of a request for proposals or any equivalent mechanism permitted by state or local law would constitute a bona fide request. Districts should also have the authority to aggregate demand by forming consortia with other eligible entities.

To permit the contracting agency to compare bids, bidders would be required to submit unbundled rates for individual services, or rates for service packages accompanied by a cost allocation showing the costs corresponding to each service in the package.

Bids would be reviewed by the requesting entity or entities, again in accordance with local contracting procedures. The low bidder would receive the right to serve schools and libraries in that region at the discounted rate. If, however, the contracting agency had reason to reject the low bid on grounds permitted by its local procedures -- such as a past record of poor service -- the contracting agency could select a different service provider. To encourage low bidding by service providers, however, only the lowest qualified bidder would have the right to compensation from the universal service fund.

5. Under Either Rate Proposal, a "Safety Net" for Poor Schools and Libraries Would Reduce the Discounted Price Further To Ensure Affordability for All.

It is possible in some cases that even the discounted benchmark price or the TSLRIC rate will be too high for a very poor school district or library to be able to pay. In such cases, we propose an additional lifeline subsidy to ensure that all schools and libraries can afford special services.

The determination of which school and library districts are eligible for a lifeline subsidy would be based on family income in each school district, as determined by the Census Bureau, or some other appropriate state or federal formula. As a rough approximation, the Census data corresponds to the tax base available to support a school or library district's investment in telecommunications facilities. The lifeline subsidy would be available to schools and libraries situated within districts that are in the bottom 25% of all school districts, ranked according to median family income. In other words, the lifeline subsidy would be available to schools and libraries serving the poorest 25% of the population. The amount of the subsidy would be proportional to the amount by which the average income in the district falls below the national average, so that an area with only 25% of the national average income would pay only 25% of the discounted price. Because this subsidy will probably benefit particular compact areas, the subsidy would come out of the federal fund, and not any state mechanism.

6. Sharing of Facilities with Noneducational Users.

The Commission should not take any action that would significantly restrict sharing of facilities. So long as a facility is being used primarily for educational purposes, it should be deemed to meet the requirements of the 1996 Act. Otherwise, innovative uses of technology and enhanced roles for schools and libraries could be stifled. Schools and libraries should remain free to share their networks with other entities in the community, and schools and libraries should not be prohibited from charging lab fees or user fees to defray expenses related to the use of a network.

THE JOINT BOARD SHOULD RECOMMEND REGULATORY MEASURES TO ENHANCE ACCESS TO ADVANCED SERVICES.

Subsection 254(h)(2) of the 1996 Act requires the Commission to adopt rules to enhance access to advanced telecommunications and information services for school classrooms and libraries, and defining the circumstances under which carriers may be required to connect their networks to such users.

To the extent not already included as special services, the Commission should encourage development of two-way interactive video services or Internet services over dedicated facilities to or for schools. The Commission can enhance access by adopting appropriate pricing policies. Such policies could include marginal-cost pricing of transmission usage to access information services providers, postalized inter-city rates, and flat-rate service, in addition to implementation of Section 271(g)(2).

Other regulatory policies that should be considered to ensure access to services are requiring the unbundling of services to allow easier aggregation of service by school and library consortia, and mandating service by one or more local providers if nobody bids on a request for proposals issued by an eligible entity.

Conclusion

For the foregoing reasons, the joint commenters urge the Joint Board to recommend that the Commission adopt rules ensuring that all eligible schools and libraries have access to the broadest permissible range of services, at prices that will deliver the benefits of advanced telecommunications technology nationwide.

