[Federal Register Volume 75, Number 152 (Monday, August 9, 2010)]
[Proposed Rules]
[Pages 48236-48272]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-19459]
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Part IV
Federal Communications Commission
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47 CFR Part 54
Rural Health Care Universal Service Support Mechanism; Proposed Rule
Federal Register / Vol. 75, No. 152 / Monday, August 9, 2010 /
Proposed Rules
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 54
[WC Docket No. 02-60; FCC 10-125]
Rural Health Care Universal Service Support Mechanism
AGENCY: Federal Communications Commission.
ACTION: Notice of proposed rulemaking.
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SUMMARY: In this document, the Commission seeks comment on a package of
reforms that would expand the use of broadband to improve the quality
and delivery of health care, and addresses each of the major
recommendations in the National Broadband Plan regarding the
Commission's rural health care program. The Commission proposes three
major changes to the rural health care program. To create a health
infrastructure program that would support up to 85 percent of the
construction costs of new or upgraded regional or statewide dedicated
broadband networks for health care purposes. To create a health
broadband services program that would provide 50 percent of the monthly
recurring costs for access to broadband services for eligible health
care providers. To expand the definition of ``eligible health care
provider'' to include administrative offices, data centers, skilled
nursing facilities, and renal dialysis centers. The Commission also
proposes to eliminate the offset contribution rule for the rural health
care program, and seeks comment on prioritizing funding requests, and
establishing performance measures.
DATES: Comments on the proposed rules are due on or before September 8,
2010, and reply comments are due on or before September 23, 2010.
Written comments on the Paperwork Reduction Act proposed information
collection requirements must be submitted by the public, Office of
Management and Budget (OMB), and other interested parties on or before
October 8, 2010. If you anticipate that you will be submitting
comments, but find it difficult to do so within the period of time
allowed buy this notice, you should advise the contact listed below as
soon as possible.
ADDRESSES: You may submit comments, identified by WC Docket No. 02-60,
by any of the following methods:
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
Federal Communications Commission's Web Site: http://fjallfoss.fcc.gov/ecfs2/. Follow the instructions for submitting
comments.
Paper Filers. See instructions in the Supplementary
Information section of this document (under Comment Filing Procedures).
People with Disabilities: Contact the FCC to request
reasonable accommodations (accessible format documents, sign language
interpreters, CART, etc.) by e-mail: [email protected] or phone: (202)
418-0530 or TTY: (202) 418-0432.
In addition to filing comments with the Secretary, a copy
of any comments on the Paperwork Reduction Act information collection
requirements contained herein should be submitted to the Federal
Communications Commission via e-mail to [email protected] and to Nicholas A.
Fraser, Office of Management and Budget, via e-mail to [email protected] or via fax at 202-395-5167.
For detailed instructions for submitting comments and additional
information on the rulemaking process, see the SUPPLEMENTARY
INFORMATION section of this document.
FOR FURTHER INFORMATION CONTACT: Ernesto Beckford (202) 418-1523,
Wireline Competition Bureau, Telecommunications Access Policy Division
or TTY: (202) 418-0484. For additional information concerning the
Paperwork Reduction Act information collection requirements contained
in this document, send an e-mail to [email protected] or contact Judith B.
Herman, Office of Managing Director, via e-mail to [email protected].
SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's
Notice of Proposed Rulemaking (NPRM) in WC Docket No. 02-60, FCC 10-
125, adopted July 15, 2010, and released July 15, 2010. The complete
text of this document is available for inspection and copying during
normal business hours in the FCC Reference Information Center, Portals
II, 445 12th Street, SW., Room CY-A257, Washington, DC 20554. The
document may also be purchased from the Commission's duplicating
contractor, Best Copy and Printing, Inc., 445 12th Street, SW., Room
CY-B402, Washington, DC 20554, telephone (800) 378-3160 or (202) 863-
2893, facsimile (202) 863-2898, or via the Internet at http://www.bcpiweb.com. It is also available on the Commission's Web site at
http://www.fcc.gov.
Comment Filing Procedures
Pursuant to Sec. Sec. 1.415 and 1.419 of the Commission's rules,
47 CFR 1.415, 1.419, interested parties may file comments and reply
comments on or before the dates indicated on the first page of this
document. Comments and reply comments may be filed using: (1) The
Commission's Electronic Comment Filing System (ECFS), (2) the Federal
Government's eRulemaking Portal, or (3) by filing paper copies. See
Electronic Filing of Documents in Rulemaking Proceedings, 63 FR 24121,
May 1, 1998.
Electronic Filers: Comments may be filed electronically
using the Internet by accessing the ECFS: http://fjallfoss.fcc.gov/ecfs2/or the Federal eRulemaking Portal: http://www.regulations.gov.
Paper Filers: Parties who choose to file by paper must
file an original and four copies of each filing. If more than one
docket or rulemaking number appears in the caption of this proceeding,
filers must submit two additional copies for each additional docket or
rulemaking number. Filings can be sent by hand or messenger delivery,
by commercial overnight courier, or by first-class or overnight U.S.
Postal Service mail. All filings must be addressed to the Commission's
Secretary, Office of the Secretary, Federal Communications Commission.
[cir] All hand-delivered or messenger-delivered paper filings for
the Commission's Secretary must be delivered to FCC Headquarters at 445
12th St., SW., Room TW-A325, Washington, DC 20554. The filing hours are
8 a.m. to 7 p.m. All hand deliveries must be held together with rubber
bands or fasteners. Any envelopes must be disposed of before entering
the building.
[cir] Commercial overnight mail (other than U.S. Postal Service
Express Mail and Priority Mail) must be sent to 9300 East Hampton
Drive, Capitol Heights, MD 20743.
[cir] U.S. Postal Service first-class, Express, and Priority mail
must be addressed to 445 12th Street, SW., Washington DC 20554.
[cir] In addition, one copy of each paper filing must be sent to
each of the following: (i) The Commission's duplicating contractor,
Best Copy and Printing, Inc., 445 12th Street, SW., Room CY-B402,
Washington, DC 20554; Web site: http://www.bcpiweb.com; phone: 1-800-
378-3160; (ii) Ernesto Beckford, Telecommunications, Telecommunications
Access Policy Division, Wireline Competition Bureau, 445 12th Street,
SW., Room 5-A312, Washington, DC 20554; e-mail:
[email protected]; and (iii) Charles Tyler, Telecommunications,
Access Policy Division, Wireline Competition Bureau, 445 12th Street,
SW., Room 5-A452, Washington, DC 20554, e-mail: [email protected].
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People with Disabilities: To request materials in
accessible formats for people with disabilities (braille, large print,
electronic files, audio format), send an e-mail to [email protected] or
call the Consumer & Governmental Affairs Bureau at 202-418-0530
(voice), 202-418-0432 (TTY).
Filings and comments are available for public inspection and
copying during regular business hours at the FCC Reference Information
Center, Portals II, 445 12th Street, S.W., Room CY-A257, Washington, DC
20554. Copies may also be purchased from the Commission's duplicating
contractor, BCPI, 445 12th Street, SW., Room CY-B402, Washington, DC
20554. Customers may contact BCPI through its Web site: http://www.bcpiweb.com, by e-mail at [email protected], by telephone at (202)
488-5300 or (800) 378-3160 (voice), (202) 488-5562 (TTY), or by
facsimile at (202) 488-5563.
Comments and reply comments must include a short and concise
summary of the substantive arguments raised in the pleading. Comments
and reply comments must also comply with Sec. 1.49 and all other
applicable sections of the Commission's rules. We direct all interested
parties to include the name of the filing party and the date of the
filing on each page of their comments and reply comments. All parties
are encouraged to utilize a table of contents, regardless of the length
of their submission. We also strongly encourage parties to track the
organization set forth in the NPRM in order to facilitate our internal
review process.
Initial Paperwork Reduction Act of 1995 Analysis
This document contains proposed information collection
requirements. The Commission, as part of its continuing effort to
reduce paperwork burdens, invites the general public and the Office of
Management and Budget (OMB) to comment on the information collection
requirements contained in this document, as required by the Paperwork
Reduction Act of 1995, Public Law 104-13. Public and agency comments
are due October 8, 2010.
Comments on the proposed information and collection requirements
should address: (a) Whether the proposed collection of information is
necessary for the proper performance of the functions of the
Commission, including whether the information shall have practical
utility; (b) the accuracy of the Commission's burden estimates; (c)
ways to enhance the quality, utility, and clarity of the information
collected; (d) ways to minimize the burden of the collection of
information on the respondents, including the use of automated
collection techniques or other forms of information technology; and (e)
ways to further reduce the information collection burden on small
business concerns with fewer than 25 employees. In addition, pursuant
to the Small Business Paperwork Relief Act of 2002, Public Law 107-198,
see 44 U.S.C. 3506(c)(4), we seek specific comment on how we might
further reduce the information collection burden for small business
concerns with fewer than 25 employees.
OMB Control Number: 3060-0804.
Title: Universal Service--Rural Health Care Program.
Form No.: FCC Form 465, 466, 466-A, 467 (currently approved), newly
proposed FCC Forms 464-A, 464-B, 464-Q, and 468.
Type of Review: Revision of currently approved collection.
Respondents: Not-for-profit institutions; Business or other for-
profit institutions; and State, local, or Tribal Government.
Number of Respondents and Responses: 11,000 and 46,721.
Estimated Time per Response: 1.5 hours.
Frequency of Response: Annually, Quarterly and One-time only.
Obligation to Respond: Required to obtain or retain benefits.
Total Annual Burden: 58,360 hours.
Total Annual Costs: $3,118,069.06.
Privacy Act Impact Assessment: This information collection does not
affect individuals or households; thus, there are no impacts under the
Privacy Act.
Nature and Extent of Confidentiality: There is no need for
confidentiality. However, respondents may request materials or
information submitted to the Commission be withheld from public
inspection under 47 CFR 0.459 of the Commission's rules.
Needs and Uses: The information collected provides the Commission
with the necessary information to administer the rural health care
support mechanism, determine the amount of support entities seeking
funding are eligible to receive, and inform the Commission about the
feasibility of revising its rules.
Statutory Authority: Statutory authority for this collection is
contained in 47 U.S.C. 151, 154(i), 154(j), 201-205, 214, 254, and
403.
Synopsis of the Notice of Proposed Rulemaking
I. Introduction
1. The NPRM seeks comment on a package of potential reforms to the
rural health care program that could be implemented in funding year
2011 (July 1, 2011-June 30, 2012).
2. The proposed reforms include: (1) Establishing a broadband
infrastructure program (the ``health infrastructure program'') that
would support up to 85 percent of the construction costs of new
regional or statewide networks to serve public and non-profit health
care providers in areas of the country where broadband is unavailable
or insufficient; (2) establishing a broadband services access program
(the ``health broadband services program'') that would subsidize 50
percent of the monthly recurring costs for access to broadband services
for eligible public or non-profit rural health care providers, which
should make broadband connectivity more affordable for providers
operating in rural areas; (3) expanding the Commission's interpretation
of ``eligible health care provider'' to include acute care facilities
that provide services traditionally provided at hospitals, such as
skilled nursing facilities and renal dialysis centers and facilities,
and administrative offices and data centers that do not share the same
building as the clinical offices of a health care provider but that
perform support functions critical for the provision of health care;
(4) clarifying the Commission's existing recordkeeping requirements to
enhance its ability to protect against waste, fraud and abuse; and (5)
eliminating the current rule that requires that funding be offset
against universal service contributions owed by participating service
providers, and instead propose to allow service providers participating
in the health broadband services program, telecommunications program,
and health infrastructure program to receive rural health care funds
directly from USAC.
3. The Commission also seeks comment on the following: (1) How to
prioritize funding requests for rural health care support to the extent
demand exceeds the annual $400 million funding cap; and (2) ways to
enhance ongoing program evaluation and implementation of performance
measures to ensure that the public realizes benefits from the
investment of universal service funding to improve broadband
connectivity for health care providers.
4. In addition to the changes discussed below, the proposed rules
include non-substantive changes to the rules applicable to the
telecommunications program. We seek comment on such changes.
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II. Health Infrastructure Program
5. The National Broadband Plan stated that the Pilot Program
``represents an important first step in extending broadband
infrastructure to unserved and underserved areas and ensuring that
health care providers in rural areas and Tribal lands are connected
with sophisticated medical centers in urban areas.'' However, the
National Broadband Plan noted that, despite the efforts of the
Commission to date, many health care providers remain under-connected.
The National Broadband Plan recommended that the Commission continue to
support broadband infrastructure for health care purposes,
incorporating lessons learned from the Pilot Program.
6. In establishing the Pilot Program, the Commission noted that
many health care providers were unable to access certain telehealth
services without deployment of broadband facilities. Despite the
overwhelming interest and participation levels in the Pilot Program,
the National Broadband Plan found that a large broadband connectivity
gap still exists, particularly among small, rural providers. For
example, the National Broadband Plan identified a broadband
connectivity gap among an estimated 3,600 out of approximately 307,000
small providers. 70 percent of those small providers lacking access to
mass-market broadband services--approximately 2,500 providers--are
located in areas that the Commission defines as rural. The National
Broadband Plan also found that larger physician offices (i.e., five or
more physicians), larger clinics and hospitals also face broadband
connectivity barriers; it noted that due to their size and health IT
service needs, such health care providers cannot utilize mass-market
broadband, but require dedicated Internet access (DIA) solutions.
7. Consistent with its authority under section 254(h)(2)(A) of the
Act, the Commission proposes to create a ``health infrastructure
program'' to fund up to 85 percent of eligible costs for the design,
construction and deployment of dedicated broadband networks that
connect public or non-profit health care providers in areas of the
country where the existing broadband infrastructure is inadequate. The
program would provide support for the construction of State or regional
broadband health care networks that can, for example, connect rural and
urban health care providers, facilitate the transmission of real time
video, pictures, and graphics, bridge the silos that presently isolate
relevant patient data, make communications resources more robust and
resilient, and maximize the efficiency and reliability of packet
routing. Broadband infrastructure projects may include either new
facilities or improvements to upgrade existing facilities (for example,
converting a copper facility to a fiber facility capable of broadband
delivery). In addition, funding may be used to support up to 85 percent
of the cost of connecting health care networks to Internet2 or National
LambdaRail (NLR), both of which are non-profit, nationwide backbone
providers.
A. Program Process
8. The Commission proposes an application and selection process for
the health infrastructure program in which eligible health care
providers may seek funding for qualified projects through a streamlined
process. The Commission seeks comment on each step of the process
described below. To the extent a commenter disagrees with a particular
aspect of the proposed process, the Commission asks them to identify
that with specificity and propose an alternative.
9. Initial Application Phase. First, applicants may request
consideration for funding by completing a user friendly online
application available on a Web site to be developed and maintained by
the Universal Service Administrative Company (USAC). Applications would
be accepted during the first quarter of each funding year (July 1 to
September 30). As part of this initial application phase, an applicant
would be required to (1) Verify that either there is no available
broadband infrastructure or the existing available broadband
infrastructure is insufficient for health IT needed to improve and
provide health care delivery, (2) provide letters of agency for each of
the eligible health care providers in the applicant's proposed network,
(3) include a preliminary budget and an infrastructure funding request,
not in excess of the per-project caps discussed below, and (4) certify
that it will comply with all program requirements if selected for
funding.
10. Project Selection Phase. The Commission proposes that
applications submitted for funding be made publicly available on USAC's
Web site. Publicly available information would include the names of the
parties seeking funding, their geographic location, and information
filed by the applicants to corroborate that sufficient broadband
infrastructure is unavailable or insufficient in their geographic
location. During the second quarter of each funding year (October 1 to
December 31), USAC would review all applications received during the
initial application phase. The Commission seeks comment below on
limiting the total number of projects that may be selected in a given
year. The Commission also seeks comment below on prioritization rules
to be applied by USAC in the event that funding requests exceed the
annual amount available under the health infrastructure program. After
applications have been reviewed, and prioritization rules have been
applied, USAC would notify selected participants of their project
eligibility status. This would normally occur during the third quarter
of each funding year (January 1 to March 30). After a participant is
notified of project eligibility, it may proceed with the project
commitment phase per the requirements set forth below. During the
project commitment phase, participants may receive funding from the
health infrastructure program for a portion of the reasonable
administrative expenses incurred in connection with the project,
subject to certain caps as discussed further below.
11. Project Commitment Phase. After being selected based on their
initial application, the Commission proposes that participants in the
health infrastructure program would complete and submit all application
materials and comply with all program requirements, including: (1) 15
percent minimum contribution requirement; (2) project milestones; (3)
detailed project description; (4) facilities ownership, IRU or capital
lease requirements; (5) standard terms and conditions; (6)
sustainability plan; (7) excess capacity disclosures; (8) vendor cost
reporting requirements; (9) quarterly reporting requirements, (10)
competitive bidding and vendor selection requirements; (11) completion
of project; and (12) NEPA and NHPA requirements. USAC would review each
step of the project commitment phase to confirm the participant's
compliance with all data and information requirements and compliance
with program rules. USAC would conduct technical and financial review
of all proposed projects to ensure that they comply with the
Commission's rules. USAC may request additional information from
applicants and participants if deemed necessary to substantiate,
explain or clarify any materials submitted as part of the funding
process.
12. Build-Out Period. The Commission proposes that participants
have a period of three funding years (commencing with the funding year
in which the initial online application was submitted) to file all
forms and supporting documents necessary to
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receive funding commitment letters from USAC; and a period of five
years (commencing on the date on which the participant receives its
first funding commitment letter for the project) in which to complete
build-out.
B. Demonstrated Need for Infrastructure Funding
13. The Commission proposes that applicants under the health
infrastructure program demonstrate that broadband, at the connectivity
speeds defined below, is presently unavailable or insufficient for
health IT needed to improve or provide health care delivery requested
by the eligible health care providers seeking funding. The Commission
seeks comment on this proposal.
14. Connectivity Speed. The Commission seeks comment on setting a
minimum threshold for broadband connectivity speeds under the health
infrastructure program. The National Broadband Plan suggested that most
businesses in the United States, including health care providers, have
two choices of broadband service: Mass-market, small business solutions
of 4 Mbps or more, or dedicated Internet access (DIA) solutions of 10
Mbps or more. Because the focus of the health infrastructure program is
to fund dedicated networks, the Commission proposes setting 10 Mbps as
the minimum broadband speed for infrastructure deployment supported
under the health infrastructure program. The Commission seeks comment
on this proposal. The Commission also seeks comment on minimum levels
of reliability, including physical redundancy, to support health IT
services and what can be done to encourage reliability. The Commission
also seeks comment on the minimum quality of service standards
necessary to meet health IT needs. The Commission seeks comment on
whether the health infrastructure program should contain a minimum
quality of service requirement.
15. The National Broadband Plan recommended that the Commission
establish demonstrated-needs criteria to ensure that deployment is
focused in those areas of the country where the existing broadband
infrastructure is insufficient. It suggested that such criteria could
include: Demonstration that the health care provider is located in an
area where sufficient broadband is unavailable or unaffordable; or
certification that the health care provider has posted for services for
an extended period of time and has not received any viable proposals
from qualified network vendors for such services.
16. Building a dedicated broadband network involves significant
effort and costs. It is important, therefore, to adopt a process that
will help ensure that projects are funded only in those regions where
providers cannot obtain access to broadband adequate for health care
purposes due to a lack of sufficient infrastructure. Accordingly, the
Commission proposes that applicants seeking funding under the health
infrastructure program demonstrate that broadband adequate to meet
their health care needs is unavailable or insufficient in the
geographic area where health care providers are to be connected by the
proposed dedicated network, by using any of the following methods:
Provide a survey of current carrier network capabilities
in the geographic area, compiled by a preparer reasonably qualified to
make such surveys. The survey should provide details as to the identity
and broadband capabilities of all existing carriers in the proposed
network area, and discuss and justify the methodology used to make such
determinations. The survey should be accompanied by a statement of the
preparer's professional, educational, and business background that make
the preparer qualified for conducting the survey. For example, indicate
the preparer's prior experience, technical or engineering degrees,
telecommunications background, and knowledge of methods typically
employed to perform such surveys. In addition to the survey, the
applicant would be required to provide a report detailing either that
there is no available broadband infrastructure, or explaining why
existing broadband infrastructure would be insufficient for health IT
needed to provide or improve health care delivery requested by the
health care providers that are proposing the infrastructure project.
Provide copies or linked references to recognized
broadband mapping studies, such as NTIA's national broadband map, State
or local broadband maps, and other mapping sources that adequately
depicts the available broadband in the proposed network area. In
addition to referencing such NTIA or State broadband mapping studies,
the applicant would be required to provide a report detailing why
existing broadband infrastructure would be insufficient to meet the
needs of the eligible health care providers that are proposing the
infrastructure project.
Certify that, for a continuous period of not less than six
months, the health care providers in the proposed dedicated network
requested broadband services under the telecommunications program or
the health broadband services program, and did not receive any
proposals from qualified network vendors meeting the terms of the
requested services. The Commission proposes six months as the minimum
time period for which applicants must show that they were unable to
acquire broadband services sufficient for their needs. This period
would allow existing carriers to compete to provide services to the
health care providers prior to any health infrastructure funding from
the health infrastructure program. The Commission seeks comment on
whether six months is a sufficient period of time. To the extent
commenters propose other time periods, they should provide specific
information to support their recommended time periods.
17. The National Broadband Plan also suggested that health care
providers could justify funding from an infrastructure program by
providing a financial analysis showing that the cost of new network
deployment would be significantly less expensive over a specified time
period (e.g., 15-20 years) than purchasing services from an existing
network carrier. The Commission seeks comment on whether it should
adopt such criteria, in addition to the three options proposed above,
and, if so, what should be included in the financial analysis? If the
Commission requires that applicants demonstrate that network deployment
would be less expensive over a period of time, what period of time is
appropriate? For example, should such period of time be equivalent to
the useful economic life of the funded network? Should an applicant
provide a net present value to demonstrate cost effectiveness? Are
there other methodologies that can be included in a financial analysis
to demonstrate the cost effectiveness of network deployment?
18. The Commission invites comments on whether the above criteria
are sufficient to establish that broadband is unavailable or
insufficient. In addition, the Commission invites comments on other
ways in which health care providers could demonstrate, or interested
stakeholders could challenge, the sufficiency of existing broadband
infrastructure. When possible, such comments should indicate publicly
available sources that could be used to determine the existence or
absence of adequate broadband infrastructure.
19. All information submitted by applicants to establish that
broadband is unavailable or insufficient would be
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subject to review and verification by USAC.
C. Letters of Agency
20. The Commission proposes that as part of the initial application
phase for infrastructure projects, applicants identify (1) all eligible
health care providers on whose behalf funding is being sought, and (2)
the lead entity that will be responsible for completing the application
process. In addition, as in the Pilot Program, the Commission would
require that the application include a Letter of Agency (LOA) from each
participating health care provider, confirming that the health care
provider has agreed to participate in the applicant's proposed network,
and authorizing the lead entity to act as the health care provider's
agent for completing the application process. Such letters of agency
will serve as confirmation that the identified health care providers
endorse the proposed network, and will also avoid improper duplicate
support for health care providers participating in multiple networks.
All such letters of agency would be delivered by the applicant as part
of the initial application.
21. Consortium Applications. The Commission recognizes that
eligible health care providers may wish to obtain broadband services as
part of consortia that may include other entities that are not eligible
health care providers. For example, health care providers may join with
State organizations, public sector (governmental) entities, and non-
profit entities that are not eligible health care providers. The Pilot
Program allowed State organizations, public entities and non-profits to
act as administrative agents for eligible health care providers within
a consortium. The Commission proposes retaining this same flexibility
for the health infrastructure program. Although State organizations,
public entities and non-profits may not constitute eligible health care
providers, they may apply on behalf of eligible health care providers
as part of a consortium (e.g., as consortia leaders) to function in an
administrative capacity for eligible health care providers within the
consortium. In doing so, however, State organizations, public entities
and non-profits would be prohibited from receiving any funding from the
health infrastructure program (other than some administrative expenses,
as discussed below). The Commission proposes that any discounts,
funding, or other program benefits secured by a State organization,
public sector (governmental) entity or non-profit entity acting as a
consortium leader under the health infrastructure program would be
passed on to the consortium members that are eligible health care
providers.
22. The Commission also proposes that in the case of a consortium,
the legally and financially responsible entity that owns dedicated
facilities funded by the health infrastructure program could be a State
organization, public sector (governmental), or not-for profit entity
acting as a fiduciary agent for eligible health care providers within
such consortium. For example, a State, public (government) or non-
profit entity acting as administrative agent for a consortium of
eligible health care providers seeking funding for a dedicated network
could also serve as the title owner of the dedicated network. However,
the Commission proposes that title to the dedicated network would be
held exclusively for the benefit of eligible health care providers. The
Commission seeks comment on the above proposals.
