Cybertelecom
Cybertelecom
Federal Internet Law & Policy
An Educational Project

Internet Communications Regulation Digest
Misc Issues
Notes > Misc These notes are not complete and there is no guarantee that they are accurate. They are presented simply as notes. Feel free to use them but as with all material on the Internet Telecom Project, you should consider them a beginning to your research and not an end. Backbones Jurisdiction Over *
    Jurisdiction Exercised *
Backbone Shortage *
Cable *
Peering Definition Modems Part 68 *
Universal Service
Third Party Liability

Backbone

    Jurisdiction Over
     
      Jurisdiction Exercised
    "In so doing, however, we condition our approval on MCI's divesture of its Internet assets to Cable & Wireless plc (C&W) prior to the close of its merger with WorldCom." -- In re Application of WorldCom, Inc. and MCI Communications Corporation for Transfer of Control of MCI Communications Corporation to WorldCom, Inc., Report and Order, CC Docket No. 97-211 ¶ 1 (September 14, 1998)
    Backbone Shortage
"In sum, it appears that a substantial investment in broadband technologies is taking place across virtually all segments of the communications industry. As one commenter states, "[a]ccess to capital is very plainly not an obstacle to the effective provision of DSL services." MCI echoes this perception, saying "[i]f there have been any capacity constraints [in backbone], it is not for lack of investment. Instead, it has been because exponential growth in Internet usage has surpassed expectations, although, in the end, supply has generally kept pace with such demand." In light of these facts, we disagree with the claim that there is a significant, nationwide, and likely persistent shortage of Internet backbone. As the text above makes clear, supply, especially of backbone, is increasing rapidly. We find that backbone facilities for broadband are being deployed in a reasonable and timely fashion. It appears to us that any shortages are relatively small in scope and duration and reflect not lack of capital, construction, or technologies, but the unforeseeable and enormous increases in demand for one of the most successful technologies in recent history. We expect that the sizeable investment will alleviate any short-term "shortages" in broadband backbone."
--In re Inquiry Concerning the Deployment of Advanced Telecommunications Capability to All Americans in a Reasonable and Timely Fashion, and Possible Steps to Accelerate Such Deployment Pursuant to Section 706 of the Telecommunications Act of 1996, Report, CC Docket No. 98-146 ¶ 44 (February 2, 1999) (concluding several paragraphs of analysis detailing investment and building of broadband both in backbone and in last mine).
"We conclude, based on the evidence in the record, that the supply of transmission capacity is expanding significantly with the construction of four new national fiber-optic networks by Qwest, IXC, Williams, and Level 3."
--In re Application of WorldCom, Inc. and MCI Communications Corporation for Transfer of Control of MCI Communications Corporation to WorldCom, Inc., Report and Order, CC Docket No. 97-211¶ 43 (September 14, 1998)

Peering

105. In the Notice, we asked whether the Commission should monitor or exercise authority over peering -- an arrangement in which two Internet backbone providers exchange traffic that originates from an end user connected to one of the providers and terminates with an end user connected to the other provider.240 Commenters almost unanimously oppose Commission involvement at this time in peering and similar relations among Internet firms.241 Only one commenter, Bell Atlantic, suggests possible action, and that is only that we "lower barriers for new entrants, in particular currently precluded entrants."242 We agree with SBC that premature regulation "might impose structural impediments to the natural evolution and growth process which has made the Internet so successful."243 Accordingly, we will continue to refrain from action involving peering. We bear in mind that "[t]he Internet and other interactive computer services have flourished, to the benefit of all Americans, with a minimum of government regulation" and that it is the policy of the United States "to preserve the vibrant and competitive free market that presently exists for the Internet and other interactive computer services, unfettered by Federal or State regulation; . . . ."244
240 Notice, 13 FCC Rcd at 15309. In general, peering is settlements-free, i.e., the providers do not charge each other for terminating traffic. Also, one peer will not allow traffic from another peer to transit its network to a third provider. See WorldCom, Inc. & MCI Communications Corp., CC Docket No. 97-211, Memorandum Opinion & Order FCC 98-225 at ¶¶ 143-46, released Sept. 14, 1998, available at 1998 WL 611053.
241 Comments of America Online, Inc., at 13-15; Comments of Internet Service Providers' Consortium at 15-17; Comments of Northern Telecom, Inc., at 3; Comments of PSINet Inc., at 7; Comments of SBC Commun. Inc., at 12.
242 Reply Comments of Bell Atlantic at 10.
243Comments of SBC Commun. Inc., at 12.
244 47 U.S.C. § 230 (b)(2). See also 47 U.S.C. § 230 (a)(4).
--In re Inquiry Concerning the Deployment of Advanced Telecommunications Capability to All Americans in a Reasonable and Timely Fashion, and Possible Steps to Accelerate Such Deployment Pursuant to Section 706 of the Telecommunications Act of 1996, Report, CC Docket No. 98-146 ¶ 105 (February 2, 1999).