Respectfully submitted,

Nicholas P. Miller
William Malone
Matthew C. Ames

MILLER, CANFIELD, PADDOCK AND STONE, P.L.C.
1225 Nineteenth Street, N.W.
Suite 400
Washington, D.C. 20036-2420
Telephone: (202) 785-0600
Fax: (202) 785-1234

Attorneys for the Joint Commenters

April 10, 1996

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April 10, 1996

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APPENDIX A: Description of Joint Commenters

APPENDIX B: KickStart Report

APPENDIX C: Kansas Newspaper Articles

APPENDIX D: NCES Report

APPENDIX E: Lyndes Declaration

APPENDIX F: California School District Statements

APPENDIX G: CSSSO Distance Learning Study

APPENDIX H: CFA Endorsement Letter

APPENDIX I: NCC-TET Executive Summary

APPENDIX J: Implementation Costs

APPENDIX K: Functionalities Required by Schools and Libraries

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The joint commenters represent a coalition of educational and library groups that have been working together to provide schools and libraries with affordable access to telecommunications and to ensure the effective implementation of the Snowe-Rockefeller Amendment. They include the National School Boards Association ("NSBA"), the American Library Association ("ALA"), including the American Association of School Librarians, a Division of ALA, the National Education Association ("NEA"), the Consortium for School Networking ("CoSN"), the Council of Chief State School Officers ("CCSSO"), Education Legislative Services, Inc. ("ELS"), the National Association of Independent Schools ("NAIS"), the National Association of Secondary School Principals, American Federation of Teachers, AFL-CIO ("AFT"), the Association for the Advancement of Computing in Education, the National Association of Elementary School Principals, the American Association of School Administrators, American Psychological Association, Association for Supervision and Curriculum Development, Council for American Private Education, Council for Educational Development and Research, Educational Testing Service, Global Village Schools Institute, National Association of State Boards of Education, National Parents and Teachers Association, National Rural Education Association, Technology and Innovations in Education, Triangle Coalition for Science for Technology Education, and United States Distance Learning Association.

The NSBA is the nationwide advocacy organization for public school governance. NSBA represents the nation's 95,000 school board members. These board members govern 15,025 local school districts that serve more than 40 million public school students - approximately 90 percent of all elementary and secondary students in the nation. Virtually all school board members are elected; the remainder are appointed by elected officials. NSBA's mission is to foster excellence and equity in public elementary and secondary education in the United States through local school board leadership. NSBA supports the capacity of each school board - acting on behalf and in close concert with the people of its community - to envision the future of education in its community, to establish a structure and environment that allow all students to reach their maximum potential, to provide accountability for the people of its community on performance in the schools, and to serve as the key community advocate for children and youth and their public schools.

The ALA is a nonprofit educational organization of 57,000 librarians, library educators, information specialists, library trustees, and friends of libraries representing public, school, academic, state, and specialized libraries dedicated to the improvement of library and information services. A new five- year initiative, ALA Goal 2000, aims to have ALA and librarianship be as closely associated with the public's rig ht to a free and open information society - intellectual participation - as it is with the idea of intellectual freedom. ALA Goal 2000 also emphasizes the importance of equity on the information superhighway and continues ALA's efforts to advocate for the highest quality of library and information services for all Americans.

The NEA, with over 2.2 million members, is the nation's largest professional employee organization, representing elementary and secondary teachers, higher education faculty, educational support personnel, retired educators, and students preparing to become teachers. NEA is focused on the issues and needs of education and the teaching profession.

The CoSN is a membership organization of institutions formed to further the development of computer- based networking among Kindergarten through 12th grade staff and students throughout the country. CoSN seeks to assure that schools develop sound networking systems and appropriate curricular applications. Our goal is for every classroom in the country to be connected to the Internet by the year 2000. We are working with other groups and policy makers to make sure all schools have affordable access to the NII.

The CCSSO is a nationwide, nonprofit organization comprised of the public officials who head the departments of elementary and secondary education and, in some states, other aspects of education in the state, five U. S. extra- jurisdictions, the District of Columbia, and the Department of Defense Schools. The Council has served as an independent voice on federal education policy since 1927, and has maintained an office in Washington, DC since 1948. Since 1908, chief state school officers have conferred with the U. S. Congress and federal agencies "to consider educational interests common to all states...which furthered by a free comparison of views." In representing the chief education administrators, the Council speaks on behalf of state education agencies, which have the primary authority for education in each state, and carries national influence commensurate with this position. The Council's members develop consensus on major issues, which the Council advocates before the President, federal agencies, the Congress and the public.