D. Funding Requests and Budgets
23. The Commission proposes that every applicant's initial
application include a funding request, a brief project description and
a detailed budget. The funding request should not exceed 85 percent of
the eligible costs identified in the budget. The Commission seeks
comment on the proposals set forth below.
24. Cap on Amount Funded per Project. The Commission seeks comment
on whether there should be a cap on the total amount for which a
project may seek funding. A per project cap would help ensure that
multiple projects across varying unserved geographic areas will be
eligible to receive funding for infrastructure. The Commission notes
that nearly 90 percent of the projects in the Pilot Program had
proposed budgets below $15 million. For example, the Commission could
provide that no single project would be eligible for more than $15
million in funding. The Commission seeks comment on whether $15
million, or some other figure, is the correct per project cap to use.
The Commission notes that it would retain authority to consider an
applicant's request for waiver of the per project cap on a case-by-case
basis if warranted by the particular circumstances and the public
interest.
25. Cap on Number of Projects per Year. Further, the Commission
seeks comment on whether to adopt a rule setting a maximum number of
projects to be selected for funding each year. One of the lessons
learned from the Pilot Program is that many applicants were ill-
prepared to undertake the complex process of developing a new health
care network, and consequently many required ongoing coaching and
support to navigate their way through the process. A smaller number of
projects will allow USAC to devote greater resources and time in
ensuring their success. Also, unlike the Pilot Program, projects not
selected for funding in any funding year will have opportunities to
apply for funding in subsequent funding years. If the number of
projects that apply and qualify for funding in any year exceeded such a
cap, should priority be given to those projects that connect the
greatest number of rural health care providers? If the Commission
adopts a cap on the number of projects that may be funded per year, it
seeks comment on whether such cap should be in addition to or in lieu
of a cap on the amounts funded per project.
26. Budget. The Commission proposes that together with the funding
request, applicants submit a detailed budget that identifies all costs
related to the proposed project. The budget should be reasonable, and
should be based on pricing information available to the applicant. All
material assumptions used in preparing the budget should be noted and
discussed in narrative form. The budget should separately identify the
following (each subject to the limitations identified in this NPRM):
(1) Eligible non-recurring costs; (2) eligible administrative expenses;
(3) eligible network design costs; (4) eligible maintenance costs; (5)
eligible NLR or Internet2 membership fees; and (6) all costs that are
necessary for completion of the project, but that are not eligible for
support under the health infrastructure program. If a budget line item
contains both eligible and ineligible components, costs should be
allocated to the extent that a clear delineation can be made between
the eligible and ineligible components.
27. Requiring applicants to prepare and submit a budget would
ensure that the applicant has given adequate consideration to the
project requirements, has undertaken a preliminary analysis of
potential costs, and has identified the amount of funds that they will
be required to contribute to the overall project. The Commission seeks
comment on whether to require applicants to include any additional
information in their preliminary budget.
28. The Commission proposes that USAC review all project budgets
for compliance with program rules. USAC could assist prospective
applicants with tools that provide benchmark cost estimates for certain
items common to
[[Page 48241]]
all infrastructure projects. The Commission proposes allowing budgets
submitted by program applicants and program participants to be made
available publicly so that other prospective applicants may use such
information as a basis for preparing their own budgets. The Commission
seeks comment on the above proposals.
E. Eligible Costs
29. Non-Recurring Costs. The Commission proposes that the health
infrastructure program may provide support for the following non-
recurring costs for the deployment of infrastructure: (1) Initial
network design studies (but not in excess of the cap identified below);
(2) engineering, materials and construction of fiber facilities or
other broadband infrastructure; and (3) the costs of engineering,
furnishing (i.e., as delivered from the manufacturers), and installing
network equipment. The Commission seeks comment on these proposals and
on whether the health infrastructure program should offer support for
other non-recurring infrastructure costs.
30. Network Design. While network design would be eligible for
funding, the primary focus of the health infrastructure program should
be capital costs for infrastructure construction and deployment.
Therefore, the Commission proposes that support for eligible network
design costs be limited to $1 million per project or 15 percent of the
project's eligible costs, whichever is less. The Commission seeks
comment on this proposal.
31. Administrative Expenses. The Commission proposes that, for the
health infrastructure program only, reasonable administrative expenses
incurred by participants for completing the application process may be
eligible for some limited support. Examples of administrative expenses
are costs incurred in preparing request for proposals, negotiating with
vendors, reviewing bids, etc. The Commission's experience with the
Pilot Program supports the need to provide some amount of funding for
administrative expenses in infrastructure projects, to support the
process of designing the network and securing necessary agreements.
Participants have indicated that the costs associated with
infrastructure deployment can be a considerable financial burden on
participants that are designing and deploying networks over vast
geographic areas. Allowing a portion of funding to be used for
administrative expenses could enable program participants to explore
more efficient, effective means of deploying broadband for the delivery
of health care. Accordingly, the Commission proposes that after a
participant is selected for funding based on its initial application,
it may request funding for up to 85 percent of the reasonable
administrative expenses incurred in connection with the project.
32. Because the primary focus of the program should be to fund
infrastructure and not project administration, the Commission proposes
three limitations on administrative expenses. First, support for such
expenses will be limited to 36 months, commencing with the month in
which a participant has been notified that its project is eligible for
funding. This period should be sufficient for completing the majority
of program requirements, and support should not be provided beyond this
period. Second, the Commission proposes that the rate of support will
not exceed $100,000 per year. This amount should be sufficient for one
full-time employee (or the equivalent) dedicated to project
administration. Participants would be required to submit certifications
and maintain records confirming the number of hours provided by one or
more employees for tasks related to the health infrastructure program
project, and that the administrative expense for which support is
sought is not more than the reasonable costs for the amount of time
such employee(s) spent on the project. Third, the Commission proposes
that the aggregate amount of support a project may receive for
administrative expenses shall not exceed ten percent of the total
budget for the project. The Commission acts conservatively in proposing
a ten percent cap, which is similar to funding limits on administrative
expenses used in some Federal grant programs. The Commission seeks
comment on this proposal to provide limited support for administrative
expenses.
33. Maintenance Costs. The Commission proposes allowing limited
support for up to 85 percent of the reasonable, necessary and customary
ongoing maintenance costs for networks funded by the health
infrastructure program. Such costs would include, for example, service
agreements to operate and maintain dedicated broadband facilities. The
primary focus of the health infrastructure program is to create a
sustainable broadband infrastructure where access is presently
inadequate. The Commission seeks comment on whether support for
maintenance costs should be limited to a defined period of time, such
as three years from completion of build-out of a project, or five years
from the first funding commitment letter issued for such project
(whichever period is shorter). Participants should be able to
demonstrate in their sustainability plans that the costs of network
operations and maintenance will be sustainable after such period of
support from the health infrastructure program. Service agreements for
network maintenance will be subject to competitive bidding rules, and
may be bid either at the time of construction of the network or at a
later time. The Commission seeks comment on this proposal.
34. National LambdaRail and Internet2. The Commission proposes that
participants may receive support for not more than 85 percent of the
membership fees for connecting their networks to the dedicated
nationwide backbones, Internet2 or NLR. As in the Pilot Program, while
the Commission allows such connections as an eligible expense, the
Commission does not indicate that such connections are mandatory or
preferred. Thus, under the health infrastructure program, applicants
would be free to propose the construction of State or regional
dedicated networks that do not connect to a nationwide backbone. It is
reasonable to allow, as an eligible expense, membership fees to connect
to NLR and Internet2. As noted in the Pilot Program, both of these
backbone providers are non-profit entities that already link a number
of institutions such as government research institutions and academic,
public and private health care providers that house significant medical
expertise. By connecting to either of these two dedicated national
backbones, health care providers at the State and local levels could
have the opportunity to benefit from advanced applications in
continuing education and research. While the membership fees for
joining NLR or Internet2 would be an eligible cost, the Commission does
not propose allowing other recurring costs related to connecting to
such backbone networks. The Commission seeks comment on this proposal.
35. For the Pilot Program, the Commission provided that connections
to Internet2 or NLR were not subject to the competitive bidding rules
requirement. For the health infrastructure program, the Commission
proposes that participants may either pre-select to connect with either
Internet2 or NLR, and seek funding for such connection, or may (at
their discretion) seek competitive bids from NLR and Internet2 through
the normal competitive bidding process. Allowing a participant to pre-
select NLR on
[[Page 48242]]
Internet2 should provide the participant with an opportunity to more
fully develop the specific elements of its infrastructure proposal,
particularly where only a specific non-profit nationwide backbone
provider will fulfill the participant's network plan or meet its need
to access a particular institution that is currently connected to only
one nationwide network. If Internet2 or NLR are pre-selected by a
participant, the costs of connection to such nationwide backbone must
be reasonable. The Commission invites comment on its proposal to exempt
connections to Internet2 and NLR from the competitive bidding rules in
the new health infrastructure program. Regardless of whether they
choose to pre-select NLR or Internet2, participants in the health
infrastructure program will be subject to the Commission's audit
authority. The Commission emphasizes that it retains the discretion to
evaluate the activities of participants and determine on a case-by-case
basis whether waste, fraud, or abuse has occurred and whether
corrective action is necessary.
F. Ineligible Costs
36. Examples of Ineligible Costs. The Commission proposes that, for
the health infrastructure program, as in the Pilot Program, ineligible
costs are those costs that are not directly associated with network
design, construction, or deployment of a dedicated network for eligible
health care providers. The Commission seeks comment on this proposal.
Participants would be required to certify that support from the health
infrastructure program will not be used to pay for ineligible costs.
The Commission proposes that, as in the Pilot Program and consistent
with the Act, the authorized purposes of the health infrastructure
program would include the costs of access to advanced
telecommunications services. Ineligible costs would include (but not be
limited to) the following costs, because the following costs are not
directly related to access or to network design, construction or
deployment:
Personnel costs (including salaries and fringe benefits),
except for those costs that qualify as administrative expenses, subject
to the limitations set forth in paragraphs 37 and 38 of this NPRM.
Travel costs, except for travel costs that are reasonable
and necessary for network design or deployment and that are
specifically identified and justified as part of a competitive bid for
a construction project.
Legal costs.
Training, except for basic training or instruction
directly related to and required for broadband network installation and
associated network operations. For example, costs for end-user
training, e.g., training of health care provider personnel in the use
of telemedicine applications, are ineligible.
Program administration or technical coordination, except
for those costs that qualify as administrative expenses, subject to the
limitations set forth in paragraphs 37 and 38 of this NPRM.
Inside wiring or networking equipment (e.g., video/Web
conferencing equipment and wireless user devices) on health care
provider premises except for equipment that terminates a carrier's or
other provider's transmission facility and any router/switch that is
directly connected to either the facility or the terminating equipment.
Computers, including servers, and related hardware (e.g.,
printers, scanners, laptops), unless used exclusively for network
management.
Helpdesk equipment and related software, or services.
Software, unless used for network management, maintenance,
or other network operations; software development (excluding
development of software that supports network management, maintenance,
and other network operations); Web server hosting; and Website portal
development.
Telemedicine applications and software.
Clinical or medical equipment.
Electronic records management and expenses.
Connections to ineligible network participants or sites
(e.g., for-profit health care providers).
Costs related to any share of a project that is not
allocable to the dedicated health care network.
Administration and marketing costs (e.g., administrative
costs; supplies and materials; marketing studies, marketing activities,
or outreach efforts; evaluation and feedback studies), except for those
costs that qualify as eligible administrative expenses, subject to the
limitations set forth in paragraphs 37 and 38 of this NPRM.
Continuous power source.
37. Billing and Operational Expenses. The Commission proposes that
the health infrastructure program not provide support for billing and
operational expenses incurred either by a health care provider or its
selected vendor. An example of billing or operational costs is the
expense that service providers may charge for allocating costs to each
health care provider in a project's network. Because the Commission
does not require that costs be allocated in this manner, such billing
and operational costs should not be eligible for support. The
Commission seeks comment on this proposal.
G. Fifteen Percent Contribution Requirement
38. Minimum Participant Contribution. The Commission proposes that
as one of the conditions to receiving any funding commitments from
USAC, participants submit certification of the availability of funds,
from eligible sources, for at least 15 percent of all eligible costs.
The Commission seeks comment on this proposal. The Pilot Program
similarly required a 15 percent minimum contribution requirement for
all eligible costs. As recognized by the National Broadband Plan, the
participant contribution requirement aligns incentives and helps ensure
that the health care provider values the broadband services being
deployed, and makes financially prudent decisions regarding the
project. Ensuring that each participant has a financial stake in the
project is an important part of the implementation of infrastructure
projects, as well as critical to maintaining overall accountability for
prudent use of finite universal service funds. The Commission therefore
proposes that the health infrastructure program would pay not more than
85 percent of eligible project costs, and participants would be
required to pay the remaining 15 percent of such eligible projects
costs. In addition, participants would be required to pay all costs
that are related to the project but that do not qualify as eligible
project costs.
39. The Commission notes that the matching funds requirement for
the Broadband Technology Opportunities Program (BTOP), established
pursuant to the Recovery Act, is generally 20 percent of eligible
costs, and that the Broadband Initiatives Program (BIP), also
established pursuant to the Recovery Act, will fund 75 percent in
grants and 25 percent in loans. The Commission has learned from its
experience with the Pilot Program that some applicants have difficulty
even meeting a 15 percent contribution requirement. At the same time,
one of the benefits of increasing the contribution requirement to 20
percent or higher would be that more funds would be available under the
program to fund additional projects. The Commission invites comment on
whether it should consider a higher level of participant contribution
for
[[Page 48243]]
health infrastructure projects. Commenters should identify whether, in
light of higher levels of participant contributions in the BTOP and BIP
programs, the contribution requirement for the health infrastructure
program should be more than 15 percent to ensure better efficiencies
and greater level of ``at risk'' commitment by participants to their
projects.
40. Evidence of Viable Source for 15 Percent Contribution. The
Commission proposes that, within 90 days after being notified of
project selection, participants demonstrate that they have a reasonable
and viable source for the minimum 15 percent contribution. Many
projects in the Pilot Program indicated deployment delays due to many
factors, including difficulty in obtaining the minimum 15 percent
contribution. This, among other factors, resulted in the Bureau
extending (by one year) the deadline for participants in the Pilot
Program to select vendors and request funding commitments from USAC. To
ensure that projects are completed in a timely manner, it is important
for participants in the health infrastructure program to meet a date
certain by which they have secured the minimum 15 percent contribution
for eligible project costs. Doing so will ensure that program funds are
not indefinitely allocated to projects that cannot proceed to
completion due to lack of adequate financial contribution from the
participant. The Commission therefore proposes that after a participant
has been notified that, based on its initial application, its project
is eligible for funding, the participant have a period of 90 days to
submit letters of assurances confirming funds from eligible sources to
meet the 15 percent minimum contribution requirement. The Commission
seeks comment on this proposal.
41. Eligible Sources. The Commission proposes placing limitations
on the eligible sources for matching funds. Selected participants would
be required to identify with specificity their source(s) of funding for
the minimum 15 percent contribution of eligible network costs. Only
funds from an eligible source may apply towards meeting this
requirement. As in the Pilot Program, eligible sources would be limited
to (1) Eligible health care providers; (2) State grants, funding, or
appropriations; (3) Federal funding, grants, loans, or appropriations
(but not other universal service funding); and (4) other grant funding,
including private grants. Participants who do not demonstrate that
their 15 percent contribution comes from an eligible source or whose
minimum 15 percent contribution is derived from an ineligible source
would be denied funding by USAC. Ineligible sources would include (1)
in-kind or implied contributions; (2) a local exchange carrier (LEC) or
other telecom carrier, utility, contractor, consultant, or other
service provider; and (3) for-profit participants. Moreover, selected
participants may not obtain any portion of their 15 percent
contribution from any universal service support program. These
limitations on eligible sources would safeguard against program
manipulation, and would prevent conflicts of interest or influence from
vendors and for-profit entities that may lead to waste, fraud, and
abuse. The Commission therefore proposes that these limitations, which
were applied to the Pilot Program, be applied to the health
infrastructure program. The Commission seeks comment on the proposed
list of eligible sources.
H. Project Milestones
42. To ensure that projects proceed to completion, the Commission
proposes that participants submit a project schedule that identifies
the following project milestones: start and end date for network
design; Start and end date for drafting and posting RFPs; start and end
date for selecting vendors and negotiating contracts; start date for
commencing construction and end date for completing construction; and
target dates for each health care provider to be connected to the
network and operational. The project schedule should be submitted
within 90 days after a participant has been notified that, based on its
initial application, the project is eligible for funding. The project
schedule would also have to be updated at the time that quarterly
reports are filed by the participants, noting which project milestones
have been met and any progress or unanticipated delays in meeting other
milestones. The Commission proposes that in the event a project
milestone is not achieved, or there is a material deviation from the
project schedule, the participant would provide an explanation in the
quarterly reports. Requiring participants to establish a schedule and
report on project milestones for infrastructure projects would assist
USAC and the Commission in assessing a participant's progress in
completing project build-out, and would reduce fraud, waste and abuse.
The Commission seeks comment on these proposals. The Commission also
seeks comment on whether it should require participants to include
other information in addition to or in lieu of project milestones. Such
information should serve as a way to monitor project progress.
I. Detailed Project Description
43. The Commission proposes that, within 90 days after a
participant is notified that its project is eligible for funding based
on its initial application, the participant complete and submit a
detailed project description that describes the network, identifies the
proposed technology, demonstrates that the project is technically
feasible and reasonably scalable, and describes each specific
development phase of the project (e.g., network design phase,
construction period, deployment and maintenance period). The Commission
seeks comment on these proposals, as described below.
44. Technology Neutral. While a project description must establish
feasibility and scalability, the Commission does not propose
restricting the type of technology participants may use. Eligible
health care providers participating in the health infrastructure
program may choose any currently available technology that meets the
definition of broadband as adopted for purposes of the Rural Health
Care program. The Commission seeks comment on this proposal. Allowing
health care providers flexibility in designing their networks furthers
the ``competitive neutrality'' provision of section 254(h)(2) of the
Act by ensuring that universal service support does not favor or
disfavor one technology over another. The Commission notes that the
various projects in the Pilot Program employed different solutions with
varying levels of broadband capacity to meet the specific needs of the
health care providers participating in each network.
45. Network Coverage. The Commission proposes that the project
description should include the identity and location of all network
participants, and should include a network diagram. Participants would
be required to indicate how they plan to fully utilize their proposed
network to provide health care services, and would be required to
present a strategy for aggregating the specific needs of health care
providers within a State or region, including providers that serve
rural areas. The project description should also discuss whether the
proposed network will connect to a national backbone, such as NLR or
Internet2. Networks may be limited to a particular State or region, but
participants should describe feasible ways in which such networks will
connect to a national broadband network. Designing networks so that
they may, where feasible, connect to a dedicated national network will
allow health care providers the
[[Page 48244]]
opportunity to benefit from advanced applications in continuing
education and research and will also enhance the health care
community's ability to provide a rapid and coordinated response in the
event of a national crisis. The Commission seeks comment on these
proposals.
46. Service Speeds and Scalability. The Commission proposes that
the project description include a discussion of the speeds and services
necessary for the particular network, and how the minimum broadband
speed, proposed above, will be provided. Networks should be adequately
designed for the exchange of identifiable health information, and
capable of meeting transmission speed requirements necessary for health
care applications to be used by the health care providers. To
demonstrate their broadband needs, participants would be required to
explain and provide reasonable support for the type of health care
providers that will use the network, the bandwidth and speed
requirements for such network, and the health care services that
necessitate broadband connections at the desired speeds. Participants
would also be required to explain how the proposed network will be
designed to meet the current broadband needs of the network members,
and would be required to address whether or how the proposed network
will be scalable to handle projected future demand. The Commission
seeks comment on these proposals.
47. Health IT Purposes. The Commission proposes requiring that, as
part of the project description, participants specify how the dedicated
broadband network will be used by eligible health care providers for
health IT to improve or provide health care delivery. As defined in the
National Broadband Plan, ``health IT'' refers to information-driven
health practices and the technologies that enable them. Health IT
includes billing and scheduling systems, e-care, electronic health
records (EHRs) and telehealth and telemedicine. In adopting the Pilot
Program, the Commission recognized the benefits of telehealth and
telemedicine. The Commission seeks comment on this proposal. Consistent
with the National Broadband Plan's recommendation to adopt outcome-
based performance goals for the Rural Health Care program, we seek
comment below on how best to monitor how participants are utilizing
dedicated broadband networks to support these health IT purposes.
48. Emergency Response Connectivity. The Commission seeks comment
on whether every project should be required to include ways in which
the proposed network will be used in emergency response and meet
disaster preparedness requirements. The Commission also seeks comment
on whether every project should be required to include ways in which
the proposed network will provide effective and secure connectivity,
and peering with other networks in order to address global public
health and border issues.
J. Facilities Ownership, IRU or Capital Lease Requirements
49. The Commission proposes requiring health care providers to have
an ownership interest, indefeasible right of use (IRU), or capital
lease interest in facilities funded by the program. The Pilot Program
did not restrict the form of agreement that health care providers could
enter into with vendors for projects funded by that program. In some
instances, Pilot Program projects opted to enter into short-term or
operating leases, which placed them at greater risk and more dependent
on the vendor than if they had obtained an ownership or long-term
interest. For example, if a vendor becomes insolvent, a project that
does not have an IRU or ownership interest could be left with a non-
operational network with limited recourse. Moreover, in the case of a
participant that enters into a short-term or operating lease for
network access, once the term of the lease expires, the participant
could potentially lose access to the network. In some instances, lease
arrangements may result in proposals in which vendors incur
infrastructure costs and pass these costs to the health care providers
as either a one-time construction charge or an amortized cost over the
term of the lease. Funding from the health infrastructure program
should confer optimal long-term interests in a funded network with the
least amount of risk. The Commission therefore proposes that health
care providers seeking funding for infrastructure projects should
either: (1) Own the infrastructure facilities funded by the program,
(2) have an IRU for such facilities, or (3) have a capital lease. The
Commission seeks comment on the proposals described below.
50. Ownership or IRU. The Commission proposes permitting facilities
subject to an IRU to be funded under the health infrastructure program.
An IRU is an indefeasible right to use facilities for a certain period
of time that is commensurate with the remaining useful life of the
asset, generally 20 years. An IRU confers on the grantee the vestiges
of ownership, and is customarily used in the telecommunications
industry. It normally involves a substantial sum paid up front,
generally priced as a certain amount (depending on market rates) per
mile or per fiber mile. The Commission proposes that any contract that
involves paying for the full cost of new construction with eligible
funds should not be treated as an IRU, but simply as a construction
project with assurances that the participant owns all constructed
facilities. The Commission also proposes that an IRU should include
maintenance of the fiber/network for the term (vendor should be
responsible for maintenance and repairs); costs of maintenance and
operation of associated electronics can be (and usually are) addressed
in a separate service agreement. An IRU should be independent of any
contract for services or electronics. Unlike a lease, an ownership
interest or IRU ensures that the vestiges of network ownership will
remain with the eligible health care provider members for the period of
time delineated by the IRU, and that the network assets supported by
universal service funds will not revert to the vendor. While IRUs are
often for 20 years, the Commission does not propose setting a fixed
number of years for an IRU. Rather, the period of the IRU should be
commensurate with the remaining economic life of the facility funded by
the program. The Commission seeks comment on this proposal.
51. Capital Lease. The Commission also proposes permitting capital
leases to be funded under the health infrastructure program, but
proposes to prohibit short-term or operating leases. A capital lease is
a lease of a business asset which represents ownership and is reflected
on the lessee's balance sheet as an asset. This is in contrast to an
operating lease, in which the lessee has no ownership interest. Under
Generally Accepted Accounting Principles (GAAP), a lease is a capital
lease if it meets one or more of the following criteria: The lease term
is greater than 75 percent of the property's estimated economic life;
the lease contains an option to purchase the property for less than
fair market value; ownership of the property is transferred to the
lessee at the end of the lease term; or the present value of the lease
payments exceeds 90 percent of the fair market value of the property.
The Commission proposes that participants in the health infrastructure
program be permitted to seek support for the cost of leasing facilities
required to provide broadband service if such lease qualifies as a
capital lease under GAAP. If there is doubt regarding the
classification of a
[[Page 48245]]
particular lease under GAAP, the participant may be required to provide
an explanation justifying the classification of its leasing arrangement
as a capital lease. The Commission invites comment on this proposal.
52. No Short-Term Leases. The Commission proposes that short-term
or operating leases are not eligible for funding under the health
infrastructure program. Because the primary focus of the health
infrastructure program is the construction and sustainability of
broadband infrastructure facilities, the Commission does not believe
that short-term or operating leases are appropriate. In a short-term
lease, ownership of the funded asset would revert back to the vendor at
the conclusion of the term of the lease, conferring a benefit on the
vendor and not the health care provider. This is inconsistent with the
goal of funding infrastructure programs for the creation of
sustainable, long-term dedicated broadband networks used for health
care purposes. The Commission therefore proposes that short-term or
operating leases are not an acceptable vehicle for deploying facilities
under the health infrastructure program. The Commission invites comment
on this proposal.