 42. It has been pointed out that the Tentative Decision requires that carrier data affiliates file reports with us, that carrier data affiliates obtain communication services and facilities under tariff rates and conditions, and that carrier data affiliates offer reasonable customer interconnection options; but that none of these measures are to be made a requirement of our rules. See Tentative Decision, para. 36. With respect to the filing of affiliate reports, we are of the opinion that, at this time, except as provided in paragraph 36 supra and Section 64.702(f) of our Rules, it would be premature to prescribe rules requiring such separate affiliate reports. We feel that we should first observe developments under our policy and rules herein before addressing ourselves further to the question of what annual or other reports, if any, may be necessary from a carrier data affiliate in order to enable us to perform our statutory duties. With respect to tariff dealings between a carrier and its affiliate, we find no need to regulate such dealings by additional rule. For under the Communications Act and existing Commission Rules, a carrier data affiliate which leases communication facilities from its affiliated carrier is to be treated on the same basis as any non-affiliated lease of like or similar communication services. Should any carrier discriminate in favor of its data affiliate, this Commission possesses extensive authority under Title II of the Act to remedy the situation. Finally, with respect to the expectation of reasonable customer interconnection options, we are of the opinion that the keen competitive forces of the market place will best resolve this problem. It appears to us that if any data processor, carrier affiliated or otherwise, refuses to interconnect a device or system at the reasonable request of the customer, the latter can obtain relief by subscribing to a like service from a more competitive data offeror. If, however, our expectation is not borne out by actual developments and serious problems result from a refusal on the part of carrier data affiliates to permit reasonable interconnection or the attachment of customer devices to their data processing networks, we shall re-examine our position herein, including our present conclusion respecting the exercise of jurisdiction over data processing (See para. 4, supra).
 43. In paragraph 10 of the Tentative Decision, we concluded that:
 ... (Questions) relating to interconnection or to the need for other improved common carrier service offerings, regulations and practices to serve computer needs, can best be handled through rate, tariff and licensing proceedings that are now pending or that may be initiated in the future, rather than through a continuation of our Inquiry in this Docket.
As has been indicated above, the primary concerns of industry participants in this proceeding involved the nature and extent of our jurisdiction over data processing and communication services, and the circumstances under which we would permit common carriers to engage in the provision of data processing
services (Para. 2, supra). Consequently, we have addressed ourselves in this Decision primarily to these basic concerns. We recognize, however, that there are a number of other matters, as set forth in our Notice of Inquiry, that are within the comprehensive scope of this proceeding since the issues originally raised herein clearly touched upon virtually every aspect of the growing interdependence of computer and communication services and facilities.
 44. We have not been persuaded that our conclusion to handle those remaining issues in other proceedings should be altered despite contentions that this proceeding ought to remain open to accommodate matters respecting interconnection and that adequacy of carrier service offerings. We have addressed these issues and others in proceedings parallel to Docket No. 16979. Paragraphs 6-13 of the Tentative Decision discusses these matters and their status as of April 1, 1970. Since the issuance of our Tentative Decision, there have been further significant developments worthy of note. The National Academy of Sciences has completed its report to us on the technical feasibilities of interconnection and we anticipate taking further action in this matter in the near future. In addition, the Commission currently has under consideration a proposal concerning the formulation of policies governing the entry and regulation of common carriers in the specialized communications market. (Notice of Inquiry to Formulate Policy; Notice of Proposed Rule Making, and Order (Docket No. 18920), FCC 70-768, July 17, 1970). In these and other docketed proceedings, we expect to resolve issues identified by our original Notice of Inquiry.
--In The Matter Of Regulatory And Policy Problems Presented By The Interdependence Of Computer And Communication Services And Facilities, Docket No. 16979, Final Decision and Order (March 18, 1971) (Computer I).
     