ELS is a private San Diego, California firm, with Washington, D.C. offices, that provides information, advocacy and assistance to its clients on a wide range of federal legislative and regulatory matters that affect public elementary and secondary education. It focuses on issues of funding, general, special and vocational education programs; child nutrition, health and safety; immigration and language proficiency; telecommunications and educational technology, among others. ELS's clients are California public school districts exclusively and include the following: Oakland Unified School District; San Diego Unified School District; Sacramento City Unified School District; San Francisco Unified School District; Fresno Unified School District; Centra California Education Legislation Consortium; Long Beach Unified School District; West Contra Costa Unified School District.

NAIS is a voluntary membership organization of over 1,100 member schools and associations in the United States and abroad, and is the national institutional advocate for independent precollegiate education. NAIS represents 416,000 students, 53,200 teachers and instruction support personnel, and 8,600 administrators in the U.S.

Representing over 885,000 members, the AFT is a public employee union of K-12 teachers and school aids, higher education staff, nurses and health professionals, and public employees. Across the nation, AFT is comprised of state affiliates and thousands of local affiliates.

APPENDIX B
Please see the KickStart report at The KickStart Initiative Home Page
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APPENDIX C
Appendix C is not available electronically at this time. Please send email to edlincwm@itc.org if you require a print copy.

APPENDIX D
Please see the Advanced Telecommunications in U.S. Public Elementary and Secondary Schools report at the Department of Education.

APPENDIX E
Appendix E is not available electronically at this time. Please send email to edlincwm@itc.org if you require a print copy.

APPENDIX F

COST CONCERNS IN CALIFORNIA

The following excerpts from statements submitted by various California school districts illustrate the importance of affordability:

Fresno Unified School District:

Recently a state block grant (AB 825) has provided about $50 per student for technology. While this has been helpful, it will in no way get us to an acceptable standard and does not provide for operating costs. The successful passage of a bond election will provide for the capital expense of local area networks and a wide area network, but this will take five years and, again, does not provide for operating nor hardware costs. Schools will also need the support of a state broadband link, which does not currently exist. To operate our LANs and WAN we will need relief for access and line charges. Our goal is to also have an interactive multi-media station for each teacher linked via the LAN and WAN.

For EMAIL, bulletin board and voice mail capabilities, we not only need those devices and software to enable 3300 classrooms to have access but again will need reduced operating rates. It will cost FUSD $500,000 per year for basic, flat rate line charges for telephone service in each classroom in addition to the unit charges and phone devices.

In order to meet the spirit of the Telecommunications Act of 1996, it is imperative that public schools have the necessary hardware, software, staff development and reasonable operating fees to do so. these are add-on instructional expenses in most cases.

Oakland Unified School District:

To understand the impact of telecommunications regulations on school districts such as Oakland you need to understand two things. First, there is a minimum level of technology required just to keep our communications infrastructure current with the private sector. Second, our technology resources are not adequate for us to keep current because they are being squandered on telecommunications costs which are excessive and unnecessary. Only through progressive regulation and market-driven competition will these excessive, unnecessary costs be eliminated from Oakland School's communications budget. Once this happens, funds will become available for important technology upgrades from routine funding sources.

However, what continues to hamper the district's efforts to keep abreast of technology development are the unnecessary and excessive costs to which school district's are subjected. To fully support the above communications upgrades, Oakland Schools require a district-wide private communications infrastructure. However, the costs to acquire the fully robust network is in the millions. The school district covers five different operating company central offices. To connect all the school sites together, the local operating company charges for "interoffice facilities" which tie the different telephone company central offices together and creates one communications system for the district. However, because of a technology called Signaling System 7, the operating company does not need separate "interoffice facility" trunks to provide this service. Yet, the operating company charges the district for these "phony" facilities.