53. Depreciation of Network Components. Because of the restrictions
against the sale, resale, or other transfer of universal service funds
contained in section 254(h)(3) of the Act, health care providers would
not normally be able to dispose of equipment or other improvements
funded by the health infrastructure program. The Commission seeks
comment on whether it should adopt rules that allow for the disposition
of assets after the full economic useful life of funded projects (as
determined, for example, under GAAP or as determined for tax
depreciation reporting purposes). The Commission notes, however, that
the full economic useful life of infrastructure projects in most
instances should be ten to twenty years. The Commission also seeks
comment on whether it should adopt rules that allow for the transfer of
ownership of funded projects to subsidiaries or affiliates of the
original applicants, provided that eligible health care providers
continue to have a controlling beneficial ownership interest in the
project.
K. Standard Terms and Conditions
54. The Commission proposes adopting requirements that construction
contracts, IRUs or eligible capital leases entered into by health care
providers for infrastructure projects contain certain mandatory
provisions. This would ensure consistency among projects, and will help
health care providers to negotiate contracts that meet at least a basic
level of assurance. The Commission emphasizes that such standard terms
and conditions would not be a substitute for further negotiated terms
that health care providers may deem necessary in their business
judgment. The Commission expects health care providers to exercise due
diligence in negotiating such contracts with vendors. The Commission
seeks comments on these proposed terms and conditions, and inquires
whether additional or different provisions should be required.
55. Construction Contracts. The Commission proposes that the
following provisions should be included in all construction contracts:
Work Standards. All work shall conform to identified
standards and specifications. The vendor shall not use any defective
material in the performance of the work.
Withholding of Payments. The health care provider may
withhold money due for any portion of the work which has been rejected
by the health care provider and which has not been corrected by the
vendor to the reasonable satisfaction of the health care provider.
Defects in Work. For a period of not less than one year
after project completion, the vendor shall correct at its expense all
defects and deficiencies in the work which result from (1) labor or
materials furnished by the vendor, (2) workmanship, or (3) failure to
follow the plans, drawings, standards, or other specifications made a
part of the contract.
56. IRU. The Commission proposes that the following provisions
should be included in all IRUs:
Term of the Agreement. The health care provider is granted
an exclusive and irrevocable right to use the facility funded by the
health infrastructure program, for the remainder of facility's useful
life.
Beneficial Ownership Interest. The health care provider
receives beneficial title and interest or equitable title in the
facilities funded by the health infrastructure program. Such title
should include the right to use the facilities, the right to have
access for repairs, and the right to let others use such facilities.
57. Capital Leases. The Commission proposes requiring that the
payment structure in a capital lease should be reflective of the term
of the lease. Lease payments in advance of the lease term would not be
allowed. For example, in a ten-year lease, the Commission would not
allow an upfront payment of the entire ten-year lease period. Such
prepayments present a significant risk that the vendor could default or
go into bankruptcy after the pre-payment has been made, resulting in
the loss of funds.
58. Provisions Applicable to all Contracts. Whether a construction
contract, an IRU, or a capital lease, the Commission proposes that all
contracts should have provisions that address the following:
Laws and Regulations. The vendor shall comply with all
Federal, State and municipal laws, ordinances and regulations
(including building and construction codes) applicable to the
performance of the work.
Environmental Protection. The vendor shall comply with all
applicable Federal, State and municipal environmental laws and
regulations which relate to environmental protection, inspection and
monitoring of property and environmental reporting and information
requirements.
Performance Bonds. For contracts in excess of $150,000,
the vendor shall deliver a performance bond. For construction
contracts, performance bonds should be for the construction term of the
contract plus a period of not less than one year (i.e., the same period
in which the health care provider may require the vendor to remedy
defects in the work). For a lease or an IRU, performance bonds should
be for the entire term of the agreement.
Indemnification. The vendor agrees to indemnify and hold
harmless the health care provider from any and all claims, actions, or
causes of action to the extent the claimed loss or damages arises out
of the vendor's negligent performance or nonperformance of its
obligations under the contract.
L. Sustainability Reporting Requirement
59. Consistent with the recommendations of the National Broadband
Plan, the Commission proposes requiring that, prior to receiving a
funding commitment letter from USAC, participants submit a
sustainability report demonstrating that the project is sustainable.
Although participants would be free to include additional information
to demonstrate a project's sustainability, the Commission proposes that
a sustainability plan would at a minimum address the following points:
Principal Factors. Discuss each of the principal factors
that were considered by the participant to demonstrate sustainability.
Minimum Fifteen Percent Funding Contribution. Discuss the
status of obtaining the minimum 15 percent
[[Page 48246]]
contribution for eligible project costs. If project funding is
dependent on appropriations or other special conditions, such
conditions should be discussed.
Projected Sustainability Period. Indicate a reasonable
sustainability period, which is at least equal to the useful life of
the funded facility. Although a sustainability period of 10 years is
generally appropriate, the period of sustainability should be
commensurate with the investments made from the health infrastructure
program.
Terms of Membership in the Network. Describe generally any
agreements made (or to be entered into) by network members (e.g.,
participation agreements, memoranda of understanding, usage agreements,
or other documents). Describe financial and time commitments made by
proposed members of the network. If the project includes excess
bandwidth for growth of the network, describe how such excess bandwidth
will be financed. If the network will include eligible health care
providers and other network members, describe how fees for joining and
using the network will be assessed.
Ownership Structure. Explain who will own each material
element of the network, and arrangements made to ensure continued use
of such elements by the network members for the duration of the
sustainability period.
Sources of Future Support. If sustainability is dependent
on fees to be paid by eligible health care providers, then the
sustainability plan should confirm that the health care providers are
committed and have the ability to pay such fees. If sustainability is
dependent on fees to be paid by network members that will use the
network for health care purposes, but are not eligible health care
providers under the Commission's rules, then the sustainability plan
should identify such entities. Alternatively, if sustainability is
dependent on revenues from excess capacity not related to health care
purposes, then the sustainability plan should identify the proposed
users of such excess capacity. If rural health care provider members of
the network qualify for continued support under the health broadband
services program, this should be discussed in the sustainability plan.
Management. Describe the management structure of the
network for the duration of the sustainability period, and how
management costs will be funded.
60. The Commission seeks comment on whether additional or different
sustainability requirements should be included.
M. Shared Use
61. Given the nature of high capacity networks capable of
supporting the health IT requirements of health care providers, it is
customary to build excess capacity when deploying such networks. The
Commission therefore needs to resolve: (i) What capacity should
properly be funded by universal service funds? (ii) Should eligible
health care providers be allowed to share this excess capacity with
non-eligible entities and, if so, (a) with which entities and (b) what
percentage of the total cost should such non-eligible entities be
required to pay?
62. The Commission recognizes that there may be cost-savings and
other benefits from allowing community users to participate in
infrastructure projects funded by the health infrastructure program.
However, the Commission seeks to ensure that the health infrastructure
program is not indirectly subsidizing unauthorized uses, and that funds
are not wasted. Rules governing the sharing of this subsidized
infrastructure are necessary to prevent waste, fraud and abuse, and to
control the size of the disbursements, particularly given the annual
limits on the health infrastructure program.
63. Fully-Distributed and Incremental Costs. Telecommunications
networks generally provide multiple services over a shared plant.
Telecommunications regulators in setting prices for telecommunications
services have generally had to allocate the costs of the shared plant
to the various services. Two traditional methods for assigning costs to
services are to employ incremental cost or fully distributed costs. In
economic theory, the term ``incremental cost'' refers to ``the
additional costs (usually expressed as a cost per unit of output) that
a firm will incur as a result of expanding the output of a good or
service by producing an additional quantity of the good or service.''
The term ``common cost'' refers to ``cost that are incurred in
connection with the production of multiple products or services, and
remains unchanged as the relative proportion of those products or
services varies * * *'' Where multiple services are produced by a
shared plant, pricing those services on the basis of their incremental
cost is unlikely to generate revenues sufficient to recover the total
costs of production. Accordingly, regulators traditionally have
allocated the common costs among the multiple services so as to recover
the total costs of the plant. A common approach has been to adopt
``fully distributed cost'' (or fully allocated cost) pricing rules,
which allocate costs on the basis of relative output levels, revenues
or attributable costs.
64. The Commission seeks comment on how to define fully distributed
costs for purposes of the health infrastructure program. For instance,
what allocators should the Commission use for allocating common costs?
Should the Commission allocate costs on the basis of directly
attributable costs? Or should the Commission allocate costs based on
relative capacity assigned to eligible versus ineligible users? Are
there other allocators that would be more appropriate to employ?
65. The Commission also seeks comment on whether it should provide
guidance on how incremental cost should be estimated. For example,
should the cost of building laterals to other community institutions,
the cost of electronics to light the fibers used by the other
institutions, and any additional costs associated with purchasing a
higher-capacity fiber cable all be deemed to be incremental costs?
Should other costs be included in estimating incremental costs?
66. The Commission seeks comment on these proposed distinctions
between fully-distributed costs and incremental costs, and solicits
alternative proposals.
67. The Commission proposes that the health infrastructure program
only support the infrastructure costs associated with the eligible
health care providers' current and anticipated bandwidth requirements.
To the extent that the deployed network has excess capacity and the
eligible entities seek to share that excess capacity with ineligible
entities, the Commission proposes that the ineligible entities should
pay an appropriate portion of the costs of the network. The Commission
seeks comment on whether the share of costs borne by the ineligible
entities should be based on incremental cost or fully-distributed cost.
The Commission seeks comment on the likely proportion of network costs
ineligible entities would be required to bear if we adopt an
incremental cost approach. The Commission seeks comment on whether it
would be administratively simpler or more appropriate to adopt a fully
distributed cost approach. For example, if eligible health care
providers plan to use 75 percent of the network capacity and 25 percent
of the capacity is planned for use by the community, should the
Commission require a showing that the ineligible users pay 25 percent
of the total cost of the network? In this example, should this 25
percent proportionate share of costs include costs associated with
trenching,
[[Page 48247]]
planning and design, obtaining rights of way, deployment, modulating
equipment costs, and maintenance and operation costs?
68. In the event the Commission adopts an incremental cost
approach, should it make a bright line distinction so if ineligible
users take more than a set percentage of the network's capacity, then
they would be required to pay a larger share based on fully-distributed
costs (rather than merely incremental cost)?
69. The Commission seeks comment on which allocators it might
adopt. For example, in fiber projects, should the Commission allocate
the cost of the common infrastructure on the basis of the relative
number of fibers used by the health care providers compared with other
users? Should we use some other measure of relative capacity or demand?
Alternatively, should the Commission allocate common costs on the basis
of directly attributable costs? Are there other allocators that would
be simpler to implement? Would use of a fully distributed cost
allocation methodology reduce the likelihood of waste, fraud and abuse?
What effect would such an approach have on the incentives of the
eligible health care provider, the vendor and other potential users of
the infrastructure to invest in a fiscally responsible manner in
broadband networks?
70. Protecting Against Fraud, Waste and Abuse. The Commission seeks
comment on what limitations on additional capacity for community use
are necessary to protect the integrity of dedicated health care
networks, and to help ensure that eligible health care providers
receive the maximum benefit from infrastructure funded by universal
service funds. The Commission seeks comment on what restrictions or
measures it should adopt to prevent fraud, waste and abuse as a result
of projects that involve dedicated health care networks and additional
capacity for use by entities that are not eligible health care
providers under our rules. For instance, if the Commission allows
excess capacity to be shared by other community uses at incremental
cost, should it require that:
The eligible health care providers or consortium of
eligible health care providers should own (or have an IRU or capital
lease interest in) in all physical elements of the dedicated network
that are part of the project, including any excess capacity.
All revenues generated by the network from allowing non-
eligible health care providers to use the network's excess capacity
must be retained by the network to operate, maintain and support the
network. This could include, for example, purchasing equipment or
applications necessary for the network or the applications that run
over it.
The participant's sustainability plan must indicate
reasonable assumptions for the use of excess capacity.
Either all excess capacity will be used for the health
care purposes identified in the participant's application for funding;
or, if used by non-eligible entities, the users of such excess capacity
will pay (to the network) a market or arm's length negotiated rate to
use such excess capacity.
Network members must have a written agreement or
organizational document that specifies the members' respective rights
and obligations, including access and maintenance, and reasonable
(i.e., arm's length) allocation of recurring and non-recurring costs.
71. Excess Capacity Disclosures. If an infrastructure project
includes excess capacity, the Commission proposes requiring applicants
to disclose the estimated amount of excess capacity as part of its
sustainability plan, and to explain how they plan to allocate the cost
of the network between the network members that are eligible health
care providers and the members that are not eligible health care
providers. In doing so, participants would be required to: (1) identify
non-eligible users of such excess capacity and explain what proportion
of the network non-recurring and recurring costs they will bear, and
(2) describe all agreements made between the eligible health care
providers and other participants in the network (e.g., cost allocation,
facility sharing agreements, maintenance and access obligations,
ownership rights). The Commission seeks comment on this proposal, and
on how recipients should be required to document the required cost
allocation (whether fully-distributed cost or/and incremental cost).
Particularly, the Commission seeks comment on how to determine what
constitutes ``fully-distributed costs'' in situations where there are
various types of ownership interests (e.g., IRU or capital lease)
proposed in this notice.
72. Additional Capacity for Community Use. In addition to the
proposed rules above (regarding excess capacity for health care
purposes), the Commission seeks comment on whether it should encourage,
permit, or restrict the following categories of joint projects that
include additional capacity for use by the community (not for health
care purposes):
Additional capacity for use by schools and libraries;
Additional capacity for use by governmental entities
(State and local); and
Additional capacity for use by other entities in the
community, such as local non-profits, community or civic organizations,
low-income residents, local businesses, anchor institutions and other
residents.
73. Priority Preferences for Projects That Include Additional
Capacity for Community Use. For each of the above types of additional
capacity for community use listed in paragraph 77, the Commission seeks
comments on whether projects funded by the health infrastructure
program should include, restrict, or allow these types of joint or
shared projects. The Commission also invites comment on priority
preference and other issues. For example:
If the Commission caps the number of projects per year, or
if the number of projects per year under the health infrastructure
program exceeds the proposed $100 million funding cap, should the
Commission give special prioritization treatment to projects that plan
to allow use of excess capacity by schools and libraries that are
otherwise eligible for universal service funding?
Should the Commission give priority to projects that allow
use of excess capacity by State or local government (including
government offices, police, fire departments and Emergency Medical
Services)?
Should other community use be allowed or restricted?
74. Other Considerations Regarding Additional Capacity for
Community Use. Should there be additional restrictions on the terms and
conditions on which additional capacity may be made available for
community use? For example, should the Commission restrict, limit, or
add specific requirements as to who should own the portion of a network
dedicated for community use?
75. Should the Commission require that additional capacity for
community use be physically separated from the dedicated capacity
reserved for the health care network? If so, the Commission seeks
comment on how such separation may be effectuated. For example, should
the Commission require capacity to be separated by fiber strand,
channel, wavelength, or by some other method?
76. Commenters should address how permitting joint projects that
include additional capacity for community use would be consistent with
the resale restrictions contained in section 254(h)(3) of the Act. The
use of such
[[Page 48248]]
additional capacity by the community would not violate the restrictions
against sale, resale or other transfer contained in section 254(h)(3)
of the Act because, in such instances, health care providers would
retain ownership of the additional capacity, and payments to the
network for the use of such additional capacity would be retained to
sustain the network. The Commission seeks comment on this analysis.
N. Vendor Cost Reporting Requirements
77. The Commission proposes requiring that health care providers
obtain certain cost information from vendors. The Commission seeks
comment on its proposal, as detailed below. Because infrastructure
projects are complex and involve a significant amount of funding, it is
important that participants exercise due diligence in determining
costs. To assist participants in this process, and to mitigate waste,
fraud and abuse, the Commission proposes that participants in the
health infrastructure program should:
Require the vendor to certify either that: (1) The
infrastructure project will only involve the construction and
deployment of the dedicated healthcare network, and will not involve
the construction or deployment of additional facilities or capacity
that will not be part of the dedicated network; or (2) The
infrastructure project will include both the construction and
deployment of the dedicated network and the construction and deployment
of additional facilities or capacity for uses other than the dedicated
network, but: (a) The cost charged to the dedicated network will not
exceed fully distributed costs given the use, quality of service, term
(length of service) and other terms and conditions for use of the
dedicated facility; and (b) the vendor will pay all costs related to
the additional facility or capacity.
To assist the health care providers to determine
sustainability of the network, require that the vendor provide a
depreciation schedule showing the useful life of fixed assets.
Require the vendor to maintain books and records that
support all cost allocations.
O. Quarterly Reporting Requirements
78. The Commission proposes requiring that health infrastructure
program participants submit quarterly reports that provide information
on the following: (1) Attaining project milestones, (2) status of
obtaining the 15 percent minimum match, (3) status of the competitive
bidding process, (4) details on how the supported network has complied
with HHS health IT guidelines or requirements, such as meaningful use,
if applicable; and (6) performance measures. The Commission seeks
comment on this proposal, and on whether such reports should only be
required annually or semi-annually. Such information could inform the
Commission's understanding of cost-effectiveness and efficacy of the
different State and regional networks funded by the program and guide
future decision-making. This information should also enable the
Commission to ensure that universal service funds are being used in a
manner consistent with section 254 of the Act and the Commission's
rules and orders. In particular, collection of this information is
critical to the goal of preventing waste, fraud, and abuse by ensuring
that funding is flowing to its intended beneficiaries. Participants
should also note that submission of a quarterly report is not a
substitute for seeking consent for any material modification to the
original application.
P. Competitive Bidding
79. The Commission proposes that all projects funded by the health
infrastructure program be subject to fair and open competitive bidding.
Currently, health care providers seeking support under the Rural Health
Care Support Mechanism post a request for services on USAC's Web site
for a period of at least 28 days, using FCC Form 465, which serves as a
method for USAC and potential vendors to be aware of requests for
services. Because of the complexity of infrastructure projects,
participants in the health infrastructure program should be explicitly
required to prepare a detailed request for proposals (RFP) that
provides sufficient information to define the scope of the project, and
to distribute the RFP in a method likely to garner attention from
interested venders. For example, participants could (1) post a notice
of the RFP in trade journals or newspaper advertisements, (2) send the
RFP to known or potential service providers, (3) include the RFP on the
health care provider's Web page or other Internet sites, or (4) follow
other customary and reasonable solicitation practices used in
competitive bidding. Adding this mandatory RFP preparation and
distribution requirement could increase the quality and quantity of
bids received by health care providers for their network projects, and
will therefore result in a more efficient use of funding under the
health infrastructure program. The Commission seeks comment on whether
participants also should be required to post an FCC Form 465 and note
on that form that they have issued a detailed RFP. If participants
using an RFP are not required to use an FCC Form 465, then the
certifications that are contained in the Form 465 would be included in
a substitute form.
80. The Commission recognizes that in certain smaller projects, or
in projects that are subject to mandatory, State or local procurement
rules, its proposed RFP preparation and distribution requirements may
not be practical or cost-effective. Accordingly, the Commission's
proposed RFP requirements would not be applicable to infrastructure
projects of $100,000 or less or projects that are subject to mandatory
State or local procurement rules. However, such projects would still be
required to complete a request for services on an Form 465 and post
this request on USAC's Web page for a period of at least 28 days before
selecting a vendor. The Commission proposes that health care providers
be required to certify that each service or facility provider selected
for an infrastructure project supported by the health infrastructure
program is, to the best of the health care provider's knowledge, the
most cost-effective service or facility provider available, as defined
in our rules. The Commission seeks comment on the above proposals.
Q. Designation of Successor Projects
81. The Commission proposes that USAC monitor each funded
participant's progress, as defined by their project milestones, and
alert the Wireline Competition Bureau (Bureau) in the event of any
significant project delays or concerns. Similar to the Pilot Program,
the Commission proposes delegating to the Bureau the authority to waive
the relevant sections of Subpart G of Part 54 of the Commission's rules
to the extent waiver may be necessary to the sound and efficient
administration of the health infrastructure program.
82. The Commission also proposes that in instances where a
participant is unable to complete its project, the Wireline Competition
Bureau would have authority to designate a successor project, similar
to the delegation of authority for the Pilot Program. Such designation
of a successor could be made upon request of the participant, or on the
Bureau's own motion. The Bureau would exercise such discretion in
instances where a project fails to meet a specified milestone, or a
participant fails to adequately notify the Commission of modifications
to the project milestone deadlines. In selecting a successor project,
the Bureau would take into consideration the likelihood that the
successor will be able, at a minimum, to complete the project in a
[[Page 48249]]
manner that provides new broadband infrastructure to the identified
region or area. The Commission also proposes delegating authority to
the Bureau to revoke funding awarded to any selected participant making
unapproved material changes to the network design plan set forth in the
participant's detailed project description submitted as part of the
funding application materials. The Commission seeks comment on the
proposals outlined above. As a final matter, the Commission also seeks
comment on ways for the Bureau and USAC to improve outreach efforts in
assisting projects through the Commission's administrative process.
R. NEPA and NHPA Requirements
83. Certain projects funded by the health infrastructure program
could implicate the National Environmental Policy Act (NEPA) and the
National Historic Preservation Act (NHPA). If NEPA and NHPA are
implicated by a particular proposed project, the Commission invites
comment on the point in the application process at which participants
should be required to comply with the requirements codified in the
Commission's rules.
II. Health Broadband Services Program
84. In the 2003 Rural Health Care Internet Access Order, the
Commission amended the Rural Health Support mechanism to fund the
recurring costs associated with Internet access for rural health care
providers in two ways. First, the program subsidizes the rates paid by
rural health care providers for telecommunications services to
eliminate the rural/urban price difference within each State (via the
telecommunications program). Second, to support advanced
telecommunications and information services, the program provides a 25
percent flat discount on monthly Internet access for rural health care
providers and a 50 percent discount for health care providers in States
that are entirely rural (via the Internet access program).
85. In establishing the level of support for the Internet access
program, the Commission concluded that a flat discount percentage of 25
percent off the cost of monthly Internet access would assist health
care providers seeking to purchase Internet services, while also
providing incentives for rural health care providers to make prudent
economic decisions concerning their telehealth needs. The Commission
found that a flat discount would be easy to administer and consistent
with section 254(b)(5), which requires ``a specific, sufficient, and
predictable mechanism * * * because it limits the amount of support
that each health care provider may receive per month to a reasonable
level.'' The Commission also determined that a flat discount would lead
to greater predictability and fairness among health care providers. In
setting the discount level at 25 percent, the Commission acted
conservatively based on the belief that this amount would provide an
incentive for rural health care providers to choose a level of service
appropriate to their needs, ensure that demand for Internet access
support would not exceed the annual funding cap, and deter wasteful
expenditures. The Commission stated that as it gained more experience
with this aspect of the support mechanism, it would reassess the
appropriateness of the 25 percent discount level.
86. Noting the under-utilization of the current support mechanism,
the National Broadband Plan recommended that the Internet access
program be replaced with a broadband services access program that
expands the definition of funded services and provides greater support
than the 25 percent subsidy under the current Internet access program
in order to better meet the health IT needs of health care providers.
To better encourage program participation, the National Broadband Plan
also recommended that the Commission simplify the application process
for the program, while also continuing to protect against potential
waste, fraud and abuse in the program.
A. Eligible Services
87. Eligible Access and Transport Services. Pursuant to section
254(h)(2)(A), and consistent with the recommendations made in the
National Broadband Plan, the Commission proposes to replace the
existing Internet access program with a new health broadband services
program, which will subsidize 50 percent of an eligible rural health
care provider's recurring monthly costs for any advanced
telecommunications and information services that provide point-to-point
broadband connectivity, including Dedicated Internet Access. The
Commission seeks comment on this proposal. The Commission notes that
section 254(h)(2)(A) is not limited to health care providers in rural
areas. The Commission seeks comment on whether an appropriate first
step for expanding funding for broadband services should be to focus on
rural areas, given the particular challenges that rural communities
often face in obtaining access to health care. The Commission also
invites comment on whether this proposal implicates section
254(h)(1)(A), and if so, how the Commission would implement the
proposed health broadband services program in light of section
254(h)(1)(A). For instance, should the Commission require that
recipients seeking funding for telecommunications services make an
election as to whether they wish to receive support under the
telecommunications program or under the new proposed health broadband
services program?