  1. Modems Part 68
"In this proceeding, we seek to make it possible for customers to download data from the Internet more quickly. Our proposal, if adopted, could somewhat improve the transmission rates experienced by persons using high speed digital information products, such as 56 kilobits per second (kbps) modems, to download data from the Internet. Currently, our rules limiting the amount of signal power that can be transmitted over telephone lines prohibit such products from operating at their full potential. We believe these signal power limitations can be relaxed without causing interference or other technical problems. Therefore, we propose to relax the signal power limitations contained in Part 68 of our rules and explore the benefits and harms, if any, that may result from this change. This change would allow Pulse Code Modulation (PCM) modems, which are used by Internet Service Providers (ISPs) and other online information service providers to transmit data to consumers, to operate at higher signal powers. This modification will allow ISPs and other online information service providers to transmit data at moderately higher speeds to end-users." -- In re 1998 Biennial Regulatory Review -- Modifications to Signal Power Limitations Contained in Part 68of the Commission's Rules, Notice of Proposed Rulemaking, CC Docket No. 98-163, ¶ 1 (September 16, 1998).
 

Universal Service

74. ISPs that own no telecommunications facilities and lease transmission, such as T1 lines, from telecommunications carriers to transmit their information services, do not contribute directly to universal service, but they make indirect contributions through charges paid to the underlying telecommunications carrier providing the leased telecommunications services.   As discussed above, the Commission concluded in the Report to Congress that facilities-based ISPs that provide no stand-alone telecommunications services could be required to contribute to universal service under its permissive authority, but the Commission declined to exercise its permissive authority at that time.  Given the anticipated growth of broadband Internet access, and the growth of broadband Internet access provided by ISPs, we believe it is now the appropriate occasion to investigate, among other things, the questions that remain unanswered by the Report to Congress.  Specifically, we ask whether broadband Internet access providers that supply last-mile connectivity over their own facilities should be required to contribute to universal service based upon their self-provisioning of telecommunications.
-- In Re Appropriate Framework for Broadband Access to the Internet over Wireline Facilities, CC Docket No. 02-33, CC Dockets Nos. 95-20, 98-10, NPRM (February 15, 2002) http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-02-42A1.doc

    School and Library Program

Under the schools and libraries support mechanism, eligible schools, libraries, and consortia that include eligible schools and libraries, may apply for discounts for eligible telecommunications services, Internet access, and internal connections.   Discounts on eligible services range from 20 percent to 90 percent, depending on economic need and whether the applicant school or library is located in an urban or rural area.
-  In Re Schools and Libraries Universal Service Support Mechanism, CC Docket No. 02-6, NPRM ¶ 8 (January 16, 2002) http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-02-8A1.doc

        Authority

8. In the 1996 Act, Congress directed the Commission to take steps necessary to establish support mechanisms to ensure the delivery of affordable telecommunications service to all Americans, including low-income consumers, rural health care providers, and eligible schools and libraries.   Based on a recommended decision from the Federal-State Joint Board on Universal Service, the Commission implemented section 254(h) in its Universal Service Order by establishing the federal universal service support mechanism for schools and libraries.
-  In Re Schools and Libraries Universal Service Support Mechanism, CC Docket No. 02-6, NPRM (January 16, 2002) http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-02-8A1.doc
 