Finally, the provision of the district's internet service has become a problem. The district's current Internet Service Provider (ISP) has presented a multi-year contract without rates. We are forced to investigate an alternate ISP. However, if the district does not keep the same ISP, it will be forced to change ISP addresses and numbers. With the change, all the internet routers in the district must be reconfigured. It costs between $100 and $200 for each router reconfiguration. Because of the infancy of the internet industry and the ongoing shakeouts of ISPs, over the next several years the district may be forced to change its ISP numbers several times and incur ongoing router reconfiguration costs.

Sacramento City Unified School District:

The District is in support of the efforts being made by ELS in attempting to obtain FCC approval for lower rates for schools and libraries. Our District is currently implementing a wide are network using a combination of ISDN, frame relay and point-to-point connections. Although this endeavor is costly from a resources basis, fully one third of the entire project cost will be expended each year on line charges alone. Relief in this area is of major interest to us, and could assist greatly in expanding the use of technology in the future.

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APPENDIX G

Appendix G is not available electronically at this time. Please send email to edlincwm@itc.org if you require a print copy.

APPENDIX H

Appendix H is not available electronically at this time. Please send email to edlincwm@itc.org if you require a print copy.

APPENDIX I

Appendix I is not available electronically at this time. Please send email to edlincwm@itc.org if you require a print copy.

APPENDIX J

IMPLEMENTATION COSTS

The most comprehensive summary of implementation costs that we have seen is found in the McKinsey Report, which estimates that startup costs for the Classroom Model would be approximately $47 billion over five years (not including video and voice infrastructure costs), with on-going costs of $14 billion. As noted in the text of our comments, however, we do not propose that hardware and associated software and training costs be included as special services, so the McKinsey Report's overall figure is much too high. The McKinsey Report's estimates of initial costs for connections to schools and connections within schools are $1.6 billion and $6.3 billion respectively, over five years. Ongoing costs would be about $1.6 billion per year. In reality, we believe the cost of installing connections to and within each school and could well be much lower. In addition, use of fiber optics to provide broadband capacity would cost no more than copper T-1 lines, and possibly less. Installation of fiber optic cable would make the additional cost of video and voice infrastructure under the McKinsey approach essentially zero, if we assume that schools and libraries would provide their own terminal equipment. See McKinsey Report at Appendix A.

Finally, the Kickstart Report estimates the costs of connecting public libraries at about $0.3 billion, with about $0.15 billion in on-going costs per year. See Kickstart Report at p. 96.

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APPENDIX K

FUNCTIONALITIES REQUIRED BY SCHOOLS AND LIBRARIES

A review of the existing uses to which schools and libraries are putting technology indicates that the following functionalities should be included in the definition of special services:

• Broadband links beyond the school system: Kansas, North Carolina, Iowa and other states are already providing state fiber optic networks linking school districts and individual schools. Separate networks will not be required if individual schools and districts have adequate connections through local carriers. Some schools -- about 7% -- have T-1 links to the public switched network; about 3% have ISDN service. T-1 connections, however, are not adequate to support some of the functions described below, and are not state-of-the-art given the availability of fiber networks in many areas. ISDN service over existing phone lines also would not support some functions. Both types of service may be sufficient to meet many institutions' needs over the short and mid-term, but the Commission should not adopt a standard that will soon prove inadequate for a significant number of schools and libraries.
• District level broadband wide area networks: Port Neches, Texas has linked its schools with an optical fiber WAN. Guilford County, North Carolina has connected all of its high schools using OC-3c fiber connections via SONET to a public ATM switch. Another example is Glendale Union High School District in Arizona. Nationally, 75% of schools currently have some form of access to WAN's or LAN's.
• School-level local area networks: Mendocino, California and Champlain Valley Union High School, Vermont are just two of the many examples. Ethernet technology is used in both districts, as in many others, but should not be denominated a national standard.
• Videoconferencing and distance learning capability: Guilford County has two-way interactive video/audio connections. Glendale Union High School District also uses fiber optics to deliver instructional television capability to each school. The capacity requirements discussed above should be large enough to provide this capability to a media center in each school.
• Access to Interactive Multimedia Networks: Stuyvesant High School in New York City is one school that has this capability, which is one of the near term objectives of the executive branch.
• Internet access: 50% percent of all schools, but only 9% of all instructional rooms, and 68% of public libraries currently have Internet access in some form. All classrooms, school libraries and public libraries should have this capability, including the capacity to reach on-line service providers. We note that AT&T's Learning Network makes this capability available to selected schools at no charge or discounted rates.
• E-mail: Teachers and parents should have the capability to reach each other by e-mail, and students should have the ability to interact with students in other schools as well. Mendocino, California, and the Ysleta Independent School District in El Paso, Texas, are two of many districts with this capability. E-mail access is now a basic form of communication and should be available in all classrooms.
• School Bulletin Boards: Electronic bulletin boards improve communications by allowing schools to post announcements and teachers to post homework assignments. They can be reached by students and parents at home, in libraries, and in community centers and other access points. The Ysleta Independent School District has implemented such a system with great success.
• Voice mail: Just as e-mail is becoming ubiquitous, so is voice mail. Voice mail capability in the schools will improve communications between parents and teachers, and make it easier for schools to contact families with announcements and information. AT&T already provides this service to some schools at discounted rates as part of its Learning Network.
• Telephone service in classrooms: Only 12% of classrooms have any telephone service at all. Some school districts find it unnecessary, but all should have the capability if they desire it.

1 H. Rep. 104-458, 104th Cong. 2d Sess., at 132-33 (Jan. 31, 1996) ("Conf. Rpt.").

2 United States Advisory Council on the National Information Infrastructure, KickStart Initiative, Connecting America's Communities to the Information Superhighway (January 1996) (the "KickStart Report"), at 36. A copy of the KickStart Report is attached as Appendix B. See also NSBA NII Awards Application (1995).

3 The Children's Partnership, America's Children and the Information Superhighway (Sep. 1994) ("America's Children") at 7.

4 McKinsey & Co., Connecting K-12 Schools to the Information Superhighway (1995) ("McKinsey Report") at 7.

5 U.S. Department of Education, National Center for Education Statistics, Advanced Telecommunications in U.S. Public Elementary and Secondary Schools, 1995, E.D. TABS (Feb. 1996), an excerpt from which is attached as Appendix D.

6 General Accounting Office, School Facilities -- America's Schools not Designed or Equipped for 21st Century, B-259609 (Apr. 4, 1995) ("GAO Report").

7 See Declaration of Craig Lyndes, attached as Appendix E ("Lyndes Decl."); statements from California school districts attached as Appendix F; and Council of Chief State School Officers, Education and Instruction through Telecommunications (1995), attached as Appendix G.

8 Cong. Rec. S708 (Feb. 1, 1996).

9 We endorse the principles set forth in the initial comments of the Consumer Federation of America ("CFA"), the American Association of Retired Persons, et al., regarding universal service. Attached as Appendix H is a letter from CFA endorsing these comments, as well.

10 See Conf. Rpt. at 131, 133. Despite the conference report's use of the phrase "public institutional telecommunications users," subsection (h)(5) (Definitions) clearly includes private schools.

11 See e.g., National Coordinating Committee on Technology in Education and Training, Executive Summary, The National Information Infrastructure: Requirements for Education and Training (1994), attached as Appendix I.

12 See Appendix J for a discussion of implementation costs.

13 For instance, many schools will have to upgrade electrical wiring and air conditioning just to run any new telecommunications and computer equipment. GAO Report at 12-13. As much as $112 billion may be needed to repair facilities to meet all applicable health and safety regulations and allow for the full use of the new technology. Id. at 1. These costs would not be funded out of the universal service fund.

14 Incremental cost was the only standard reported by the Senate Committee. When the term "discount" was introduced, Senator Snowe explained that the changed was intended to offer more flexibility to ensure affordability. 141 Cong. Rec. S 7984 (June 1995) (daily ed.).