88. As noted by the National Broadband Plan, when used effectively,
broadband-based technologies can ``help health care professionals and
consumers make better decisions, become more efficient, engage in
innovation, and understand both individual and public health more
effectively.'' Currently, the Internet access program provides support
equal to 25 percent of the monthly cost of Internet access reasonably
related to the health care needs of rural health care providers. The
Commission's current rules define Internet access as ``an information
service that enables rural health care providers to post their own
data, interact with stored data, generate new data, or communicate over
the World Wide Web.'' Under this definition, the Commission determined
that Internet access provides access to the world-wide information
resource of the Internet, and includes all features typically provided
by Internet service providers to provide adequate functionality and
performance. To qualify as Internet access under the definition, the
Commission further stated that transmissions must traverse the Internet
in some fashion.
89. Access to advanced telecommunications and information services
for health care delivery is provided in a variety of ways today, and is
not limited to the public Internet and the features typically provided
by Internet service providers. For example, due to privacy laws and
electronic health care record requirements, secure transmission of
health IT data needs to occur over a private dedicated connection
between health care providers. In addition, as evidenced in the
networks being funded under the Pilot Program, many health care
providers rely on private wide area networks to provide Health IT and
access applications for the delivery of health care to rural areas.
Limiting funding to transmission over the public Internet therefore may
inhibit access to health IT necessary to improve health care delivery.
The low utilization rate of the existing Internet access program
suggests the narrow definition of
[[Page 48250]]
Internet Access does not align with the needs of health care
practitioners.
90. The Commission proposes that the health broadband services
program provide support to eligible rural health care providers for the
recurring costs of access to advanced telecommunications and
information services that enable rural health care providers to post
their own data, interact with stored data, generate new data, or
communicate over private dedicated networks or the public Internet for
the provision of health IT.
91. The Commission seeks comment on whether it should define a
minimum level of broadband capability for purposes of providing support
under the new health broadband services program. The National Broadband
Plan suggested that 4 Mbps downstream is the minimum necessary for a
solo practitioner to support the deployment of health IT applications
today and in the near future, whereas the recommended bandwidth for
other health care providers is 10 Mbps for small clinics and health
care providers with 2 to 4 physicians, 25 Mbps for larger clinics and
health care providers with 5 or more physicians, 100 Mbps for hospitals
and 1,000 Mbps for large medical centers. Would 4 Mbps be an
appropriate minimum for purposes of the new health broadband services
program, or should we require different minimum speeds depending on the
type of health care provider? Four (4) Mbps could be a sufficient
minimum requirement since the health broadband services program would
be used to fund broadband services without funding additional
infrastructure. In contrast, for the health infrastructure program,
given the use of funding specifically for broadband deployment, the
minimum broadband speed should be higher. The Commission also seeks
comment on minimum levels of reliability, including physical
redundancy, to support health IT services and what can be done to
encourage reliability. The Commission also seeks comment on the minimum
quality of service standards necessary to meet health IT needs. The
Commission seeks comment on whether the health broadband services
program should contain a minimum quality of service requirement.
92. Eligible Service Providers. In the past, the Commission has
permitted health care providers to seek discounts on ``the most cost-
effective form of Internet access, regardless of the platform.''
Consistent with section 254(h)(2)(A), the Commission proposes that
participants in the health broadband services program may seek
supported services from any type of broadband provider, as long as the
participant selects the most cost-effective option to meet its health
care needs. The Commission seeks comment on this proposal.
93. Limitations to Prevent Waste, Fraud, and Abuse. To guard
against the possibility of waste, fraud, and abuse in the health
broadband services program, the Commission proposes that the supported
services must be reasonably related to the provision of health care
services by an eligible health care provider. Second, eligible health
care providers that seek support for telecommunications service
offerings may not also request support from the telecommunications
program for the same service. Lastly, all requests for discounts under
the health broadband services program would comply with our rules on
competitive bidding and cost-effectiveness, as discussed below. The
Commission seeks comment on these proposals.
B. No Capital or Infrastructure Costs
94. The National Broadband Plan recommended that the Rural Health
Care Support Mechanism maintain a distinction between subsidies for
recurring costs (i.e., the monthly service price) and subsidies for
other costs (e.g., infrastructure, equipment). Given the proposed
availability of funding for infrastructure deployment and upgrades in
the health infrastructure program, the Commission proposes placing
limits on the use of funding under the health broadband services
program for non-recurring costs. Under the Internet access program,
USAC allows participants to receive one-time support equal to 25
percent of the cost of Internet access installation. The existing
Internet access program, however, does not provide support for the
costs of construction or infrastructure build-out necessary for the
installation of Internet access services. The Commission proposes that
under the health broadband services program, participants may receive a
one-time support equal to 50 percent of reasonable and customary
installation charges for broadband access. Installation charges would
be defined as charges that are normally charged by service providers to
commence service, and are not charges that are based on amortization or
pass through of construction or infrastructure costs. The health
broadband services program would only subsidize health care providers'
recurring costs--that is, the monthly price for providers' eligible
services and one-time installation charges. The Commission seeks
comment on this proposal.
95. The National Broadband Plan recommended that ``federal and
state policies should facilitate demand aggregation and use of state,
regional and local networks when that is the most cost-efficient
solution for anchor institutions to meet their connectivity.'' The
Commission proposes that eligible health care providers should be able
to receive support for the lease of dark or lit fiber to provide
broadband connectivity from any provider. Under such an approach,
applicants would, for instance, be able to lease dark fiber that may be
owned by State, regional or local governmental entities, when that is
the most cost-effective solution to their connectivity needs.
96. The Commission recognizes that, in some situations, service
providers may deploy new facilities to serve eligible health care
entities, and may seek to recover all or part of those costs through
non-recurring charges when service is initiated. Consistent with
policies adopted in the schools and libraries support mechanism, the
Commission proposes that applicants may not seek upfront support for
non-recurring charges of $500,000 or more. If non-recurring charges are
more than $500,000, they must be part of a multi-year contract, and
must be prorated over a period of at least five years. The Commission
seeks comment on these proposals.
C. Restrictions on Satellite Services
97. Section 254 directs the Commission to adopt rules that enhance
access to advanced telecommunications and information services to the
extent ``technologically feasible and economically reasonable.'' As
noted by the National Broadband Plan, ``the high fixed costs of
designing, building and launching a satellite mean that satellite-based
broadband is likely to be cheaper than terrestrial service only for the
most expensive-to-serve areas.'' The Commission proposes to require
that a health care provider seeking support for satellite service
demonstrate that it is the most cost-effective option available to meet
the provider's health care needs. The Commission also proposes to
incorporate the rules currently governing the purchase of satellite
services under the telecommunications program into the new health
broadband services program. Currently, eligible health care providers
may seek support for rural satellite services, even if a similar
terrestrial-based service is available. However, discounts are capped
at the amount that the provider would have received if they purchased a
functionally similar terrestrial-based
[[Page 48251]]
alternative. The Commission seeks comment on these proposals.
D. Level of Support
98. The National Broadband Plan recommended that the Commission
base discount levels for the health broadband services program on
criteria that address such factors as lack of broadband access, lack of
affordable broadband, price discrepancies for similar broadband
services between health care providers, the health care provider's
inability to afford broadband services, special status for health care
providers in the highest Health Professional Shortage Areas (HPSAs) of
the country, and special status for public or safety net institutions.
99. The National Broadband Plan further recommended that, to enable
health care providers to afford higher bandwidth broadband services,
the subsidy support amount under the health broadband services program
should be greater than the 25 percent subsidy available under the
Internet access program. In addition, the National Broadband Plan
suggested that support be adjusted to better match the costs of
services for disadvantaged health care providers. Additionally, to
encourage participation in the health broadband services program, the
National Broadband Plan stated that the Commission should ``simplify
the application process and provide clarity on the level of support
that providers can reasonably expect, while protecting against
potential waste, fraud and abuse.''
100. The Commission notes that, on average, health care providers
that applied for the urban/rural cost difference for eligible
telecommunications services under the existing telecommunications
program received funding commitments for a 60 percent discount on their
cost of service; a significant number of those funding commitments are
for T-1 lines. The Commission does not have sufficient information at
this time regarding the comparative costs of higher bandwidth services
that increasingly may be used by health care providers in the future as
they employ health IT applications for telehealth and e-care, nor does
the Commission have information that would enable it to develop an
administratively workable affordability benchmark. Given the dearth of
available information, a cautious approach could be to adopt a flat
discount of 50 percent for monthly recurring costs and evaluate, after
some period of time, whether such a flat discount results in increased
adoption and utilization of broadband for health care purposes. The
Commission seeks comment on this proposal, as discussed in this
section.
101. One potential advantage of adopting a 50 percent discount is
that the participating health care provider has a financial stake in
paying for its selected services, thereby providing an incentive for
cost-effective decision making and promoting the efficient use of
universal service funding. In particular, unlike a rural/urban
benchmark methodology, a flat discount requires that providers seek
cost efficient solutions to their broadband needs because they have
their own investment in the recurring service costs. In conjunction
with the competitive bidding process, a financial stake in services
supported by the health broadband services program will help in keeping
costs lower for the same quality services.
102. The National Broadband Plan also recommended that, to better
encourage participation in the health broadband services program, the
Commission should provide clarity as to the level of support that
health care providers can reasonably expect to receive. Not only does a
50 percent flat discount promote prudent decision-making, it provides a
clear and predictable support amount, thereby assisting rural health
care providers in planning for their broadband needs and purchasing
services. Moreover, a flat rate discount is easy to administer, which
should expedite the application process and reduce administrative
expenses incurred by USAC.
103. The Commission also seeks input on whether affordability
metrics could be incorporated into the flat rate methodology proposed
above. Are there factors that could be considered under a flat rate
funding mechanism that target health care providers in rural areas that
still could not afford broadband access services under the 50 percent
funding threshold?
E. Competitive Bidding
104. The National Broadband Plan suggests that the Commission
should evaluate the tools at its disposal, such as competitive bidding,
to enhance its oversight of the Rural Health Care Support Mechanism.
The Commission proposes to extend the competitive bidding requirements
that are currently applicable to the Internet access program to the new
health broadband services program. Specifically, the Commission
proposes that each participant undertake a competitive bidding process
by posting an FCC Form 465 prior to selecting a service provider, and
certify that it considered all bids received and selected the most
cost-effective bid. The Commission seeks comment on this proposal. Are
there changes the Commission can make to the competitive bidding
mechanism to make it more successful or efficient? Are there certain
types of situations that should be exempted from the competitive
bidding requirements?
105. Multi-year contracts. Under the current internet access
program, certain service contracts have ``evergreen'' status, meaning
that for the life of the contract, the parties do not have to rebid the
service or post an FCC Form 465. A health care provider covered under
an evergreen contract may apply annually for Internet access support by
filing only an FCC Form 466-A. Conversely, a health care provider who
does not have an evergreen contract is considered to have a ``month-to-
month, tariffed service and must post an FCC Form 465 and select the
most cost-effective service and service provider each year.''
106. The Commission proposes to codify this practice as part of the
new health broadband services program. If they choose to do so, program
participants will be allowed to enter into multi-year contracts for
recurring broadband services. Further, the Commission proposes that
multi-year contracts that are competitively bid in accordance with the
Commission's rules and are deemed to have evergreen status by USAC do
not need to be re-bid each year, for the life of the contract. However,
consistent with current policy, all health care providers would be
required to continue to request support annually by filing an FCC Form
466-A. Additionally, any changes to the parties' evergreen contract,
such as an extension, renewal, or the addition of services, would
require the posting of a new FCC Form 465. Codifying this existing
practice would maintain consistency while transitioning from the
existing Internet access program to the new health broadband services
program. Health care providers would also benefit from the opportunity
to enter into long-term contracts with service providers, which may
offer lower pricing than would be available on an annual basis.
Moreover, the administrative obligations would be reduced for those
providers who do not file a Form 465 each year. The Commission seeks
comment on this proposal.
107. Opting into the Health Broadband Services Program. Under the
Pilot Program, the Commission permitted participants to seek support
for both the recurring and non-recurring costs associated with the
deployment of broadband health care networks and the advanced
telecommunications and
[[Page 48252]]
information services provided over those networks. When the Pilot
Program ends, some participants may wish to transition to the new
health broadband services program to subsidize the recurring costs
formerly funded by the Pilot Program. The Commission seeks comment on
whether Pilot Program participants whose original request for
competitive bids included both non-recurring and recurring costs should
be permitted to transition to the health broadband services program
without undergoing a new competitive bidding process.
III. Eligible Health Care Providers
A. Administrative Offices
108. Under the Commission's current rules, health care providers
housing their administrative operations in off-site offices may not
seek rural health care support for those offices. The National
Broadband Plan recommended that the Commission expand its
interpretation of eligible health care provider to allow participation
in the Rural Health Care Support Mechanism by off-site administrative
offices. Off-site administrative offices that are owned or controlled
by an eligible health care provider should have the opportunity to
receive rural health care support, and, as detailed below, the
Commission proposes to amend its rules to reflect this change. The
Commission seeks comment on this proposal.
109. There are several reasons why the Commission thinks it
appropriate to revisit this issue. In today's environment, while
administrative offices do not provide ``hands on'' delivery of patient
care, they often perform support functions that are critical to the
provision of clinical care by rural health care providers. For example,
administrative offices may coordinate patient admissions and
discharges, ensure quality control and patient safety, and maintain the
security and completeness of patients' medical records. Administrative
offices also perform ministerial tasks, such as billing and collection,
claims processing, and regulation compliance. Without an administrative
office capable of carrying out these functions, an eligible health care
provider may not be able to successfully provide patient care. From the
Pilot Program, the Commission has also learned that administrative
costs can be significant for rural health care providers and, in some
cases, may prevent providers from adopting telemedicine at all. For
example, one Pilot Program participant stated in its response to the
NBP Public Notice #17 that, despite efforts to minimize costs, it had
spent over $160,000 on administrative expenses in approximately two
years. By expanding the Commission's interpretation of section
254(h)(7)(B) to include funding for off-site administrative offices,
the Commission could help to reduce the costs of telemedicine adoption
for rural providers.
110. The Commission also recognizes that there is a wide variation
in the way that health care providers structure their facilities. While
some providers perform both clinical and administrative functions at a
single, stand-alone facility, other providers require multiple sites
and choose to house their administrative and clinical operations in
separate buildings. It is becoming a best practice among health care
providers to locate their administrative facilities off-site from the
provider's primary facility. To the extent that administrative offices
are owned or controlled by an eligible health care provider, the
Commission proposes that they should be funded as a part of the
eligible health care provider under section 254(h)(7)(B). It is
impractical to distinguish administrative offices that are located off-
site but otherwise perform the same functions as in-house
administrative offices. The Commission seeks comment on this proposed
change.
111. If the Commission revises its rules to indicate that off-site
administrative offices may qualify as eligible health care providers,
additional limitations may be needed to protect the program from waste,
fraud, and abuse. First, the Commission proposes that an off-site
administrative office must be at least 51 percent owned or controlled
by an eligible non-profit or public health care provider listed in
section 254(h)(7)(B) of the Act. An off-site facility would not qualify
for support, therefore, simply by entering into an outsourcing
relationship with an eligible health care provider. The Commission also
seeks comment on whether an off-site administrative office that is less
than 51 percent owned or controlled by an eligible health care provider
should be eligible for support on a pro-rated basis or should be
excluded from support altogether. Second, the Commission notes that, in
some cases, off-site administrative offices may serve several purposes,
some of which are unrelated to health care or performed on behalf of
ineligible entities. The Commission therefore proposes to allow
eligible health care providers to seek support for off-site
administrative offices only in those instances where the health care
provider certifies that the administrative office is used primarily for
performing services that are integral to the provision of health care
by eligible health care providers. The Commission seeks comment on
these proposals.
C. Data Centers
112. Currently, off-site data centers are not eligible health care
providers under the Commission's rules. The National Broadband Plan
recommended that the Commission expand its interpretation of ``eligible
health care provider'' to include off-site data centers used for health
care purposes and owned (directly or indirectly) by an eligible health
care provider. As the Commission learned from the Pilot Program, data
centers often perform functions, such as housing patient records or
serving as operations centers, which are critical to the delivery of
health care in rural communities. For example, the Utah Telehealth
Network Pilot Program Project uses a primary and a secondary data
center to deliver approximately 2,500 clinical and financial
applications across wide area networks to eligible health care
facilities. Similarly, the Western New York Rural Area Health Education
Center (Western New York Area Health Pilot Program Project plans to
``connect all participating hospitals and clinics in the rural and
under-served areas over a dedicated broadband Internet Protocol network
to a centralized conferencing and server core at the Western New York
Area Health data center facility * * * which aggregates, and expands
the primary- and secondary-care capacities of these hospitals and
clinics for telemedicine, radiological imaging, and community-based
health information exchange, as well as clinical collaboration,
mentoring, and distance learning and education applications.''
Commenters responding to the NBP Public Notice #17 stressed that if the
connections between the data centers and the individual network sites
are not funded, information transfer will not occur and the network
cannot operate, thereby inhibiting patient care.
113. As health care providers rely more on advanced applications to
meet the challenges of sharing, storing and retrieving electronic
medical data and images, health care providers and organizations will
likely need to depend more heavily on high-speed connectivity between
key sites and data centers. As an administrative matter, it is
impractical to disallow funding to data centers that provide the same
functions as on-site entities, but happen to be located off-site. Like
off-site administrative offices, the Commission therefore proposes that
off-site data
[[Page 48253]]
centers that are owned or controlled by eligible health care providers
should receive rural health care support as a part of the eligible
health care provider under section 254(h)(7)(B).
114. As with the case of administrative offices, the Commission
notes that off-site data centers can serve several purposes, some of
which may be unrelated to health care or performed on behalf of
ineligible entities. Many private companies, for example, offer off-
site data center services that may be purchased by any member of the
public. In those cases, it is possible that some of the entities served
are not eligible health care providers. As such, the Commission
proposes to allow eligible health care providers to seek support only
for off-site data centers in which the eligible health care provider
has at least a 51 percent ownership or controlling interest. The
Commission also seeks comment on whether an off-site administrative
office that is less than 51 percent owned or controlled by an eligible
health care provider would be eligible for support on a pro-rated basis
or should be excluded from support altogether. Additionally, because of
the possibility that off-site data centers may provide services
unrelated to health care or on behalf of ineligible entities, the
Commission proposes to require eligible health care providers seeking
support for off-site data centers to certify that the data center is
used primarily for performing services that are integral to the
provision of health care. The Commission seeks comment on these
proposals.
D. Skilled Nursing Facilities
115. The Commission proposes that non-profit skilled nursing
facilities be considered eligible for rural health care support under
the category of ``not-for-profit hospitals.'' Skilled nursing
facilities provide some of the same post-acute services that are
traditionally provided at hospitals, such as the management,
observation, and evaluation of patient care. As noted by the National
Broadband Plan, under the changing technological landscape of rural
health care, services are no longer clearly divided into traditional
delivery models. The CDC reports that the number of acute care
facilities has decreased, and services traditionally provided in
hospital settings are increasingly performed at non-acute and post-
acute care facilities. Skilled nursing facilities are an example of
this trend. Specifically, due to advances in telemedicine, in many
instances patients no longer need to be transferred to hospitals for
treatment because they can receive the same or similar treatment at a
skilled nursing facility.
116. The evolution of skilled nursing facilities as a recognized
provider of post acute services is demonstrated by their coverage under
Medicare. Medicare covers skilled nursing care when certain conditions
are met: (1) The patient enters the skilled nursing facility shortly
following a hospital stay of three consecutive days or more; (2) a
doctor has ordered skilled nursing care which requires the skills of
professional personnel such as nurses, physical therapists,
occupational therapists or speech pathologists or audiologists; and (3)
the patient needs skilled care on a daily basis on an in-patient basis.
The Commission proposes that facilities that provide skilled nursing
services that are covered by Medicare should be eligible for support as
a ``not-for-profit hospital'' under section 254(h)(7)(B) of the Act.
117. The Commission recognizes, however, that certain facilities
(such as nursing homes) may provide both skilled nursing services and
custodial services. Unlike skilled nursing services, custodial services
involve assisting patients with daily activities such as eating,
clothing, bathing, etc., and are not services covered by Medicare. It
is therefore important that rural health care support be available only
to those facilities with a sufficient volume of skilled nursing
patients. The Commission seeks comment on how to distinguish a facility
that is primarily engaged in providing skilled nursing services as
opposed to facilities that are primarily engaged in providing custodial
care. For example, should the Commission allow a facility to receive
support as a skilled nursing facility if: (1) It has a certificate of
need to provide skilled nursing services for at least 51 percent of its
total beds; or (2) at least 51 percent of the facility's revenues for
the last twelve months are from skilled nursing services?
Alternatively, should designation as a skilled nursing facility be
based on the number of patients at a facility that received skilled
nursing services over a three-month period of time compared to the
total number of patients at the facility for the same period of time?
The Commission invites comment on this issue. Additionally, the
Commission seeks comment on whether support should be limited to
skilled nursing facilities that maintain an average patient stay not
exceeding 20 consecutive days, which is consistent with the Centers for
Medicare and Medicaid Services (CMS) restrictions on reimbursement for
skilled nursing care.
E. Renal Dialysis Centers and Facilities
118. Consistent with the National Broadband Plan's suggestion to
examine funding those institutions that have become integral in the
delivery of health care, the Commission proposes to indicate that non-
profit renal dialysis centers and non-profit renal dialysis facilities
may receive support as eligible health care providers under the
category of not-for-profit hospitals. As defined by CMS, a renal
dialysis center is ``a hospital unit that is approved to furnish the
full spectrum of diagnostic, therapeutic, and rehabilitative services
required for the care of End Stage Renal Disease (ESRD) dialysis
patients (including inpatient dialysis furnished directly or under
arrangement and outpatient dialysis).'' More limited services are
provided by a renal dialysis facility, which is ``a unit that is
approved to furnish dialysis service(s) directly to ESRD patients.''
119. Acute care provided by renal dialysis centers and renal
dialysis facilities is consistent with the general schema of services
traditionally provided by hospitals. The Commission also believes that
inclusion of renal dialysis centers and renal dialysis facilities is
consistent with CMS's classification of these facilities. Additionally,
the Commission proposes that a renal dialysis center or renal dialysis
facility seeking rural health care support should be required to
certify that, over the 12-month period preceding the date of
application for support, the facility provided life-preserving ESRD
treatment to at least 51 percent of its patients. The Commission seeks
comment on the above proposals.
6. Annual Caps and Prioritization Rules
120. The aggregate annual cap for the Rural Health Care Support
Mechanism is $400 million. Given that current demand under the existing
program has historically been less than $70 million, we see no need to
revisit the overall funding cap. The Commission does, however, believe
it would be prudent to set an initial cap for the proposed health
infrastructure program (within the overall $400 million cap) to manage
the portion of funding that supports new deployment as opposed to
ongoing services. The Commission proposes to allocate up to $100
million for infrastructure projects under the health infrastructure
program, leaving at least $300 million available annually for the
telecommunications program and the health broadband services program.
In the existing Pilot Program, the Commission made funding commitments
to 62 infrastructure
[[Page 48254]]
projects in 42 States, which represented $139 million per year. As
discussed above, funding a smaller number of infrastructure projects on
an annual basis, at least as it initially implements the new program,
would be more administratively workable, and therefore the Commission
proposes a cap of $100 million per year for infrastructure projects. As
the Commission gains more experience, it can re-evaluate and make
subsequent changes to the program as appropriate.
121. The Commission seeks comment on this proposal to set $100
million cap for the health infrastructure program and $300 million for
the telecommunications program and the health broadband services
program. Because there are limited funds available for both the health
broadband services program and the health infrastructure program, the
Commission also seeks comment and proposals on what funding priority
rules it should apply in those instances where funding requests exceed
the amount of funds available in a particular funding year.
122. Initially, the Commission does not believe that the funding
requests in the health broadband services program will exceed the
amount of available funds. However, in the event that USAC receives
funding requests that exceed available funds, it would be necessary to
allocate funding. One approach would be to apply a pro-rata deduction
among all eligible health care providers, thereby reducing the amount
that each health care provider receives for such funding year. Another
approach would be to fund eligible health care providers based on their
Health Professional Shortage Area (HPSA) score for primary care as
designated by HHS. For example, health care providers in areas with the
highest possible HPSA score (presently, 26) would receive support
first, and health care providers with scores below the highest HPSA
score would receive support in descending order, until available funds
are exhausted. The Commission seeks comments on alternative proposals
to prioritize funding for the health broadband services program if
funding limits are reached.
123. For the health infrastructure program, the Commission seeks
comments on how to prioritize funding in the event projects apply and
qualify for funding in any funding year that collectively exceed the
proposed $100 million cap. For example, one method for prioritizing
projects could be based on the following factors: (1) Total number of
rural health care providers in the proposed network; (2) total number
of health care providers (both urban and rural) in the proposed
network, and (3) the combined HPSA scores for all urban health care
providers in the proposed network. Under this method, USAC would give
first priority to projects that have the highest number of eligible
rural health care providers, not to exceed $100 million in the
aggregate and second priority to projects that have the highest number
of health care providers (urban and rural). In the event projects have
the same number of eligible health care providers in their proposed
networks, they would be sub-ranked according to the number of rural
health care providers in the proposed network. If further sub-ranking
is required, projects would be ranked according to the aggregate HPSA
scores of the urban health care providers in the proposed network.