        Process

    9. Pursuant to § 254(h)(1)(B), the Commission's rules require that the applicant make a bona fide request for services by filing with the Administrator an FCC Form 470,  which is posted to the Administrator's website for all potential competing service providers to review.   After the FCC Form 470 is posted, the applicant must wait at least 28 days before entering into an agreement for services and submitting an FCC Form 471, which requests support for eligible services.   All applications received within a specified time period, or window, are deemed to be filed simultaneously for purposes of applying rules of priority when requests for funding exceed the funding cap.   The Administrator reviews the FCC Forms 471 that it receives and issues funding commitment decisions indicating discounts the applicant may receive in accordance with the Commission's rules.  The school or library then pays the non-discount portion of the service cost to the service provider, which is, in turn, reimbursed by the Administrator for the costs of the approved discounts.  It is also possible for the school or library to pay such bills in full, and be reimbursed for the discounted amount through the filing of an FCC Form 472, the Billed Entity Applicant Reimbursement (BEAR) form, with the Administrator.   Under this method, the Administrator issues payment of the discounted amount to the provider and requires the provider to remit that payment to the school or library.
    10. If the Administrator denies a request for funding, the applicant may either appeal directly to the Commission, or appeal to the Administrator.  If rejected on appeal by the Administrator, the applicant may appeal to the Commission.
-  In Re Schools and Libraries Universal Service Support Mechanism, CC Docket No. 02-6, NPRM (January 16, 2002) http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-02-8A1.doc
 

33. Under existing law and Commission procedure, the Administrator of the universal service support mechanism does not provide funds directly to schools and libraries, but rather, provides funds to eligible service providers, who then offer discounted services to eligible schools and libraries.   Under existing Administrator's procedures, service providers and applicants are advised to work together to determine whether the applicant will either (1) pay the service provider the full cost of services, and subsequently receive reimbursement from the provider for the discounted portion, after the provider receives reimbursement through the Billed Entity Applicant Reimbursement (BEAR) process, or (2) pay only the non-discounted portion of the cost of services, with the service provider seeking reimbursement from the Administrator for the discounted portion.   Because it is not clear in our rules whether the provider or the applicant may make the final determination of which of the two payment processes to pursue, the potential exists for service providers to insist that applicants to whom they provide services use the first method of paying the up-front costs, and later seeking reimbursement.  Indeed, some large providers require recipients to use the BEAR form.
-  In Re Schools and Libraries Universal Service Support Mechanism, CC Docket No. 02-6, NPRM (January 16, 2002) http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-02-8A1.doc
 

            Appeals

    48. In the Eighth Order on Reconsideration, the Commission established a process by which aggrieved parties could seek review from the Commission of decisions of the Administrator.   As of January 1, 2002, the Commission has reviewed 740 appeals from the Administrator's decisions.  Of these, 592 were denied or dismissed, 135 were granted, and 13 were granted in part.  Of those appeals granted, a number involved situations where the Commission concluded that a close examination of the rules and policies applicable to the underlying request was warranted.   Our history to date thus leads us to conclude that the Administrator is applying existing rules and policies correctly in the vast majority of cases.  Nevertheless, the opportunity for Commission review remains an important method by which we provide effective oversight of the Administrator's activities.
    49. Our current rules provide that any person aggrieved by a decision of any Division of the Administrator may file an appeal directly with the Commission within 30 days of the date of the issuance of the decision.   Alternately, the person may appeal the decision of a Division within 30 days of the date of the decision to the relevant Committee governing that Division, in which case the time for filing an appeal with the Commission is tolled during the pendency of the appeal before the Committee.   Once the Committee has issued a decision on the appeal, the person then has up to 30 days to appeal that decision to the Commission.   In each case, an appeal is deemed filed on the date that it is received, not the date it is postmarked.
    50.   Appeals to the Commission are decided by the Common Carrier Bureau, unless they raise novel issues of fact, law, or policy, in which case, they are decided by the full Commission.   Whether an appeal is before the Common Carrier Bureau or the full Commission, the standard of review is de novo.   This review process applies equally to decisions made by the three divisions of the Administrator defined in our regulations, the Schools and Libraries Division, the Rural Healthcare Division, and the High Cost and Low Income Division.
-  In Re Schools and Libraries Universal Service Support Mechanism, CC Docket No. 02-6, NPRM (January 16, 2002) http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-02-8A1.doc
 