Other ways to prioritize projects could be to consider the relative
size of the patient base or population density of the area served by
the health care providers, or to consider measures such as the cost per
served population or other factors that demonstrate the most cost
effective use of funds. The Commission seeks comment on these or other
methods that commenters may suggest for prioritizing project funding.
Commenters recommending the use of one prioritization method over
another should explain the basis for such prioritization, and explain
how the prioritization system would work.
124. One readily available source of information to prioritize
funding requests would be to use HPSA scores. HPSA scores rank urban
and rural geographic areas based on the shortage of primary care health
professionals. HPSA designations and scores are used across the Federal
government to allocate resources, with more than 30 Federal programs
providing benefits based on HPSA designations or scoring. Geographic
areas are scored on a scale of 0 to 26, with 26 representing the
highest professional shortage area. Scores are provided for three
categories of providers: Primary Care, Mental Health and Dental. The
factors considered by HHS for calculating HPSA scores for a geographic
area include population-to-provider ratios, population poverty rates,
and travel time and distance to the nearest source of care. Additional
factors that influence the score include infant mortality rates and low
birth weight data. The Commission seeks comment on the use of HPSA
scores as a component of any prioritization considerations.
125. The Commission also seeks comment on whether there are other
publicly available criteria, in addition to HPSA scores, that could be
used to prioritize funding. Alternatively, should the Commission
collect additional information from applicants that could be used to
prioritize applications, and if so, what information should be
collected in a standardized fashion for such purpose? Commenters should
discuss the burden or additional reporting obligations that would be
imposed on health care providers in compiling and submitting such
information as part of their applications for funding.
126. The Commission also seeks comment generally on whether it
should set aside some amount of funding each year that could be awarded
through a competitive process that takes into account factors other
than those proposed above. For instance, should the Commission set
aside a defined amount of the annual $400 million funding for
recipients that can demonstrate innovative uses of broadband
connectivity to meet health care needs in a community?
7. Offset Rule
127. The Commission has historically required contributors to
Federal universal service support mechanisms to treat the support
received for providing services under the Rural Health Care Support
Mechanism as an offset to the amount they must otherwise contribute to
the universal service fund. When the Commission adopted this
requirement, it was construing the statutory language that authorized
both the rural health care mechanism and the schools and libraries
mechanism. However, the Commission ultimately implemented the offset
rule as a mandatory requirement only for the Rural Health Care Support
Mechanism and not for the schools and libraries mechanism. Although the
Commission concluded it had authority to allow direct reimbursement, it
considered a mandatory offset rule for the Rural Health Care Support
Mechanism to be ``less vulnerable to manipulation and more easily
administered and monitored.''
128. While the original intent of the offset rule was to prevent
fraud, waste and abuse, it may no longer make sense today, particularly
in light of the proposed reforms in this NPRM. The Commission has
recognized that the offset rule can create inequities and
inefficiencies, and has modified its applicability in the past. In
establishing the Pilot Program, the Commission determined that the
offset rule should not apply to that program because both
telecommunications carriers and non-telecommunications carriers were
eligible to provide services under the
[[Page 48255]]
program. The Commission determined it was in the public interest to
distribute support to Pilot Program service providers in a neutral
fashion, where neither the telecommunications carriers nor the non-
telecommunications carrier would be subject to the offset rule. The
Commission recognizes that the offset rule could create administrative
difficulties in the future, if the Commission authorizes support for
services provided by entities that do not contribute to the universal
service fund.
129. Accordingly, the Commission proposes to eliminate the offset
rule for participants in the health broadband services program,
telecommunications program, and health infrastructure program and
replace it with a rule allowing service providers in the program to
receive monies directly from USAC. The Commission seeks comment on this
proposal. Notably, the schools and libraries mechanism has an optional
offset method, yet only a small percentage of service providers elect
to offset their obligation against their contribution to the universal
service fund. The Commission seeks comment on whether to retain the
offset rule as an option for contributors that wish to utilize an
offset in the context of the new programs proposed in this NPRM. The
Commission also seeks comment on whether the reimbursement mechanism
should be unified across all of the new rural health care programs.
8. Protecting Against Waste, Fraud, and Abuse
130. The Commission proposes that participants in the health
infrastructure program and the health broadband services program should
continue to be subject to any currently applicable rules pertaining to
audits, recordkeeping, and duplicate support. The Commission seeks
comment on the proposals described below.
131. With respect to audits, the Commission proposes that
participants in both programs will be subject to random compliance
audits to ensure compliance with program rules and orders. The
Commission also proposes that program participants and service
providers will be required to maintain certain documentation related to
the purchase and delivery of services funded by the Rural Health Care
Support Mechanism, and will be required to produce those records upon
request. However, the Commission proposes to make the following
clarifications to its recordkeeping rules: First, the Commission
proposes to clarify that the documents to be retained by participants
and service providers under the program should include all records
related to the participant's application for, receipt of, and delivery
of discounted services. Second, the Commission proposes to amend the
Commission's existing rules to mandate that service providers, upon
request, produce the records kept pursuant to the Commission's
recordkeeping requirement.
132. Finally, the Commission proposes that health care providers
may not receive funds for the same services under the health broadband
services program and the telecommunications program. Similarly, the
Commission proposes to prohibit participants from receiving funds for
the same services under the Rural Health Care Support Mechanism and any
other universal service program (i.e., the E-rate program, the High
Cost program, and the Low Income program), or from any other Federal
program, including, for example, Federal grants, awards, or loans. The
Commission seeks comment on these proposals.
IV. Data Gathering and Performance Measures
A. ``Meaningful Use'' Criteria
133. The National Broadband Plan recommended that the Commission
align the Rural Health Care Support Mechanism with other Federal
government criteria intended to measure the efficient use of health IT,
such as the ``meaningful use'' criteria being developed by HHS.
Meaningful use criteria are intended to encourage physicians and
hospitals to use broadband services and infrastructure in a way that
improves the Nation's health care delivery system. HHS is still
developing and considering regulations to implement meaningful use
requirements for electronic health records, but is expected to adopt
final rules later this year. Initially, under the HHS requirements,
health care providers will be given financial incentives if they meet
the HHS definition of meaningful use of electronic health records. In
2015, full Medicare and Medicaid support will be conditioned on
compliance with meaningful use requirements, and health care providers
will receive reduced Medicare or Medicaid reimbursement if they do not
meet the requirements of meaningful use.
134. The National Broadband Plan suggested that the Commission
should condition receipt of rural health care support on providers'
compliance with the HHS meaningful use requirements after a certain
period of time, such as three years. The Commission recognizes that any
new compliance obligations may impose burdens on health care providers,
and that these burdens may be more significant for rural providers. At
the same time, the goals reflected in the HHS meaningful use
requirements are important, and there may be benefits both to providers
and the Federal government in aligning policies to the extent feasible.
The Commission seeks comment on whether and how the Commission could
align its performance measures with HHS's meaningful use criteria. The
Commission also seeks comment on whether there are other Federal
criteria that it should consider adopting.
135. The Commission seeks comment on whether, assuming full
implementation of meaningful use requirements in 2015, recipients of
funding from the Rural Health Care Support Mechanism should be required
to document their compliance with meaningful use requirements as a
condition of receiving support. What would be the practical and
operational implications of such a requirement? The Commission notes
that, under HHS' draft proposed regulations, meaningful use will be
certified at the individual physician level (with the exception of
hospitals), while the Commission's program provides support to a
variety of eligible entities that do not necessarily include physician
offices (such as post-secondary educational institutions offering
health care instruction, local health departments, community health
centers, community mental health centers and rural health clinics). If
the Commission were to adopt a meaningful use requirement, how should
it evaluate whether the health care entity has satisfied meaningful
use? The Commission also seeks comment on what the remedy should be for
failure to meet such a requirement, if adopted? For instance, if a
health care provider is required to comply with HHS meaningful use
regulations as of 2015, should the Commission reduce or eliminate rural
health care support if the entity has not achieved the HHS meaningful
use standard by 2018?
C. Other Performance Measures
136. To measure the impact of the Commission's universal service
programs, it is important for participants in the health broadband
services program and the health infrastructure program to have
measurable performance goals to demonstrate how they are using the
Federal support to take advantage of broadband capabilities for medical
services or support. The Commission therefore seeks comment on what
generally-applicable performance
[[Page 48256]]
criteria the Commission should adopt. For example, the Commission could
adopt criteria regarding consistency or frequency of use of broadband
services for record-keeping, remote monitoring, or remote consultation
on complex or non-routine medical issues. The Commission seeks comment
on these and other possible criteria by which to measure performance.
The Commission also seeks comment on whether the Commission should
employ existing industry standards or metrics, such as the American
Telemedicine Association's Standards and Guidelines for
Teledermatology, Telemental Health and Telepathology, as part of its
performance measure criteria. Are there other existing metrics that
would be suitable for measuring accomplishments related to the Rural
Health Care Support Mechanism?
137. The Commission also recognizes there are a wide variety of
eligible entities that may obtain support from the proposed health
broadband services program and the health infrastructure program, and
therefore there may be a need for some flexibility in performance
measures to reflect the many potential uses and varying needs of
program beneficiaries. Therefore, the Commission seeks comment on
whether to require each program beneficiary to identify more specific
performance measures. For example, the Commission might require all
beneficiaries to report on progress of bringing services online, and
the individual recipient would identify a specific timeline and report
on whether it met the timeline. The Commission might require
beneficiaries to identify particular goals, such as increasing network
speed or reliability, and the beneficiary would identify the specific
goal and report on whether the goal was accomplished. The Commission
seeks comment on this proposal. The Commission seeks comment on how
this process should work. For example, the Commission might require a
beneficiary to submit specific performance measures within 60 days of
notification that its application for support has been approved. The
Commission also seeks comment on whether it should have the opportunity
to reject or propose modifications to the individualized performance
measurements that beneficiaries submit.
138. The Commission seeks comment on the frequency of assessing
performance and how often the beneficiary should report on performance.
For example, should performance measures be made annually or more
frequently? Should ongoing support be conditioned wholly or partly on
demonstrated satisfaction of performance standards? The Commission also
seeks comment on what, if any, additional information the report should
contain, such as an explanation for any failure to meet performance
goals or the opportunity to propose revisions to the performance
measurements.
D. Data Gathering and Analysis
139. Health Care Broadband Status Report and Testing Mechanisms.
The National Broadband Plan recommended that the Commission
periodically publish a health care broadband status report that
discusses the state of health care broadband connectivity, reviews
health IT industry trends, describes government programs and makes
reform recommendations. Further, the National Broadband Plan suggested
that the Commission should work in conjunction with HHS (which has
experience in evaluating the effectiveness of clinical programs) to
measure and assess the impact that the health broadband services
program and the health infrastructure program have on health care and
health IT. For example, the National Broadband Plan suggested that the
Commission could conduct the following tests:
Determine how health care providers that receive Rural
Health Care Support for broadband differ in the utilization of e-care
from health care providers that do not receive program support;
Assess the impact of changing the level of broadband
subsidies to a targeted community and determine if there is an
increased use of broadband and health IT as a result of such subsidies;
Explore whether expanding the Rural Health Care Support
Mechanism to include funding for training would lead to better
broadband utilization and improved care; and
Evaluate the impact the Rural Health Care Support
Mechanism is having on vulnerable populations, such as the elderly,
racial and ethnic minorities, or low-income rural and urban
communities, to understand whether targeted efforts would be more
effective.
140. The National Broadband Plan suggested that in order to ensure
sufficient support for these tests, the Commission should allocate a
portion of the Rural Health Care Support Mechanism (e.g., $5 million)
for a testing program that funds innovative ideas for evaluating the
existing broadband efforts or improve upon them in the future. The
Commission seeks comment on the recommendation to allocate a portion of
the rural health care funding for running trials of and evaluating
innovative concepts, and if so, what amount should be set aside for
that purpose?
141. The Commission seeks comment on whether and how to develop the
periodic broadband status reports and testing mechanisms suggested by
the National Broadband Plan. In particular, the Commission is
interested in suggestions for how to evaluate objectively the impact of
the Rural Health Care Support Mechanism and how the Commission can
direct support to make greatest use of limited resources. The
Commission also seeks comment on whether to create a working group to
develop recommendations for the direction of the Rural Health Care
Support Mechanism, and if so, who should participate in such a group
and how should it be structured?
142. The Commission also proposes to collect data that will help it
analyze how the support is being used, such as requiring beneficiaries
to annually identify the speed of the connections supported by the
Rural Health Care Support Mechanism and the type and frequency of
utilization of telehealth or telemedicine applications as a result of
broadband access. This data could assist the Commission in its ongoing
oversight over this program and help the Commission determine how
beneficiaries are using broadband services to improve the provision of
medical services or support. The Commission seeks comment on this
proposal. The Commission also seeks comment on the services or
applications that should be included.
V. Procedural Matters
A. Initial Regulatory Flexibility Analysis
1. Pursuant to the Regulatory Flexibility Act (``RFA''), the
Commission has prepared this Initial Regulatory Flexibility Analysis
(``IRFA'') of the possible significant economic impact on small
entities by the policies and rules proposed in this Notice of Proposed
Rulemaking. Written public comments are requested on this IRFA.
Comments must be identified as responses to the IRFA and must be filed
on or before the dates indicated on the first page of this NPRM. The
Commission will send a copy of the NPRM, including the IRFA, to the
Chief Counsel for Advocacy of the Small Business Administration. In
addition, the NPRM and IRFA (or summaries thereof) will be published in
the Federal Register.
[[Page 48257]]
1. Need for, and Objectives of, the Notice for Proposed Rulemaking
2. The Commission is required by section 254 of the Communications
Act of 1934, as amended, to promulgate rules to implement the universal
service provisions of section 254. On May 8, 1997, the Commission
adopted rules that reformed its system of universal service support
mechanisms so that universal service is preserved and advanced as
markets move toward competition. Among other programs, the Commission
adopted a program to provide discounted telecommunications services to
public or non-profit health care providers that serve persons in rural
areas. The changing technological landscape in rural health care over
the past decade has prompted us to propose a new structure for the
rural health care universal service support mechanism.
3. In this NPRM, the Commission seeks comment on a package of
potential reforms to the rural health care program that could be
implemented in funding year 2011 (July 1, 2011-June 30, 2012). The
proposed reforms include: (1) Establishing a broadband infrastructure
program (the ``health infrastructure program'') that would support up
to 85 percent of the construction costs of new regional or statewide
networks to serve public and non-profit health care providers in areas
of the country where broadband is unavailable or insufficient; (2)
establishing a broadband services access program (the ``health
broadband services program'') that would subsidize 50 percent of the
monthly recurring costs for access to broadband services for eligible
public or non-profit rural health care providers, which should make
broadband connectivity more affordable for providers operating in rural
areas; (3) expanding the Commission's interpretation of ``eligible
health care provider'' to include acute care facilities that provide
services traditionally provided at hospitals, such as skilled nursing
facilities and renal dialysis centers and facilities, and
administrative offices and data centers that do not share the same
building as the clinical offices of a health care provider but that
perform support functions critical for the provision of health care;
(4) clarifying the Commission's existing recordkeeping requirements to
enhance our ability to protect against waste, fraud and abuse; and (5)
eliminating the current rule that requires that funding be offset
against universal service contributions owed by participating service
providers, and instead propose to allow service providers participating
in the health broadband services program, telecommunications program,
and health infrastructure program to receive rural health care funds
directly from USAC.
2. Legal Basis
4. This Notice of Proposed Rulemaking, including publication of
proposed rules, is authorized under sections 1, 2, 4(i)-(j), 201(b),
254, 257, 303(r), and 503 of the Communications Act of 1934, as
amended, and section 706 of the Telecommunications Act of 1996, as
amended, 47 U.S.C. 151, 152, 154(i)-(j), 201(b), 254, 257, 303(r), 503,
1302.
3. Description and Estimate of the Number of Small Entities To Which
Rules Will Apply
5. The RFA directs agencies to provide a description of and, where
feasible, an estimate of the number of small entities that may be
affected by the proposed rules, if adopted. The RFA generally defines
the term ``small entity'' as having the same meaning as the terms
``small business,'' ``small organization,'' and ``small governmental
jurisdiction.'' In addition, the term ``small business'' has the same
meaning as the term ``small business concern'' under the Small Business
Act. A small business concern is one that: (1) Is independently owned
and operated; (2) is not dominant in its field of operation; and (3)
satisfies any additional criteria established by the SBA. Nationwide,
there are a total of approximately 29.6 million small businesses,
according to the SBA. A ``small organization'' is generally ``any not-
for-profit enterprise which is independently owned and operated and is
not dominant in its field.'' Nationwide, as of 2002, there were
approximately 1.6 million small organizations. The term ``small
governmental jurisdiction'' is defined generally as ``governments of
cities, towns, townships, villages, school districts, or special
districts, with a population of less than fifty thousand.'' Census
Bureau data for 2002 indicate that there were 87,525 local governmental
jurisdictions in the United States. We estimate that, of this total,
84,377 entities were ``small governmental jurisdictions.'' Thus, the
Commission estimates that most governmental jurisdictions are small.
6. Small entities potentially affected by the proposals herein
include eligible rural non-profit and public health care providers and
the eligible service providers offering them services, including
telecommunications service providers, Internet Service Providers
(ISPs), and vendors of the services and equipment used for dedicated
broadband networks.
a. Rural Health Care Providers
7. Section 254(h)(5)(B) of the Act defines the term ``health care
provider'' and sets forth seven categories of health care providers
eligible to receive universal service support. In addition, non-profit
entities that act as ``health care providers'' on a part-time basis are
eligible to receive prorated support and the Commission has no ability
to quantify how many potential eligible applicants fall into this
category.
8. As noted earlier, non-profit businesses and small governmental
units are considered ``small entities'' within the RFA. In addition,
the Commission notes that census categories and associated generic SBA
small business size categories provide the following descriptions of
small entities. The broad category of Ambulatory Health Care Services
consists of further categories and the following SBA small business
size standards. The categories of small business providers with annual
receipts of $7 million or less consists of: Offices of Dentists;
Offices of Chiropractors; Offices of Optometrists; Offices of Mental
Health Practitioners (except Physicians); Offices of Physical,
Occupational and Speech Therapists and Audiologists; Offices of
Podiatrists; Offices of All Other Miscellaneous Health Practitioners;
and Ambulance Services. The category of such providers with $10 million
or less in annual receipts consists of: Offices of Physicians (except
Mental Health Specialists); Family Planning Centers; Outpatient Mental
Health and Substance Abuse Centers; Health Maintenance Organization
Medical Centers; Freestanding Ambulatory Surgical and Emergency
Centers; All Other Outpatient Care Centers, Blood and Organ Banks; and
All Other Miscellaneous Ambulatory Health Care Services. The category
of such providers with $13.5 million or less in annual receipts
consists of: Medical Laboratories; Diagnostic Imaging Centers; and Home
Health Care Services. The category of Ambulatory Health Care Services
providers with $34.5 million or less in annual receipts consists of
Kidney Dialysis Centers. For all of these Ambulatory Health Care
Service Providers, census data indicate that there are a combined total
of 368,143 firms that operated for all of 2002. Of these, 356,829 had
receipts for that year of less than $5 million. In addition, an
additional 6,498 firms had annual receipts of $5 million to $9.99
million; and an additional 3,337 firms
[[Page 48258]]
had receipts of $10 million to $24.99 million; and an additional 865
had receipts of $25 million to $49.99 million. The Commission therefore
estimates that virtually all Ambulatory Health Care Services providers
are small, given SBA's size categories. The Commission notes, however,
that its rules affect non-profit and public health care providers, and
many of the providers noted above would not be considered ``public'' or
``non-profit.'' In addition, the Commission has no data specifying the
numbers of these health care providers that are rural and meet other
criteria of the Act.
9. The broad category of Hospitals consists of the following
categories with an SBA small business size standard of annual receipts
of $34.5 million or less: General Medical and Surgical Hospitals,
Psychiatric and Substance Abuse Hospitals; and Specialty (Except
Psychiatric and Substance Abuse) Hospitals. For these health care
providers, census data indicate that there is a combined total of 3,800
firms that operated for all of 2002, of which 1,651 had revenues of
less than $25 million, and an additional 627 firms had annual receipts
of $25 million to $49.99 million.. The Commission therefore estimates
that most Hospitals are small, given SBA's size categories. In
addition, the Commission has no data specifying the numbers of these
health care providers that are rural and meet other criteria of the
Act.
10. The broad category of Social Assistance consists, inter alia,
of the category of Emergency and Other Relief Services with a small
business size standard of annual receipts of $7 million or less. For
all of these health care providers, census data indicate that there was
a total of 55 firms that operated for all of 2002. All of these firms
had annual receipts of below $1 million. The Commission therefore
estimates that all such firms are small, given SBA's size standard. In
addition, the Commission has no data specifying the numbers of these
health care providers that are rural and meet other criteria of the
Act.
b. Providers of Telecommunications and Other Services
Telecommunications Service Providers
11. Incumbent Local Exchange Carriers (LECs). Neither the
Commission nor the SBA has developed a size standard for small
incumbent local exchange services. The closest size standard under SBA
rules is for Wired Telecommunications Carriers. Under that size
standard, such a business is small if it has 1,500 or fewer employees.
According to Commission data, 1,311 incumbent carriers reported that
they were engaged in the provision of local exchange services. Of these
1,311 carriers, an estimated 1,024 have 1,500 or fewer employees and
287 have more than 1,500 employees. Thus, under this category and
associated small business size standard, the Commission estimates that
the majority of entities are small.
12. The Commission has included small incumbent local exchange
carriers in this RFA analysis. A ``small business'' under the RFA is
one that, inter alia, meets the pertinent small business size standard
(e.g., a telephone communications business having 1,500 or fewer
employees), and ``is not dominant in its field of operation.'' The
SBA's Office of Advocacy contends that, for RFA purposes, small
incumbent local exchange carriers are not dominant in their field of
operation because any such dominance is not ``national'' in scope. The
Commission has therefore included small incumbent carriers in this RFA
analysis, although the Commission emphasizes that this RFA action has
no effect on the Commission's analyses and determinations in other,
non-RFA contexts.
13. Interexchange Carriers. Neither the Commission nor the SBA has
developed a definition of small entities specifically applicable to
providers of interexchange services (IXCs). The closest applicable
definition under the SBA rules is for wired telecommunications
carriers. This provides that a wired telecommunications carrier is a
small entity if it employs no more than 1,500 employees. According to
the Commission's 2008 Trends Report, 300 companies reported that they
were engaged in the provision of interexchange services. Of these 300
IXCs, an estimated 268 have 1,500 or fewer employees and 32 have more
than 1,500 employees. Consequently, the Commission estimates that most
providers of interexchange services are small businesses.
14. Competitive Access Providers. Neither the Commission nor the
SBA has developed a definition of small entities specifically
applicable to competitive access services providers (CAPs). The closest
applicable definition under the SBA rules is for wired
telecommunications carriers. This provides that a wired
telecommunications carrier is a small entity if it employs no more than
1,500 employees. According to the 2008 Trends Report, 1,005 CAPs and
competitive local exchange carriers (competitive LECs) reported that
they were engaged in the provision of competitive local exchange
services. Of these 1,005 CAPs and competitive LECs, an estimated 918
have 1,500 or few employees and 87 have more than 1,500 employees.
Consequently, the Commission estimates that most providers of
competitive exchange services are small businesses.
15. Wireless Telecommunications Carriers (except Satellite). Since
2007, the Census Bureau has placed wireless firms within this new,
broad, economic census category. Prior to that time, such firms were
within the now-superseded categories of ``Paging'' and ``Cellular and
Other Wireless Telecommunications.'' Under the present and prior
categories, the SBA has deemed a wireless business to be small if it
has 1,500 or fewer employees. Because Census Bureau data are not yet
available for the new category, the Commission will estimate small
business prevalence using the prior categories and associated data. For
the category of Paging, data for 2002 show that there were 807 firms
that operated for the entire year. Of this total, 804 firms had
employment of 999 or fewer employees, and three firms had employment of
1,000 employees or more. For the category of Cellular and Other
Wireless Telecommunications, data for 2002 show that there were 1,397
firms that operated for the entire year. Of this total, 1,378 firms had
employment of 999 or fewer employees, and 19 firms had employment of
1,000 employees or more. Thus, the Commission estimates that the
majority of wireless firms are small.
16. Wireless Telephony. Wireless telephony includes cellular,
personal communications services, and specialized mobile radio
telephony carriers. As noted, the SBA has developed a small business
size standard for Wireless Telecommunications Carriers (except
Satellite). Under the SBA small business size standard, a business is
small if it has 1,500 or fewer employees. According to the 2008 Trends
Report, 434 carriers reported that they were engaged in wireless
telephony. Of these, an estimated 222 have 1,500 or fewer employees and
212 have more than 1,500 employees. The Commission has estimated that
222 of these are small under the SBA small business size standard.
17. Satellite Telecommunications and All Other Telecommunications.
These two economic census categories address the satellite industry.
The first category has a small business size standard of $15 million or
less in average annual receipts, under SBA rules. The second has a size
standard of $25 million or less
[[Page 48259]]
in annual receipts. The most current Census Bureau data in this
context, however, are from the (last) economic census of 2002, and the
Commission will use those figures to gauge the prevalence of small
businesses in these categories.
18. The category of Satellite Telecommunications ``comprises
establishments primarily engaged in providing telecommunications
services to other establishments in the telecommunications and
broadcasting industries by forwarding and receiving communications
signals via a system of satellites or reselling satellite
telecommunications. For this category, Census Bureau data for 2002 show
that there were a total of 371 firms that operated for the entire year.
Of this total, 307 firms had annual receipts of under $10 million, and
26 firms had receipts of $10 million to $24,999,999. Consequently, the
Commission estimates that the majority of Satellite Telecommunications
firms are small entities that might be affected by its action.
19. The second category of All Other Telecommunications comprises,
inter alia, ``establishments primarily engaged in providing specialized
telecommunications services, such as satellite tracking, communications
telemetry, and radar station operation. This industry also includes
establishments primarily engaged in providing satellite terminal
stations and associated facilities connected with one or more
terrestrial systems and capable of transmitting telecommunications to,
and receiving telecommunications from, satellite systems.'' For this
category, Census Bureau data for 2002 show that there were a total of
332 firms that operated for the entire year. Of this total, 303 firms
had annual receipts of under $10 million and 15 firms had annual
receipts of $10 million to $24,999,999. Consequently, the Commission
estimates that the majority of All Other Telecommunications firms are
small entities that might be affected by its action.
Internet Service Providers
20. The 2007 Economic Census places these firms, whose services
might include voice over Internet protocol (VoIP), in either of two
categories, depending on whether the service is provided over the
provider's own telecommunications facilities (e.g., cable and DSL
ISPs), or over client-supplied telecommunications connections (e.g.,
dial-up ISPs). The former are within the category of Wired
Telecommunications Carriers, which has an SBA small business size
standard of 1,500 or fewer employees. The latter are within the
category of All Other Telecommunications, which has a size standard of
annual receipts of $25 million or less. The most current Census Bureau
data for all such firms, however, are the 2002 data for the previous
census category called Internet Service Providers. That category had a
small business size standard of $21 million or less in annual receipts,
which was revised in late 2005 to $23 million. The 2002 data show that
there were 2,529 such firms that operated for the entire year. Of
those, 2,437 firms had annual receipts of under $10 million, and an
additional 47 firms had receipts of between $10 million and
$24,999,999. Consequently, the Commission estimates that the majority
of ISP firms are small entities.
Vendors and Equipment Manufacturers
21. Vendors of Infrastructure Development or ``Network Buildout.''
The Commission has not developed a small business size standard
specifically directed toward manufacturers of network facilities. The
closest applicable definition of a small entity are the size standards
under the SBA rules applicable to manufacturers of ``Radio and
Television Broadcasting and Communications Equipment'' (RTB) and
``Other Communications Equipment.'' According to the SBA's regulations,
manufacturers of RTB or other communications equipment must have 750 or
fewer employees in order to qualify as a small business. The most
recent available Census Bureau data indicates that there are 1,187
establishments with fewer than 1,000 employees in the United States
that manufacture radio and television broadcasting and communications
equipment, and 271 companies with less than 1,000 employees that
manufacture other communications equipment. Some of these manufacturers
might not be independently owned and operated. Consequently, the
Commission estimates that the majority of the 1,458 internal
connections manufacturers are small.
22. Telephone Apparatus Manufacturing. The Census Bureau defines
this category as follows: ``This industry comprises establishments
primarily engaged in manufacturing wire telephone and data
communications equipment. These products may be standalone or board-
level components of a larger system. Examples of products made by these
establishments are central office switching equipment, cordless
telephones (except cellular), PBX equipment, telephones, telephone
answering machines, LAN modems, multi-user modems, and other data
communications equipment, such as bridges, routers, and gateways.'' The
SBA has developed a small business size standard for Telephone
Apparatus Manufacturing, which is: All such firms having 1,000 or fewer
employees. According to Census Bureau data for 2002, there were a total
of 518 establishments in this category that operated for the entire
year. Of this total, 511 had employment of under 1,000, and an
additional 7 had employment of 1,000 to 2,499. Thus, under this size
standard, the majority of firms can be considered small.
23. Radio and Television Broadcasting and Wireless Communications
Equipment Manufacturing. The Census Bureau defines this category as
follows: ``This industry comprises establishments primarily engaged in
manufacturing radio and television broadcast and wireless
communications equipment. Examples of products made by these
establishments are: transmitting and receiving antennas, cable
television equipment, GPS equipment, pagers, cellular phones, mobile
communications equipment, and radio and television studio and
broadcasting equipment.'' The SBA has developed a small business size
standard for Radio and Television Broadcasting and Wireless
Communications Equipment Manufacturing, which is: All such firms having
750 or fewer employees. According to Census Bureau data for 2002, there
were a total of 1,041 establishments in this category that operated for
the entire year. Of this total, 1,010 had employment of under 500, and
an additional 13 had employment of 500 to 999. Thus, under this size
standard, the majority of firms can be considered small.
24. Other Communications Equipment Manufacturing. The Census Bureau
defines this category as follows: ``This industry comprises
establishments primarily engaged in manufacturing communications
equipment (except telephone apparatus, and radio and television
broadcast, and wireless communications equipment).'' The SBA has
developed a small business size standard for Other Communications
Equipment Manufacturing, which is: All such firms having 750 or fewer
employees. According to Census Bureau data for 2002, there were a total
of 503 establishments in this category that operated for the entire
year. Of this total, 493 had employment of under 500, and an additional
7 had employment of 500 to 999. Thus, under
[[Page 48260]]
this size standard, the majority of firms can be considered small.
4. Description of Projected Reporting, Recordkeeping, and Other
Compliance Requirements
25. The reporting and recordkeeping requirements in this NPRM could
have an impact on both small and large entities. However, even though
the impact may be more financially burdensome for smaller entities, the
Commission believes the impact of such requirements is outweighed by
the benefit of providing the additional support necessary to make
broadband available for rural health care providers to provide health
care to rural and remote areas, and to make broadband access rates for
public and non-profit rural health care providers affordable. Further,
these requirements are necessary to ensure that the statutory goals of
section 254 of the Telecommunications Act of 1996 are met without
waste, fraud, or abuse.
26. The Commission proposes an application and selection process
for the health infrastructure program in which eligible health care
providers may seek funding for qualified projects through a streamlined
process. The Commission seeks comment on each step of the process
described below. To the extent a commenter disagrees with a particular
aspect of the proposed process, the Commission asks them to identify
that with specificity and propose an alternative.
27. Initial Application Phase. First, applicants may request
consideration for funding by completing a user friendly online
application available on a Web site to be developed and maintained by
USAC. Applications would be accepted during the first quarter of each
funding year (July 1 to September 30). As part of this initial
application phase, an applicant would be required to (1) verify that
either there is no available broadband infrastructure or the existing
available broadband infrastructure is insufficient for health IT needed
to improve and provide health care delivery, (2) provide letters of
agency for each of the eligible health care providers in the
applicant's proposed network, (3) include a preliminary budget and an
infrastructure funding request, not in excess of the per-project caps
discussed below, and (4) certify that it will comply with all program
requirements if selected for funding.
28. Project Selection Phase. The Commission proposes that
applications submitted for funding be made publicly available on USAC's
Web site. Publicly available information would include the names of the
parties seeking funding, their geographic location, and information
filed by the applicants to corroborate that sufficient broadband
infrastructure is unavailable or insufficient in their geographic
location. During the second quarter of each funding year (October 1 to
December 31), USAC would review all applications received during the
initial application phase. After applications have been reviewed, and
prioritization rules have been applied, USAC would notify selected
participants of their project eligibility status. This would normally
occur during the third quarter of each funding year (January 1 to March
30). After a participant is notified of project eligibility, it may
proceed with the project commitment phase per the requirements set
forth below. During the project commitment phase, participants may
receive funding from the health infrastructure program for a portion of
the reasonable administrative expenses incurred in connection with the
project, subject to certain caps.
29. Project Commitment Phase. Within 90 days after a participant in
the health infrastructure program is notified that, based on its
initial application, the participant's project is eligible for funding,
the participants would complete and submit all application materials
and comply with all program requirements, including the following: (1)
Certification of the availability of funds for not less than 15 percent
of all eligible costs; (2) a project schedule; and (3) a detailed
project description. The project schedule would identify key milestones
that the project will accomplish and the date that the tasks would be
achieved. The detailed project description would describe the network,
identify the proposed technology, demonstrates that the project is
technically feasible and reasonably scalable, and describe each
specific development phase of the project (e.g., network design phase,
construction period, deployment, maintenance period).
30. In addition, prior to receiving a funding commitment letter
from USAC, participants would be required to submit a sustainability
report demonstrating that the costs of network operations and
maintenance will be sustainable after such period of support from the
health infrastructure program. If an infrastructure project includes
bandwidth that may be used by entities that are not eligible health
care providers, the Commission will consider the extra bandwidth to be
excess capacity and would require the participant to file excess
capacity disclosures. The Commission would require the excess capacity
disclosures to: (1) Identify users of the excess capacity and delineate
how they are paying for their portion of the costs, and (2) describe
generally agreements made between the health care network portion of
the project and the community use portion of the project (e.g., cost
allocation, sharing agreements, maintenance and access, ownership).
31. We also propose adopting a rule that would require health care
providers to obtain certain cost information from vendors. Vendors
would be required to make certain certifications with respect to the
construction and deployment of the dedicated network. They would also
be required to provide participants with a depreciation schedule
showing the useful life of fixed assets, as well as maintain books and
records that support all cost allocations.
32. USAC would review each step of the project commitment phase to
confirm the participant's compliance with all data and information
requirements and compliance with program rules. USAC would conduct
technical and financial review of all proposed projects to ensure that
they comply with the Commission's rules. USAC may request additional
information from applicants and participants if deemed necessary to
substantiate, explain or clarify any materials submitted as part of the
funding process.
33. Health infrastructure program participants would be required to
submit quarterly reports that provide information regarding the
following: (1) Attaining project milestones, (2) status of obtaining 15
percent minimum match, (3) status of the competitive bidding process,
(4) details on how the supported network has complied with HHS health
IT initiatives, and (6) performance measures. The project milestones
would be updated at the time that quarterly reports are filed by the
participants, noting which project milestones have been met and any
delays or progress in meeting other milestones. The Commission believes
that requiring participants in the health infrastructure program to
establish a schedule and report on project milestones will assist USAC
and the Commission in assessing a participant's progress in completing
project buildout, and will reduce waste, fraud, and abuse.
34. The Commission also proposes several reporting and
recordkeeping requirements for the health broadband services program
and the health infrastructure program. The Commission proposes that
health care providers that receive support under the health broadband
services program or
[[Page 48261]]
the health infrastructure program would be required to complete a
certification that identifies the speed of any connection supported by
the Rural Health Care Support Mechanism. They would also indicate, as a
result of broadband access, the type of health IT applications they
were using and the frequency with which they used they used the
applications. The Commission also proposes the retention of the
existing competitive bidding requirements for both programs, because
the Commission believes that competitive bidding has been successful
regarding the prevention of waste, fraud, and abuse in the Rural Health
Care Support Mechanism.
35. Finally, the current rules establish a five year document
retention period for health care providers. The Commission recommends
that it adopt the same requirement for service providers and non-
telecommunications carriers. The Commission believes that it should
clarify that the documents would include all records related to the
application for, receipt and delivery of discounted services. The
Commission also seeks comment on whether it should adopt any additional
rules regarding recordkeeping requirements.
5. Steps Taken To Minimize Significant Economic Impact on Small
Entities, and Significant Alternatives Considered
36. The RFA requires an agency to describe any significant
alternatives that it has considered in reaching its approach, which may
include the following four alternatives, among others: (1) The
establishment of differing compliance or reporting requirements or
timetables that take into account the resources available to small
entities; (2) the clarification, consolidation, or simplification of
compliance or reporting requirements under the rule for small entities;
(3) the use of performance, rather than design, standards; and (4) an
exemption from coverage of the rule, or any part thereof, for small
entities.
37. In this NPRM, the Commission makes a number of proposals that
may have an economic impact on small entities that participate in the
universal service support mechanism for rural health care providers.
Specifically, as addressed above, the Commission seeks comment on: (1)
Establishing a broadband infrastructure program (the ``health
infrastructure program'') for eligible health care providers; (2)
establishing a broadband services access program (the ``health
broadband services program'') for eligible health care providers; (3)
expanding the number of entities eligible for discounts by broadening
the interpretation of the definition of eligible health care providers
to include off-site data centers and administrative offices, as well as
skilled nursing facilities and renal dialysis centers; and (4)
establishing performance measures for eligible health care providers
receiving broadband support. If adopted, these proposals will change
the size of the overall pool of eligible applicants that may receive
universal service support under the Rural Health Care Support
Mechanism, as well as affect the amount of support that eligible
entities may receive.
38. In seeking to minimize the burdens imposed on small entities
where doing so does not compromise the goals of the universal service
mechanism, the Commission has invited comment on how these proposals
might be made less burdensome for small entities. The Commission again
invites commenters to discuss the benefits of such changes on small
entities and whether these benefits are outweighed by resulting costs
to rural health care providers that might also be small entities. The
Commission anticipates that the record will reflect whether the overall
benefits of such programmatic changes would outweigh the burdens on
small entities, and if so, suggest alternative ways in which the
Commission could lessen the overall burdens on small entities. The
Commission encourages small entities to comment.
39. The Commission has taken the following steps to minimize the
impact on small entities. First, to ease the administrative burden on
applicants, the Commission proposes an approach that simplifies the
application process for rural health care providers. The Commission
believes that this will help ensure that applicants, including small
entities, will not be deterred from applying for support due to
administrative burdens. Applicants for support from the health
infrastructure program may choose between three methods in order to
demonstrate the need requirement for infrastructure funding. An
applicant may choose a method that would not require preparation by a
third party. The Commission also proposes that participants in the
health infrastructure program may receive funding for a portion of
their administrative expenses in order to ease the financial burden of
compliance with the various reporting requirements associated with
participation in the health infrastructure program.
40. The Commission also recognizes that participants in the health
infrastructure program, particularly smaller projects, or projects that
are subject to mandatory, State or local procurement rules, may find
the proposed RFP preparation and distribution requirements to be overly
burdensome. Accordingly, the Commission has included an exception for
such projects that would exclude infrastructure projects of $100,000 or
less or projects that are subject to mandatory, State or local
procurement rules. However, such projects would still be required to
complete a request for services on a Form 465 and posting this request
on USAC's Web page for a period of at least 28 days before selecting a
vendor.
41. Next, in order to encourage participation in the health
broadband services program, the Commission proposes a simplified
application process that clearly identifies the level of support that
providers can reasonably expect to receive. The proposed 50 percent
flat discount promotes prudent business decisions thereby assisting
rural health care providers in planning for their Health IT needs.
Moreover, a flat rate discount is easy to administer and consistent
with section 254(b)(5), which requires ``a specific, sufficient, and
predictable mechanism * * * because it limits the amount of support
that each health care provider may receive per month to a reasonable
level.'' The Commission proposes to simplify the forms process used in
the application process.
6. Federal Rules That May Duplicate, or Conflict With Proposed Rules
42. None.
B. Paperwork Reduction Act Analysis
43. This document contains proposed [new or modified] information
collection requirements. The Commission, as part of its continuing
effort to reduce paperwork burdens, invites the general public and the
Office of Management and Budget (OMB) to comment on the information
collection requirements contained in this document, as required by the
Paperwork Reduction Act of 1995, Public Law 104-13. In addition,
pursuant to the Small Business Paperwork Relief Act of 2002, Public Law
107-198, see 44 U.S.C. 3506(c)(4), we seek specific comment on how we
might further reduce the information collection burden for small
business concerns with fewer than 25 employees.
C. Ex Parte Presentations
44. The rulemaking this Notice initiates shall be treated as a
``permit-but-disclose'' proceeding in accordance
[[Page 48262]]
with the Commission's ex parte rules. Persons making oral ex parte
presentations are reminded that memoranda summarizing the presentations
must contain summaries of the substance of the presentations and not
merely a listing of the subjects discussed. More than a one- or two-
sentence description of the views and arguments presented generally is
required. Other requirements pertaining to oral and written
presentations are set forth in Sec. 1.1206(b) of the Commission's
rules.
List of Subjects in 47 CFR Part 54
Communications common carriers, Health facilities, Reporting and
recordkeeping requirements, Telecommunications, Telephone.
Marlene H. Dortch,
Secretary, Federal Communications Commission.
Proposed Rules
For the reasons discussed in the preamble, the Federal
Communications Commission proposes to amend 47 CFR part 54 as follows:
PART 54--UNIVERSAL SERVICE
Subpart G--Universal Service Support for Health Care Providers
1. The authority citation for part 54 continues to read as follows:
Authority: 47 U.S.C. 151, 154(i), 201, 205, 214, and 254 unless
otherwise noted.
2. Add Sec. 54.600 and an undesignated center heading to subpart G
to read as follows:
Defined Terms and Eligibility
Sec. 54.600 Index of defined terms.
The following definitions apply to this subpart.
Administrative office is defined in Sec. 54.601.
Broadband access services is defined in Sec. 54.631(b).
Capital lease (for purposes of the health infrastructure program)
is defined in Sec. 54.659(c).
Data centers is defined in Sec. 54.601(c).
Eligible sources (for purposes of the health infrastructure
program) is defined in Sec. 54.656(c).
Evergreen status or evergreen contract (for purposes of the health
broadband services program) is defined in Sec. 54.641(b).
Excess capacity (for purposes of the health infrastructure program)
is defined in Sec. 54.662.
HCP consortium leader is defined in Sec. 54.652(c).
Health broadband services program is defined in Sec. 54.602(c).
Health care provider is defined in Sec. 54.601(a)(2).
Health infrastructure program is defined in Sec. 54.602(b).
Health IT is defined in Sec. 54.658(d)(2).
Ineligible costs (for purposes of the health infrastructure
program) is defined in Sec. 54.655(a).
Ineligible sources (for purposes of the health infrastructure
program) is defined in Sec. 54.656(d).
Installation charges is defined in Sec. 54.633.
IRU (for purposes of the health infrastructure program) is defined
in Sec. 54.659(b).
Maximum supported distance (for purposes of the telecommunications
program) is defined in Sec. 54.625(a).
Minimum broadband speed for purposes of the health infrastructure
program is defined in Sec. 54.651(c), and for purposes of the health
broadband services program is defined in Sec. 54.631(e).
Minimum contribution (for purposes of the health infrastructure
program) is defined in Sec. 54.656(a).
NTIA is defined in Sec. 54.651(a)(2).
Renal dialysis centers is defined in Sec. 54.601(e).
Renal dialysis facilities is defined in Sec. 54.601(e).
Rural health care provider is defined in Sec. 54.601(a)(3).
Rural rate (for purposes of the telecommunications program) is
defined in Sec. Sec. 54.607(a) and 54.607(b).
Selected participants (for purposes of the health infrastructure
program) is defined in Sec. 54.650(c)(2).
Skilled nursing facilities is defined in Sec. 54.601(d).
Standard urban distance or SUD (for purposes of the
telecommunications program) is defined in Sec. 54.605(c).
Telecommunications program is defined in Sec. 54.602(a).
Urban rate (for purposes of the telecommunications program) is
defined in Sec. Sec. 54.605(a) and 54.605(b).
3. Section 54.601 is revised to read as follows:
Sec. 54.601 Eligibility.
(a) Eligible health care providers. (1) Only an entity that is
either a public or non-profit health care provider, as defined in this
section, shall be eligible to receive supported services under this
subpart.
(2) For purposes of this subpart, a ``health care provider'' is any
public or non-profit:
(i) Post-secondary educational institution offering health care
instruction, including a teaching hospital or medical school;
(ii) Community health center or health center providing health care
to migrants;
(iii) Local health department or agency;
(iv) Community mental health center;
(v) Not-for-profit hospital;
(vi) Rural health clinic; or
(vii) Consortium of health care providers consisting of one or more
entities described in paragraphs (a)(2)(i) through (vi) of this
section.
(3) Rural health care providers. For purposes of this subpart, a
``rural health care provider'' is an eligible health care provider
located in a rural area, as that term is defined for purposes of the
rural health care universal service support mechanism in Sec. 54.5 of
this part.
(i) Any health care provider that was located in a rural area under
the definition used by the Commission prior to July 1, 2005, and that
had received a funding commitment from USAC since 1998, remains
eligible for support under this subpart through the funding year ending
on June 30, 2011.
(ii) [Reserved]
(4) Per location determination. Each separate site or location of a
health care provider shall be considered an individual health care
provider for purposes of calculating and limiting support under this
subpart.
(b) Administrative offices. As used in this subpart, an
``administrative office'' means a facility that does not provide hands-
on delivery of patient care, but performs support functions that are
critical to the provision of clinical care by eligible health care
providers. Administrative offices qualify as part of an eligible health
care provider if they are located on the main campus of an eligible
health care provider listed in paragraph (a) of this section, or they
are located off-site and comply with the following provisions:
(1) The off-site administrative office is at least 51 percent owned
or controlled by an eligible health care provider listed in paragraph
(a) of this section. For purposes of this paragraph, ``control'' of an
administrative office is presumed to exist if one or more eligible
health care providers listed in paragraph (a) of this section, directly
or indirectly, own, control, or hold the power to vote or proxies for
at least 51 percent of the voting rights or governance right of the
entity that owns the administrative offices.
(2) Eligible health care providers seeking support for off-site
administrative offices must certify that the administrative office is
used primarily for performing services that are integral to the
eligible health care provider's provision of health care.
[[Page 48263]]
(c) Data centers. As used in this subpart, a ``data center'' means
a facility that serves as a centralized repository for the storage,
management, and dissemination of an eligible health care provider's
computer systems, associated components, and data. Data centers qualify
as part of an eligible health care provider if they are located on the
main campus of an eligible health care provider listed in paragraph (a)
of this section, or they are located off-site and comply with the
following provisions:
(1) The off-site data center is at least 51 percent owned or
controlled by an eligible health care provider listed in paragraph (a)
of this section. For purposes of this paragraph, ``control'' of a data
center is presumed to exist if one or more eligible health care
providers listed in paragraph (a) of this section, directly or
indirectly, own, control, or hold the power to vote or proxies for at
least 51 percent of the voting rights or governance right of the entity
that owns the data center.
(2) Eligible health care providers seeking support for off-site
data centers must certify that the data center is used primarily for
performing services that are integral to the eligible health care
provider's provision of health care.
(d) Skilled nursing facilities. As used in this subpart, a
``skilled nursing facility'' means a facility that primarily provides
post-acute services that are traditionally provided at not-for-profit
hospitals, including the management, observation, and evaluation of
patient care. Public or non-profit skilled nursing facilities qualify
as eligible health care providers as not-for-profit hospitals under
paragraph (a)(5) of this section, provided that the facility primarily
provides (for at least 51 percent of its total beds) services that are
recognized as skilled nursing care by the Centers for Medicare and
Medicaid Services.
(e) Renal dialysis centers and facilities. As used in this subpart,
a ``renal dialysis center'' means a hospital unit that is approved by
the Centers for Medicare and Medicaid Services (CMS) to furnish the
full spectrum of diagnostic, therapeutic, and rehabilitative services
required for the care of End Stage Renal Disease (ESRD) dialysis
patients (including both inpatient and outpatient dialysis services).
As used in this subpart, a ``renal dialysis facility'' is a unit that
is approved by CMS to furnish dialysis services directly to ESRD
patients. Public or non-profit renal dialysis centers or facilities
qualify as eligible health care providers as not-for-profit hospitals
under paragraph (a)(5) of this section, provided that the facility or
center seeking support certifies that, over the 12-month period
preceding the date of application for support, the facility or center
provided life preserving ESRD treatment to at least 51 percent of its
patients.
(f) Consortia. (1) An eligible health care provider may join a
consortium with other eligible health care providers; with schools,
libraries, and library consortia eligible under Subpart F; and with
public sector (governmental) entities to order telecommunications
services. With one exception, eligible health care providers
participating in consortia with ineligible private sector members shall
not be eligible for supported services under this subpart. A consortium
may include ineligible private sector entities if such consortium is
only receiving services at tariffed rates or at market rates from those
providers who do not file tariffs.
(2) For consortia, universal service support under this subpart
shall apply only to the portion of eligible services used by an
eligible health care provider.
4. Add Sec. 54.602 to read as follows:
Sec. 54.602 Eligible services.
(a) Telecommunications program. Rural health care providers may
request support for the difference, if any, between the urban and rural
rates for telecommunications services, subject to the provisions and
limitations beginning at Sec. 54.604. This support is referred to as
the telecommunications program.
(b) Health infrastructure program. Eligible health care providers
may request support for broadband infrastructure, subject to the
provisions and limitations beginning at Sec. 54.650. This support is
referred to as the health infrastructure program.
(c) Health broadband services program. Rural health care providers
may request support for the recurring costs for broadband access
services, subject to the provisions and limitations beginning at Sec.
54.631. This support is referred to as the health broadband services
program.
(d) Allocation of discounts. An eligible health care provider that
engages in eligible and ineligible activities or that collocates with
an entity that provides ineligible services shall allocate eligible and
ineligible activities in order to receive a prorated discount (or
prorated support) for eligible activities. Health care providers shall
choose a method of cost allocation that is based on objective criteria
and reasonably reflects the eligible usage of the facilities.
(e) Health care purposes. Telecommunications and broadband access
services for which eligible health care providers receive support from
the telecommunications program, the health infrastructure program or
the health broadband services program, must be reasonably related to
the provision of health care services by the eligible health care
provider.
5. Section 54.603 is revised to read as follows:
Sec. 54.603 Competitive bid and certification requirements.
(a) Competitive bidding requirements. Each eligible health care
provider shall participate in a competitive bidding process pursuant to
the requirements established in this section and any additional and
applicable State, local, or other procurement requirements to select
the telecommunications carriers or other services providers that will
provide services eligible for universal service support under this
subpart.
(b) Additional bidding requirements for health infrastructure
program. In addition to the requirements in paragraph (a) of this
section, eligible health care providers seeking support from the health
infrastructure program for projects of $100,000 or more that are not
subject to mandatory State or local procurement rules, must (prior to
selecting a service provider) prepare a detailed request for proposal
(RFP) that provides sufficient information to define the scope of the
project. Such RFP must be distributed in a method likely to garner
attention from interested service providers. Examples include: Post a
notice of the RFP in trade journals or newspaper advertisements, send
the RFP to known or potential service providers, include the RFP on the
health care provider's Web page or other Internet sites, or follow
other customary and reasonable solicitation practices used in
competitive bidding for infrastructure projects.
(c) Posting of FCC Form 465; health care provider certification
requirements.
(1) An eligible health care provider seeking to receive services
eligible for universal service support under this subpart (whether
under the telecommunications program, the health broadband services
program, or the health infrastructure program) shall submit a completed
FCC Form 465 to the Administrator. FCC Form 465 shall be signed by the
person authorized to order telecommunications or information services
for the health care provider and shall include, at a minimum, that
person's certification under oath that:
(i) The requester is a public or not-for-profit entity that falls
within one of the categories set forth in the definition of
[[Page 48264]]
health care provider, listed in Sec. 54.601(a), 54.601(b) or
54.601(c);
(ii) The requester is physically located in a rural area, unless
the health care provider is requesting services eligible for support
under the health infrastructure program;
(iii) If the requester is seeking services eligible for support
under the health infrastructure program, that the requester has
complied with the initial application requirements listed in Sec.
54.650(b);
(iv) The requested service or services will be used solely for
purposes reasonably related to the provision of health care services or
instruction that the health care provider is legally authorized to
provide under the law in the State in which such health care services
or instruction are provided;
(v) The requested service or services will not be sold, resold or
transferred in consideration of money or any other thing of value;
(vi) If the service or services are being purchased as part of an
aggregated purchase with other entities or individuals, the full
details of any such arrangement, including the identities of all co-
purchasers and the portion of the service or services being purchased
by the health care provider; and
(vii) The requester is required to comply with the performance
measures listed in Sec. 54.677.
(2) The Administrator shall post each FCC Form 465 that it receives
from an eligible health care provider on its Rural Health Care Division
Web site designated for this purpose.
(3) After posting an eligible health care provider's FCC Form 465
on the Rural Health Care Division Web site, the Administrator shall
send confirmation of the posting to the entity requesting services. The
health care provider shall wait at least 28 days from the date on which
its FCC Form 465 is posted on the Web site before selecting a service
provider(s). The confirmation from the Administrator shall include the
date after which the requester may sign a contract with its chosen
service provider(s).
(4) Selecting a service provider. In selecting a service provider
for services eligible for universal service support under this subpart,
a health care provider shall consider all bids submitted by service
providers and select the most cost-effective alternative. After
selecting a service provider for services eligible for support under
this subpart: The health care provider shall certify to the
Administrator that the health care provider is selecting the most cost-
effective method of providing the requested service or services, where
the most cost-effective method of providing a service is defined as the
method that costs the least after consideration of the features,
quality of transmission, reliability, and other factors that the health
care provider deems relevant to choosing a method of providing the
required health care services; and The health care provider shall
submit to the Administrator paper copies of the responses or bids
received in response to the requested services.
6. Add an undesignated centered heading ``TELECOMMUNICATIONS
PROGRAM'' above Sec. 54.604 subpart G.
7. Section 54.604 is revised to read as follows:
Sec. 54.604 Telecommunications services.
(a) Telecommunications services. Any telecommunications service
that is the subject of a properly completed bona fide request by a
rural health care provider shall be eligible for universal service
support for the difference, if any, between the urban rate and the
rural rate, subject to the limitations described in this paragraph. The
length of a supported telecommunications service under the
telecommunications program may not exceed the distance between the
health care provider and the point farthest from that provider on the
jurisdictional boundary of the largest city in a State as defined in
Sec. 54.625(a).
(b) Existing contracts. A signed contract for services eligible for
telecommunications program support pursuant to this subpart between an
eligible health care provider as defined under Sec. 54.601 and a
telecommunications carrier shall be exempt from the competitive bid
requirements set forth in Sec. 54.603(a) as follows:
(1) A contract signed on or before July 10, 1997 is exempt from the
competitive bid requirement for the life of the contract.
(2) [Reserved]
(c) For rural health care providers that take service under or
pursuant to a master contract, as defined in Sec. 54.500(f), the date
of execution of that master contract represents the applicable date for
purposes of determining whether and to what extent the rural health
care provider is exempt from the competitive bid requirements.
(d) The competitive bid system will be deemed to be operational
when the Administrator is ready to accept and post FCC Form 465 from
rural health care providers on a Web site and that Web site is
available for use by telecommunications carriers.
8. Section 54.605 is amended by revising paragraphs (a) and (c), to
read as follows:
Sec. 54.605 Determining the urban rate.
(a) If a rural health care provider requests support for an
eligible service to be funded from the telecommunications program that
is to be provided over a distance that is less than or equal to the
standard urban distance, as defined in paragraph (c) of this section,
for the State in which it is located, the ``urban rate'' for that
service shall be a rate no higher than the highest tariffed or
publicly-available rate charged to a commercial customer for a
functionally similar service in any city with a population of 50,000 or
more in that State, calculated as if it were provided between two
points within the city.
* * * * *
(c) The ``standard urban distance'' (or ``SUD'') for a State is the
average of the longest diameters of all cities with a population of
50,000 or more within the State.
* * * * *
9. Section 54.609 is amended by revising paragraphs (a)
introductory text, (a)(1)(iv), (a)(3), (d)(1), (d)(2), and (e)(1) to
read as follows:
Sec. 54.609 Calculating support.
(a) For a public or non-profit rural health care provider, the
amount of universal service support provided for an eligible service to
be funded from the telecommunications program shall be the difference,
if any, between the urban rate and the rural rate charged for the
service, as defined herein. In addition, all reasonable charges that
are incurred by taking such services, such as State and Federal taxes
shall be eligible for universal service support. Charges for
termination liability, penalty surcharges, and other charges not
included in the cost of taking such service shall not be covered by the
universal service support mechanisms. Rural health care providers may
choose one of the following two support options.
(1) * * *
(iv) A telecommunications carrier that provides telecommunications
service to a rural health care provider participating in an eligible
health care consortium, and the consortium must establish the actual
distance-based charges for the health care provider's portion of the
shared telecommunications services.
* * * * *
(3) Base rate support-consortium. A telecommunications carrier that
provides telecommunications service to a rural health care provider
participating in an eligible health care consortium, and the consortium
must
[[Page 48265]]
establish the applicable rural base rates for telecommunications
service for the health care provider's portion of the shared
telecommunications services, as well as the applicable urban base rates
for the telecommunications service.
* * * * *
(d) * * *
(1) Rural public and non-profit health care providers may receive
support for rural satellite services under the telecommunications
program, even when another functionally similar terrestrial-based
service is available in that rural area. Support for satellite services
shall be capped at the amount the rural health care provider would have
received if they purchased a functionally similar terrestrial-based
alternative.
(2) Rural health care providers seeking support from the
telecommunications program for satellite services shall provide to the
Administrator with the Form 466, documentation of the urban and rural
rates for the terrestrial-based alternatives.
* * * * *
(e) * * *
(1) Calculation of support. The support amount allowed under the
telecommunications program for satellite services provided to mobile
rural health care providers is calculated by comparing the rate for the
satellite service to the rate for an urban wireline service with a
similar bandwidth. Discounts for satellite services shall not be capped
at an amount of a functionally similar wireline alternative. Where the
mobile rural health care provider provides service in more than one
State, the calculation shall be based on the urban areas in each State,
proportional to the number of locations served in each State.
* * * * *
10. Section 54.611 is revised to read as follows:
Sec. 54.611 Election to offset support against annual USF
contribution.
(a) A telecommunications carrier providing services eligible for
telecommunications program support under this subpart to eligible
health care providers may, at the election of the carrier: Treat the
amount eligible for support under this subpart as an offset against the
carrier's universal service support obligation for the year in which
the costs for providing eligible services were incurred; or receive
direct reimbursement from the Administrator for that amount.
(b) Carriers shall elect in January of each year the method by
which they will be reimbursed and shall remain subject to that method
for the duration of the calendar year. Any support amount that is owed
a carrier that fails to remit its monthly universal service
contribution obligation, however, shall first be applied as an offset
to that carrier's contribution obligation. Such a carrier shall remain
subject to the offsetting method for the remainder of the calendar year
in which it failed to remit their monthly universal service obligation.
A carrier that continues to be in arrears on its universal service
contribution obligations at the end of a calendar year shall remain
subject to the offsetting method for the next calendar year.
(c) If a telecommunications carrier providing services eligible for
support from the telecommunications program elects to treat that
support amount as an offset against the carrier's universal service
contribution obligation and the total amount of support owed to the
carrier exceeds its universal service obligation, calculated on an
annual basis, the carrier shall receive a direct reimbursement in the
amount of the difference. Any such reimbursement due a carrier shall be
provided to that carrier no later than the end of the first quarter of
the calendar year following the year in which the costs were incurred
and the offset against the carrier's universal service obligation was
applied.
11. Section 54.613 is amended by revising paragraph (b) to read as
follows:
Sec. 54.613 Limitations on supported services for rural health care
providers.
* * * * *
(b) This section shall not affect a rural health care provider's
ability to obtain services supported under the health broadband
services program or the health infrastructure program, provided that
eligible health care providers that seek support for bundled services
that include basic telecommunications service supported under the
health broadband services program may not also request support from the
telecommunications program for the same basic telecommunications
service.
12. Section 54.615 is amended by revising paragraphs (b) and (c) to
read as follows:
Sec. 54.615 Obtaining services.
* * * * *
(b) Receiving supported rate. Upon receiving a bona fide request,
as defined in paragraph (c) of this section, from a rural health care
provider for a telecommunications service eligible for support under
the telecommunications program, a telecommunications carrier shall
provide the service at a rate no higher than the urban rate, as defined
in Sec. 54.605, subject to the limitations set forth in this Subpart.
(c) Bona fide request. In order to receive services eligible for
support under the telecommunications program, an eligible health care
provider must submit a request for services to the telecommunications
carrier, signed by an authorized officer of the health care provider,
and shall include that person's certification under oath that:
(1) The requester is a public or non-profit entity that falls
within one of the seven categories set forth in the definition of
health care provider, listed in Sec. 54.601(a);
(2) The requester is physically located in a rural area; or, if the
requester is a mobile rural health care provider requesting services
under Sec. 54.609(e), that the requester has certified that it is
serving eligible rural areas.
(3) [Reserved].
(4) The requested service or services will be used solely for
purposes reasonably related to the provision of health care services or
instruction that the health care provider is legally authorized to
provide under the law in the State in which such health care services
or instruction are provided;
(5) The requested service or services will not be sold, resold or
transferred in consideration of money or any other thing of value;
(6) If the service or services are being purchased as part of an
aggregated purchase with other entities or individuals, the full
details of any such arrangement, including the identities of all co-
purchasers and the portion of the service or services being purchased
by the health care provider; and
(7) The requester is selecting the most cost-effective method of
providing the requested service or services, where the most cost-
effective method of providing a service is defined as the method that
costs the least after consideration of the features, quality of
transmission, reliability, and other factors that the health care
provider deems relevant to choosing a method of providing the required
health care services.
Sec. 54.617 [Redesignated as Sec. 54.671]
13. Redesignate Sec. 54.617 as Sec. 54.671.
Sec. 54.619 [Redesignated as Sec. 54.673]
14. Redesignate Sec. 54.619 as Sec. 54.673.
Sec. 54.621 [Removed]
15. Remove Sec. 54.621.
Sec. 54.623 [Redesignated as Sec. 54.675]
16. Redesignate Sec. 54.623 as Sec. 54.675.
17. Section 54.625 is revised to read as follows:
[[Page 48266]]
Sec. 54.625 Support for telecommunications services beyond the
maximum supported distance for rural health care providers.
(a) The maximum support distance for the telecommunications program
is the distance from the health care provider to the farthest point on
the jurisdictional boundary of the city in that State with the largest
population, as calculated by the Administrator.
(b) An eligible rural health care provider may purchase an eligible
telecommunications service supported under the telecommunications
program that is provided over a distance that exceeds the maximum
supported distance.
(c) If an eligible rural health care provider purchases an eligible
telecommunications service supported under the telecommunications
program that exceeds the maximum supported distance, the health care
provider must pay the applicable rural rate for the distance that such
service is carried beyond the maximum supported distance.
18. Add an undesignated centered heading ``HEALTH BROADBAND
SERVICES PROGRAM'' below Sec. 54.625 of subpart G.
19. Add Sec. 54.631 to read as follows:
Sec. 54.631 Eligible services.
(a) Recurring costs for broadband access services. Subject to the
provisions of Sec. Sec. 54.631 through 54.641, rural health care
providers may request support from the health broadband services
program for 50 percent of the recurring monthly costs for broadband
access services at the minimum broadband speeds defined below.
(b) For purposes of this subpart, ``broadband access service'' is
any advanced telecommunications or information service that enables
rural health care providers to post their own data, interact with
stored data, generate new data, or communicate over private dedicated
networks or the public Internet for the provision of health IT.
(c) Eligible health care providers that seek support from the
health broadband services program for broadband access services must
certify that such services are reasonably related to the provision of
health IT for the delivery of health care services by the eligible
health care provider.
(d) Eligible health care providers that seek support under the
health broadband services program for telecommunications services may
not also request support from the telecommunications program for the
same service.
(e) For purposes of the health broadband services program,
``minimum broadband speed'' means 4 Mbps.
20. Add Sec. 54.633 to read as follows:
Sec. 54.633 Installation charges and other non-recurring costs.
(a) Rural health care providers may request one-time support from
the health broadband services program for 50 percent of the reasonable
and customary installation charges for broadband access services.
``Installation charges'' are defined as charges that are normally
charged by service providers to commence service, and are not charges
that are based on an amortization of construction or infrastructure
costs.
(b) Except as provided in paragraph (c) of this section, no
universal service support is available under the health broadband
services program for the non-recurring costs associated with the
construction or deployment of broadband infrastructure.
(c) Rural health care providers may not seek support for non-
recurring charges of $500,000 or more. If non-recurring charges are
more than $500,000, they must be part of a multi-year contract, and
must be prorated over a period of at least five years.
21. Add Sec. 54.635 to read as follows:
Sec. 54.635 Eligible service providers.
Broadband access services may be provided by a telecommunications
carrier or other qualified broadband access service provider, provided
that the health care provider selects the most cost effective option to
meet its health care needs in accordance with Sec. 54.603.
22. Add Sec. 54.637 to read as follows:
Sec. 54.637 Competitive bidding requirements.
Rural health care providers seeking broadband access services to be
supported by the health broadband services program must comply with the
competitive bidding and certification requirements set forth in Sec.
54.603.
23. Add Sec. 54.639 to read as follows:
Sec. 54.639 Restrictions on satellite services.
(a) Rural health care providers may seek support for rural
satellite-based broadband access services under the health broadband
services program, even when another functionally similar terrestrial-
based service is available in the rural area, subject to the provisions
of this section.
(b) Support for satellite services will be capped at the amount of
support the eligible health care provider would be eligible to receive
under the health broadband services program if it had purchased such
service from a functionally similar terrestrial-based alternative.
(c) Where an eligible health care provider seeks a more expensive
satellite-based service when a less expensive terrestrial-based
alternative is available, the health care provider will be responsible
for the difference between the satellite-based service and the
terrestrial-based alternative.
(d) An eligible health care provider seeking support for satellite
service must submit documentation to the Administrator demonstrating
that satellite service is the most cost-effective option available to
meet the provider's health care needs at the same time information is
submitted pursuant to Sec. 54.603(c)(4).
24. Add Sec. 54.641 to read as follows:
Sec. 54.641 Multi-year contracts.
(a) Participants in the health broadband services program are
permitted to enter into multi-year contracts for recurring broadband
access services, but may not receive funding commitments from the
Administrator for more than one funding year at a time.
(b) Multi-year contracts entered into by a rural health care
provider after complying with the competitive bid requirements of Sec.
54.603, are deemed to have ``evergreen'' status. Health care providers
do not have to rebid for services during the term of a multi-year
contract with evergreen status. However, health care providers may not
add services to a multi-year contract or extend the term of a multi-
year contract and retain ``evergreen'' status. Such modifications to a
multi-year contract are deemed a new request for services, and require
that the health care provider rebid the services in compliance with the
provisions of Sec. 54.603 and select the most cost-effective service
provider.
(c) All program participants, including those covered by evergreen
contracts, must submit a request for support each funding year to
continue receiving funding from the health broadband services program
for recurring broadband access services. Requests for support each
funding year are subject to the program funding and prioritization
rules set forth in Sec. 54.675. Rural health care providers with
multi-year contracts do not have a priority preference over other rural
health care providers seeking support from the health broadband
services program in any funding year.
25. Add an undesignated centered heading and Sec. 54.650 to read
as follows:
[[Page 48267]]
Health Infrastructure Program
Sec. 54.650 Obtaining support.
(a) Subject to the provisions in Sec. Sec. 54.650 through 54.664,
eligible health care providers may request universal service support to
fund up to 85 percent of eligible costs for the design, construction
and deployment of dedicated broadband networks that connect public or
non-profit health care providers in areas of the country where there is
no available broadband infrastructure or the existing broadband
infrastructure is insufficient for health IT needed to improve and
provide health care delivery. Broadband infrastructure projects may
include either new facilities or improvements to upgrade existing
facilities (for example, converting a copper facility to a fiber
facility capable of broadband delivery). In addition, funding may be
used to support up to 85 percent of the cost of connecting health care
networks to Internet2 or National LambdaRail.
(b) Initial application phase. Eligible health care providers may
apply for funding under the health infrastructure program by submitting
an application to the Administrator. Applications will be accepted
during the first quarter of each funding year (July 1 to September 30).
As part of this initial application phase, an applicant will be
required:
(1) To either verify that either there is no available broadband
infrastructure, or demonstrate, pursuant to Sec. 54.651, that the
existing broadband infrastructure is insufficient for health IT needed
to improve and provide health care delivery;
(2) To provide letters of agency, as set forth in Sec. 54.652, for
each of the eligible health care providers in the applicant's proposed
network, and identify the lead entity that will be responsible for
completing the application process;
(3) To include a preliminary budget and an infrastructure funding
request as set forth in Sec. 54.653; and
(4) To certify that it will comply with all program requirements if
selected for funding.
(c) Project selection phase. (1) Applications submitted for funding
will be made publicly available on the Administrator's Web site.
(2) After applications have been reviewed, the Administrator will
notify those applicants whose projects have been selected in that
funding year as eligible to participate in the program (``selected
participants''). After a selected participant is notified of project
eligibility, it may proceed with the project commitment phase as set
forth in paragraph (d) of this section.
(3) Health care providers whose projects are not selected for
funding in any funding year may apply for funding in subsequent funding
years.
(d) Project commitment phase. Selected participants must complete
and submit all additional materials and comply with all program
requirements as set forth in Sec. Sec. 54.656 through 54.663. The
Administrator may request additional information from applicants and
selected participants if necessary to substantiate, explain or clarify
any materials submitted as part of the funding process.
(e) Build-out period. All projects funded by the health
infrastructure program must be subject to fair and open competitive
bidding, as provided in Sec. 54.603. The Administrator will review all
applications and additional information provided by selected
participants to confirm compliance with the program rules. The
Administrator will issue funding commitment letters for projects after
a selected participant has completed all requirements and selected a
service provider. Selected participants have a period of three funding
years, commencing with the funding year in which the initial online
application was submitted pursuant to Sec. 54.650(b), to file all
forms and supporting documents necessary to receive funding commitment
letters from the Administrator. Selected participants have a period of
five funding years, commencing with the funding year on which the
selected participant receives its first funding commitment letter for
the project, in which to complete build-out.
26. Add Sec. 54.651 to read as follows:
Sec. 54.651 Demonstrated need for infrastructure funding.
(a) Pursuant to Sec. 54.650, applicants seeking funding under the
health infrastructure program must demonstrate that broadband at the
minimum broadband speed, as defined in paragraph (c) of this section,
is unavailable or insufficient in the geographic area where the
eligible health care providers are to be connected by the proposed
dedicated network, by using any of the following methods:
(1) Survey method. Provide a survey of current carrier network
capabilities in the geographic area, compiled by a preparer qualified
to make such surveys.
(i) The survey must provide details as to the identity and
broadband capabilities of all existing carriers in the proposed network
area, and discuss and justify the methodology used to make such
determinations.
(ii) The survey must be accompanied by a statement of the
preparer's professional, educational, and business background that make
the preparer qualified for conducting the survey. The statement should
include the preparer's prior experience, technical or engineering
degrees, telecommunications background, and knowledge of methods
typically employed to perform such surveys.
(iii) The applicant must also provide a report detailing either
that there is no available broadband infrastructure, or explaining why
existing broadband infrastructure would be insufficient for health IT
needed to provide or improve health care delivery by the eligible
health care providers that are proposing the infrastructure project.
(2) Broadband mapping method. (i) Provide copies or linked
references to recognized broadband mapping studies, such as the
National Telecommunications and Information Administration (``NTIA'')
national broadband map, State or local broadband maps, and other
mapping sources that adequately depict the available broadband in the
proposed network area.
(ii) The applicant must also provide a report detailing why
existing broadband infrastructure would be insufficient for health IT
needed to provide or improve health care delivery by the by the
eligible health care providers that are proposing the infrastructure
project.
(3) Certification method. Certify that, for a continuous period of
not less than six months, the health care providers that will
participate in the proposed dedicated network requested broadband
access services under the telecommunications program or the health
broadband services program, at connectivity speeds of not less than the
minimum broadband speed, and did not receive any proposals from network
service providers meeting the terms of the requested services.
(b) All information submitted by applicants to establish that
broadband is unavailable or insufficient will be subject to review and
verification by the Administrator.
(c) For purposes of the health infrastructure program, ``minimum
broadband speed'' means 10 Mbps.
27. Add Sec. 54.652 to read as follows:
Sec. 54.652 Letters of agency.
(a) Pursuant to Sec. 54.650, applicants must identify all eligible
health care providers on whose behalf funding is being sought, and the
lead entity that will be responsible for completing the application
process.
[[Page 48268]]
(b) The initial application must include a letter of agency from
each participating eligible health care provider, confirming that the
health care provider has agreed to participate in the applicant's
proposed network, and authorizing the lead entity to act as the health
care provider's agent for completing the application process.
(c) As used in this section, ``HCP consortium leaders'' means State
organizations, public entities and non-profits that are not eligible
health care providers but that serve in an administrative capacity for
eligible health care providers within a consortium. HCP consortium
leaders may apply for funding under the health infrastructure program,
on behalf of eligible health care providers. In doing so, however, HCP
consortium leaders may not receive any funding from the health
infrastructure program except as provided in Sec. 54.654(c). The full
value of any discounts, funding, or other program benefits under the
health infrastructure program that are secured by an HCP consortium
leader must be passed on to the eligible health care providers that are
members of the consortium.
28. Add Sec. 54.653 to read as follows:
Sec. 54.653 Funding requests and budgets.
(a) Every applicant's initial application must include a funding
request, a brief project description, and a detailed budget that
identifies all costs related to the proposed project. The funding
request may not exceed 85 percent of the eligible costs identified in
the budget.
(b) Budget requirements. (1) The budget must be reasonable, and
must be based on general pricing information available to the applicant
from third parties. All material assumptions used in preparing the
budget must be noted and discussed in narrative form. The budget must
separately identify the following:
(i) Eligible non-recurring costs, subject to the limitations set
forth in Sec. 54.654(a);
(ii) Eligible network design costs, subject to the limitations set
forth in Sec. 54.654(b);
(iii) Eligible administrative expenses, subject to the limitations
set forth in Sec. 54.654(c);
(iv) Eligible maintenance costs, subject to the limitations set
forth in Sec. 54.654(d);
(v) Eligible NLR or Internet2 membership fees, subject to the
limitations set forth in Sec. 54.654(e); and
(vi) All costs that are necessary for completion of the project,
but that are not eligible for support under the health infrastructure
program.
(2) If a budget line item contains both eligible and ineligible
components, costs should be allocated between the eligible and
ineligible components.
(3) Budgets submitted by applicants and selected participants may
be made publicly available by the Administrator so that other
prospective applicants may use such information as a basis for
preparing their own budgets.
29. Add Sec. 54.654 to read as follows:
Sec. 54.654 Eligible costs.
(a) Non-recurring costs. The health infrastructure program may
provide support for the following non-recurring costs for the
deployment of infrastructure: initial network design studies not in
excess of the cap identified in Sec. 54.654(b); engineering, materials
and construction of fiber facilities or other broadband infrastructure;
and the costs of engineering, furnishing (i.e., as delivered from the
manufacturers), and installing network equipment.
(b) Network design. Network design costs are limited to $1 million
per project or 15 percent of the project's eligible costs, whichever is
less.
(c) Administrative expenses. Selected participants may request
funding under the health infrastructure program for up to 85 percent of
the reasonable administrative expenses incurred in connection with
infrastructure projects. Selected participants must submit
certifications and maintain records confirming the number of hours
provided by one or more employees for tasks related to the health
infrastructure program project and that the administrative expense for
which support is sought is not more than the reasonable costs for the
amount of time such employee(s) spent on the project. Administrative
expenses are subject to the following limitations:
(1) Support for such expenses will be limited to 36 months,
commencing with the month in which a selected participant has been
notified by the Administrator that the selected participant's project
is eligible for funding.
(2) The rate of support will not exceed $100,000 per year.
(3) The aggregate amount of support a project may receive for
administrative expenses shall not exceed 10 percent of the total
proposed budget for the project.
(d) Maintenance costs. Selected participants may request funding
for up to 85 percent of the reasonable, necessary and customary ongoing
maintenance costs for networks funded by the health infrastructure
program, subject to the following limitations:
(1) Support for maintenance costs shall be limited to a period of
five years from the first funding commitment letter issued for such
project.
(2) Selected participants must demonstrate in their sustainability
plans, as described in Sec. 54.661, that the costs of network
operations and maintenance will be sustainable after such period of
support from the health infrastructure program.
(3) Service agreements for network maintenance will be subject to
the competitive bidding rules set forth in Sec. 54.603, and may be bid
either at the time of construction of the network or at a later time.
(e) National LambdaRail and Internet2. (1) Selected participants
may request funding under the health infrastructure program for up to
85 percent of the membership fees for connecting their networks to the
dedicated nationwide backbones offered by Internet2 or National
LambdaRail, or their successors.
(2) Selected participants may either pre-select to connect with
either Internet2 or National LambdaRail, and seek funding for such
connection, or may (at their discretion) seek competitive bids from
National LambdaRail and Internet2 through the normal competitive
bidding process. If Internet2 or National LambdaRail are pre-selected
by a selected participant, the costs of connection to such nationwide
backbone must be reasonable.
30. Add Sec. 54.655 to read as follows:
Sec. 54.655 Ineligible costs.
(a) Certification that funds will not be used to pay for ineligible
costs. The authorized purposes of the health infrastructure program
include the costs of access to advanced telecommunications services.
For purposes of the health infrastructure program, ``ineligible costs''
are those costs that are not directly related to access or are not
directly associated with network design, construction, or deployment of
a dedicated network for eligible health care providers. Selected
participants are required to certify that support from the health
infrastructure program will not be used to pay for ineligible costs.
(b) Examples of ineligible costs. Examples of ineligible costs
include but are not limited to:
(1) Personnel costs, including salaries and fringe benefits, except
for those costs that qualify as administrative expenses, subject to the
limitations set forth in Sec. 54.654(c).
[[Page 48269]]
(2) Travel costs, except for travel costs that are reasonable and
necessary for network design or deployment and that are specifically
identified and justified as part of a competitive bid for a
construction project.
(3) Legal costs.
(4) Training, except for basic training or instruction directly
related to and required for broadband network installation and
associated network operations. For example, costs for training health
care provider personnel in the use of telemedicine applications are
ineligible.
(5) Program administration or technical coordination, except for
those costs that qualify as administrative expenses, subject to the
limitations set forth in Sec. 54.654(c).
(6) Inside wiring or networking equipment, e.g., video/Web
conferencing equipment and wireless user devices, on health care
provider premises, except for equipment that terminates a carrier's or
other provider's transmission facility and any router/switch that is
directly connected to either the facility or the terminating equipment.
(7) Computers, including servers, and related hardware, e.g.,
printers, scanners, laptops, unless used exclusively for network
management.
(8) Helpdesk equipment and related software, or services.
(9) Software, unless used for network management, maintenance, or
other network operations; software development, excluding development
of software that supports network management, maintenance, and other
network operations; Web server hosting; and Web site portal
development.
(10) Telemedicine applications and software.
(11) Clinical or medical equipment.
(12) Electronic records management and expenses.
(13) Connections to ineligible network participants or sites, e.g.,
for-profit health care providers.
(14) Costs related to any share of a project that is not allocable
to the dedicated health care network.
(15) Administration and marketing costs, e.g., administrative
costs; supplies and materials; marketing studies, marketing activities,
or outreach efforts; evaluation and feedback studies, except for those
costs that qualify as eligible administrative expenses, subject to the
limitations set forth in Sec. 54.654(c).
(16) Continuous power source.
(c) Billing and operational expenses. The health infrastructure
program will not provide support for billing and operational expenses
incurred either by a health care provider or its selected vendor. An
example of billing or operational costs is the expense that service
providers may charge for allocating costs to each health care provider
in a project's network.
31. Add Sec. 54.656 to read as follows:
Sec. 54.656 Minimum participant contribution requirement.
(a) Minimum participant contribution. The health infrastructure
program will not pay more than 85 percent of eligible project costs,
and selected participants are required to pay the remaining amount of
all eligible project costs (the ``minimum contribution''). Selected
participants are required to pay all costs that are related to the
project but that do not qualify as eligible project costs. Selected
participants must demonstrate that their minimum contribution
requirement will be met from an eligible source to receive funding from
the health infrastructure program.
(b) Evidence of eligible sources for minimum participant
contribution. Within 90 days after a selected participant has been
notified that its project is eligible for funding, the selected
participant must submit to the Administrator letters of assurances:
Confirming funds from eligible sources to meet the minimum contribution
requirement, and identifying with specificity the eligible sources of
funding.
(c) Eligible sources. The following are ``eligible sources'' for
meeting the minimum contribution:
(1) Eligible health care providers;
(2) State grants, funding, or appropriations;
(3) Federal funding, grants, loans, or appropriations, but not
other universal service funding; and
(4) Other grant funding, including private grants, but not grants
from ineligible sources.
(d) Ineligible sources. The following are examples of ``ineligible
sources'' for meeting the minimum contribution:
(1) In-kind or implied contributions;
(2) A local exchange carrier (LEC) or other telecom carrier,
utility, contractor, consultant, or other service provider;
(3) For-profit participants; and
(4) Any other universal service support program.
32. Add Sec. 54.657 to read as follows:
Sec. 54.657 Project milestones.
(a) Project schedule. Within 90 days after a selected participant
has been notified that its project is eligible for funding, the
selected participant must submit to the Administrator a project
schedule that identifies the following project milestones:
(1) Start and end date for network design;
(2) Start and end date for drafting and posting RFPs;
(3) Start and end date for selecting vendors and negotiating
contracts;
(4) Start date for commencing construction and end date for
completing construction; and
(5) Target dates for each health care provider to be connected to
the network and operational.
(b) Quarterly updates. Each selected participant must submit to the
Administrator, on a quarterly basis, an update of the selected
participant's project schedule, noting which project milestones have
been met and any progress or unanticipated delays in meeting other
milestones. In the event a project milestone is not achieved, or there
is a material deviation from the project schedule, the selected
participant must provide an explanation in the project schedule update.
33. Add Sec. 54.658 to read as follows:
Sec. 54.658 Detailed project description.
(a) Project description. Within 90 days after a selected
participant has been notified that its project is eligible for funding,
the selected participant must submit to the Administrator a detailed
project description that describes the network, identifies the proposed
technology, demonstrates that the project is technically feasible and
reasonably scalable, and describes each specific development phase of
the project (e.g., network design phase, construction period,
deployment and maintenance period).
(b) Network coverage. (1) The project description must include the
identity and location of all network participants, and a network
diagram.
(2) The project description must indicate how selected participants
plan to fully utilize their proposed network to provide health care
services, and must present a strategy for aggregating the specific
needs of health care providers within a State or region, including
providers that serve rural areas. Networks may be limited to a
particular State or region, but selected participants should describe
feasible ways in which such networks will connect to a national
broadband network. The project description should discuss whether the
proposed network will connect to a national backbone, such as National
LambdaRail or Internet2.
(c) Service speeds and scalability. (1) The project description
must include a discussion of the speeds and services necessary for the
particular network, and how the minimum broadband speed, as defined in
Sec. 54.651(c), will be provided.
[[Page 48270]]
(2) Networks must be designed for the exchange of identifiable
health information, and capable of meeting transmission speed
requirements necessary for health care applications to be used by the
health care providers. To demonstrate their broadband needs, selected
participants are required to explain and provide reasonable support for
the type of health care providers that will use the network, the
bandwidth and speed requirements for such network, and the health care
services that necessitate broadband connections at the desired speeds.
(3) The project description must explain how the proposed network
will be designed to meet the current broadband needs of the network
members, and must address whether or how the proposed network will be
scalable to handle projected future demand. As referenced here,
scalability refers to the ability of a system to accommodate a
significant growth in the size of the system (i.e., services provided,
end users served) without the need for substantial redesign.
(d) Health IT purposes. (1) The project description must specify
how the dedicated broadband network will be used by eligible health
care providers for health IT to improve or provide health care
delivery.
(2) For purposes of this subpart, ``health IT'' is defined as
information-driven health practices and the technologies that enable
them. Health IT includes billing and scheduling systems, e-care,
electronic health records (EHRs) and telehealth and telemedicine.
34. Add Sec. 54.659 to read as follows:
Sec. 54.659 Facilities ownership, IRU or capital lease.
(a) Health care providers seeking funding for infrastructure
projects under the health infrastructure program must:
(1) Own the infrastructure facilities funded by the program,
(2) Have an IRU for such facilities, or
(3) Have a capital lease.
(b) IRU. An ``IRU'' is an indefeasible right to use facilities for
a certain period of time that is commensurate with the remaining useful
life of the asset. An IRU confers on the grantee the vestiges of
ownership, and is customarily used in the telecommunications industry.
An IRU may include maintenance of the fiber/network for the term, where
vendor is responsible for maintenance and repairs. An IRU must be
independent of any contract for services or electronics. Costs of
maintenance and operation of associated electronics can be (and usually
are) addressed in a separate service agreement.
(c) Capital lease. A capital lease is a lease of a business asset
which represents ownership and is reflected on the lessee's balance
sheet as an asset, and meets one or more of the following criteria: The
lease term is greater than 75 percent of the property's estimated
economic life; the lease contains an option to purchase the property
for less than fair market value; ownership of the property is
transferred to the lessee at the end of the lease term; or the present
value of the lease payments exceeds 90 percent of the fair market value
of the property. If there is doubt regarding a selected participant's
classification of a particular lease as a capital lease, the selected
participant may be required to provide an explanation justifying the
classification of its leasing arrangement as a capital lease.
35. Add Sec. 54.660 to read as follows:
Sec. 54.660 Standard terms and conditions.
(a) Construction contracts, IRUs or eligible capital leases entered
into by health care providers for infrastructure projects receiving
support from the health infrastructure program must contain the
provisions set forth in this section.
(b) Construction contracts. The following provisions must be
included in all construction contracts:
(1) Work standards. All work shall conform to identified standards
and specifications. The vendor shall not use any defective material in
the performance of the work.
(2) Withholding of payments. The health care provider may withhold
money due for any portion of the work which has been rejected by the
health care provider and which has not been corrected by the service
provider to the reasonable satisfaction of the health care provider.
(3) Defects in work. For a period of not less than one year after
project completion, the service provider shall correct at its expense
all defects and deficiencies in the work which result from: Labor or
materials furnished by the service provider, workmanship, or failure to
follow the plans, drawings, standards, or other specifications made a
part of the contract.
(c) IRUs. The following provisions must be included in all
construction IRUs:
(1) Term of the agreement. The health care provider is granted an
exclusive and irrevocable right to use the facility funded by the
health infrastructure program, for the remainder of facility's useful
life.
(2) Beneficial ownership interest. The health care provider
receives beneficial title and interest or equitable title in the
facilities funded by the health infrastructure program. Such title
should include the right to use the facilities, the right to have
access for repairs, and the right to let others use such facilities.
(d) Capital leases. The payment structure in a capital lease must
be reflective of the term of the lease. Leases may not provide for
payments in advance of the lease term. For example, a ten year lease
may not provide for an upfront payment of the entire ten year lease
period.
(e) Provisions applicable to all contracts. Any construction
contract, IRU or capital lease for projects receiving support from the
health infrastructure program must include provisions as follows:
(1) Laws and regulations. The service provider shall comply with
all Federal, State and municipal laws, ordinances and regulations
(including building and construction codes) applicable to the
performance of the work.
(2) Environmental protection. The service provider shall comply
with all applicable Federal, State and municipal environmental laws and
regulations which relate to environmental protection, inspection and
monitoring of property and environmental reporting and information
requirements.
(3) Performance bonds. For contracts in excess of $150,000, the
service provider shall deliver a performance bond. For construction
contracts, performance bonds must be for the construction term of the
contract plus a period of not less than one year (i.e., the same period
in which the health care provider may require the service provider to
remedy defects in the work). For a lease or an IRU, performance bonds
should be for the entire term of the agreement.
(4) Indemnification. The service provider agrees to indemnify and
hold harmless the health care provider from any and all claims,
actions, or causes of action to the extent the claimed loss or damages
arises out of the service provider's negligent performance or
nonperformance of its obligations under the contract.
(f) Service provider reporting requirements. Selected participants
in the health infrastructure program must, at or prior to the time of
selecting a service provider:
(1) Require the service provider to certify either that:
(i) The infrastructure project will only involve the construction
and deployment of the dedicated health care network, and will not
involve the construction or deployment of
[[Page 48271]]
additional facilities or capacity that will not be part of the
dedicated network; or
(ii) The infrastructure project will include both the construction
and deployment of the dedicated network and the construction and
deployment of additional facilities or capacity for uses other than the
dedicated network, but: The cost charged to the dedicated network will
not exceed fully distributed costs given the use, quality of service,
term (length of service) and other terms and conditions for use of the
dedicated facility; and the service provider will pay all costs related
to the additional facility or capacity.
(2) Require the service provider to provide a depreciation schedule
showing the useful life of fixed assets to assist the health care
providers in determining their network sustainability.
(3) Require the service provider to maintain books and records that
support all cost allocations.
36. Add Sec. 54.661 to read as follows:
Sec. 54.661 Sustainability.
Prior to receiving funding for infrastructure projects under the
health infrastructure program, each selected participant must submit to
the Administrator a sustainability report demonstrating that its
project is sustainable. Although each selected participant may include
additional information to demonstrate a project is sustainable, every
sustainability plan is required to address, at a minimum, the following
points:
(a) Principal factors. Discuss each of the principal factors that
were considered by the selected participant to demonstrate
sustainability.
(b) Minimum contribution requirement. Discuss the status of
obtaining the minimum contribution for eligible project costs. If
project funding is dependent on appropriations or other special
conditions, such conditions should be discussed.
(c) Projected sustainability period. Indicate a reasonable
sustainability period, which is at least equal to the useful life of
the funded facility. Although a sustainability period of 10 years is
generally appropriate, the period of sustainability should be
commensurate with the investments made from the health infrastructure
program.
(d) Terms of membership in the network. Describe generally any
agreements made (or to be entered into) by network members, e.g.,
participation agreements, memoranda of understanding, usage agreements,
or other documents. Describe financial and time commitments made by
proposed members of the network. If the project includes excess
bandwidth for growth of the network, describe how such excess bandwidth
will be financed. If the network will include eligible health care
providers and other network members, describe how fees for joining and
using the network will be assessed.
(e) Ownership structure. (1) Explain who will own each material
element of the network, and arrangements made to ensure continued use
of such elements by the network members for the duration of the
sustainability period.
(2) In the case of a consortium, the legally and financially
responsible entity designated to own facilities funded by the health
infrastructure program can be a State organization, public sector
(governmental) or not-for-profit entity acting as a fiduciary agent for
eligible health care providers within such consortium. However, title
to the dedicated network must be held exclusively for the benefit of
eligible health care providers.
(f) Sources of future support. If sustainability is dependent on
fees to be paid by eligible health care providers, then the
sustainability plan must confirm that the health care providers are
committed and have the ability to pay such fees. If sustainability is
dependent on fees to be paid by network members that will use the
network for health care purposes, but are not eligible health care
providers under the Commission's rules, then the sustainability plan
must identify such entities. Alternatively, if sustainability is
dependent on revenues from excess capacity not related to health care
purposes, then the sustainability plan must identify the proposed users
of such excess capacity. If rural health care provider members of the
network qualify for continued support under the health broadband
services program, this should be discussed in the sustainability plan.
(g) Management. Describe the management structure of the network
for the duration of the sustainability period, and how management costs
will be funded.
(h) Excess capacity disclosures. If an infrastructure project
includes excess capacity, as part of its sustainability plan the
selected participant must disclose the estimated amount of excess
capacity and explain how it plans to allocate the cost of the network
between the network members that are eligible health care providers and
the members that are not eligible health care providers. In doing so,
selected participants are required to: Identify non-eligible users of
such excess capacity and explain what proportion of the network non-
recurring and recurring costs they will bear, and describe all
agreements made between the eligible health care providers and other
participants in the network (e.g., cost allocation, facility sharing
agreements, maintenance and access obligations, ownership rights).
37. Add Sec. 54.662 to read as follows:
Sec. 54.662 Excess capacity.
The health infrastructure program will only provide funds for the
infrastructure costs associated with the eligible health care
providers' current and anticipated bandwidth requirements. To the
extent that a deployed network has excess capacity and the eligible
health care providers seek to share that excess capacity with
ineligible entities, the ineligible entities must pay an appropriate
portion of the costs of the network.
39. Add Sec. 54.663 to read as follows:
Sec. 54.663 Quarterly reporting requirements.
(a) Selected participants in the health infrastructure program must
submit quarterly reports that provide information on the following:
Attaining project milestones; status of meeting the minimum
contribution requirement; status of the competitive bidding process;
details on how the supported network has complied with HHS health IT
guidelines or requirements, such as meaningful use, if applicable; and
performance measures, as described in Sec. 54.677.
(b) Such reports must be filed with the Administrator and the
Commission on a quarterly basis, at such times as determined by the
Administrator.
40. Add Sec. 54.664 to read as follows:
Sec. 54.664 Designation of successor projects.
(a) The Bureau may waive the relevant sections of subpart G of part
54 of the Commission's rules to the extent waiver may be necessary to
the sound and efficient administration of the health infrastructure
program.
(b) In instances where a selected participant is unable to complete
its project, the Bureau has authority to designate a successor project.
Such designation of a successor can be made upon request of the
selected participant, or on the Bureau's own motion. The Bureau may
exercise such discretion in instances where a project fails to meet a
specified milestone, or a selected participant fails to adequately
notify the Commission of modifications to the project milestone
deadlines. In selecting a successor project, the Bureau may take into
consideration the likelihood that the successor will be able, at a
[[Page 48272]]
minimum, to complete the project in a manner that provides new
broadband infrastructure to the identified region or area.
(c) The Bureau may revoke funding awarded to any selected
participant making unapproved material changes to the network design
plan set forth in the selected participant's detailed project
description submitted as part of the funding application materials.
40. Add an undesignated centered heading ``GENERAL PROVISIONS''
below Sec. 54.664 of subpart G.
41. Amend newly redesignated Sec. 54.671 by revising paragraph (b)
to read as follows:
Sec. 54.671 Resale.
* * * * *
(b) Permissible fees. The prohibition on resale set forth in
paragraph (a) of this section shall not prohibit a health care provider
from charging normal fees for health care services, including
instruction related to such services rendered via telecommunications or
broadband access services purchased under this subpart.
42. Amend newly redesignated Sec. 54.673 by revising paragraph (d)
to read as follows:
Sec. 54.673 Audits and recordkeeping.
* * * * *
(d) Service providers. Telecommunications and other service
providers delivering services supported by the telecommunications
program, the health broadband services program or the health
infrastructure program, shall retain documents related to the delivery
of any discounted or supported services for at least 5 years after the
last day of the delivery of such discounted or supported services. Any
other document that demonstrates compliance with the statutory or
regulatory requirements for the rural health care mechanism shall be
retained as well.
43. Amend newly redesignated Sec. 54.675 by revising paragraphs
(a), (c), and (f) to read as follows:
Sec. 54.675 Cap.
(a) Amount of the annual cap. The aggregate annual cap on Federal
universal service support for health care providers shall be $400
million per funding year, of which up to $100 million per funding year
will be available for the health infrastructure program, and the
remainder shall be available for the telecommunications program and the
health broadband services program.
* * * * *
(c) Requests. Funds shall be available as follows:
(1) Generally, funds shall be available to eligible health care
providers on a first-come-first-served basis, with requests accepted
beginning on the first of January prior to each funding year.
(2) For the telecommunications program and the health broadband
services program, the Administrator shall implement a filing window
period that treats all rural health care providers filing within the
window period as if their applications were simultaneously received.
(3) For the health infrastructure program, the filing window period
for applications will be the first quarter of each funding year (July 1
to September 30). The Administrator will treat all applications
received during such window period as if they were simultaneously
received.
(4) The deadline for all required forms to receive funding under
the telecommunications program and the health broadband services
program is June 30 for the funding year that begins on the previous
July 1.
(5) For applicants selected to participate in the health
infrastructure program based on their initial online application, the
deadline to file all forms and supporting documents necessary to
receive funding commitment letters from the Administrator is three
funding years, commencing on July 1 of the funding year in which the
initial online application is submitted pursuant to Sec. 54.650(b) and
ending 36 months (on June 30) after that. Selected participants have a
period of five funding years (commencing with the funding year on which
the selected participant receives its first funding commitment letter
for the project) in which to complete build-out.
* * * * *
(f) Pro-rata reductions for telecommunications program support. The
Administrator shall act in accordance with this section when a filing
window period for the telecommunications program and the health
broadband services program, as described in paragraph (c)(3) of this
section, is in effect. When a filing window period described in
paragraph (c)(3) of this section closes, the Administrator shall
calculate the total demand for telecommunications program and health
broadband services program support submitted by all applicants during
the filing window period. If the total demand during a filing window
period exceeds the total remaining support available for the funding
year, the Administrator shall take the following steps:
(1) The Administrator shall divide the total remaining funds
available for the funding year by the total amount of
telecommunications program support requested by each applicant that has
filed during the window period, to produce a pro-rata factor.
(2) The Administrator shall calculate the amount of
telecommunications program support requested by each applicant that has
filed during the filing window.
(3) The Administrator shall multiply the pro-rata factor by the
total telecommunications program dollar amount requested by each
applicant filing during the window period. Administrator shall then
commit funds to each applicant for telecommunications program support
consistent with this calculation.
44. Add Sec. 54.677 to read as follows:
Sec. 54.677 Data gathering.
Health care providers receiving support under the health broadband
services program and the health infrastructure program will be required
to annually identify the speed of the connection supported by such
funds, and the type and frequency of utilization of health IT
applications as a result of broadband access. Such annual report shall
be in a form to be prescribed by the Commission.
[FR Doc. 2010-19459 Filed 8-6-10; 8:45 am]
BILLING CODE 6712-01-P