    53. Each funding year, the Administrator sets aside a portion of the funds available that year for the schools and libraries universal service mechanism to ensure that sufficient funds will be available for any appeals that may be granted by the Administrator or the Commission.  The Administrator calculates this amount in part by generating a prediction of the percentage of its decisions that will be reversed based on historical experience.  Because the prediction may underestimate the actual number of reversed decisions, it is possible that the appeal reserve fund in a particular year will ultimately be inadequate to fund all successful appeals in that year.
    54. In the Eleventh Reconsideration Order and Further Notice, the Commission proposed certain rules establishing funding priorities for the Administrator to apply when distributing funds from the appeal reserve to schools and libraries that successfully appeal decisions of the Administrator.   Specifically, the Commission proposed that the Administrator should first fund all Priority One appeals, and then allocate any remaining funds in the appeal reserve to Priority Two appeals in order of descending discount rate.   The Commission further proposed that if funds were not available for all Priority One appeals, then all funding should be allocated to Priority One appeals on a pro-rata basis.   To ensure correct distribution of funds to Priority One appeals, the Commission proposed that the Administrator should wait until a final decision has been issued on all Priority One service appeals before allocating funds to such services on a pro-rata basis.
    55. In response to these proposals, several commenters suggest that it is inappropriate to limit appellants to those funds in the appeal reserve fund because it might result in successful appellants being treated differently from applicants who were awarded funding initially.   In some circumstances, two schools or libraries of similar eligibility that file simultaneous applications for identical support might receive different funding merely because one was subject to an erroneous initial funding decision that was subsequently reversed on appeal.
-  In Re Schools and Libraries Universal Service Support Mechanism, CC Docket No. 02-6, NPRM (January 16, 2002) http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-02-8A1.doc
 

            Unused Funds


    63. In each funding year, a portion of the $2.25 billion available under the program cap has gone unused, largely because some applicants do not fully use the funds committed to them in a given year.    Under the Administrator's procedures in effect in the first three funding years of the program, the Administrator engaged in various ongoing analyses throughout each funding year to ensure that it did not commit more than the $2.25 billion cap each year.  Although this $2.25 billion limit on commitments ensured that the level of funds actually disbursed remained under the $2.25 billion cap, the result, given that applicants do not seek disbursement of all committed funds, has been that some of the $2.25 billion has gone unused by applicants each year.
    64. The Administrator issues funding commitment decision letters to applicants once their applications have been approved, but does not authorize payouts of committed funds until it receives valid invoices demonstrating that the applicants have obtained the requested products and services.  The Administrator approves the disbursement of funds once it receives a certification from the recipient and invoices from the service provider or applicant, indicating that approved services have begun.  In many cases, however, applicants and vendors do not submit the required documentation for all the funding, and therefore receive only partial funding, or none of the committed funds at all.  As of June 30, 2001, approximately $940 million of the $3.7 billion in program funds committed to applicants during the first and second funding years was not disbursed because of the failure of applicants and providers to submit the required documentation.   In the first funding year, the Administrator disbursed approximately 82 percent of committed funds.   In the second funding year through June 30, 2001, the Administrator disbursed approximately 71 percent of committed funds.   The Administrator projects that a similar proportion of committed funds will be disbursed in Funding Year 3.
-  In Re Schools and Libraries Universal Service Support Mechanism, CC Docket No. 02-6, NPRM (January 16, 2002) http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-02-8A1.doc

        USAC

11. Oversight of such a far-reaching program is necessarily intensive and complex.  The Commission has established rules governing the operation of the schools and libraries discount mechanism in a series of orders.   The Administrator, in consultation with Commission staff, has further refined its procedures over the course of the last three funding years in response to Commission directions, decisions on appeal, audits, and internal review.  Along with the rapid growth in the number of applicants and recipients, both the Commission and the Administrator have experienced increased numbers of appeals by applicants whose requests for discounts have been denied.  Although the Administrator's administrative costs remain small as a percentage of total program costs, particularly in comparison to other federal programs,  the Commission continues to seek ways to minimize administrative costs while achieving the goals of the statute in the most effective manner possible.
-  In Re Schools and Libraries Universal Service Support Mechanism, CC Docket No. 02-6, NPRM (January 16, 2002) http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-02-8A1.doc
 

        Eligible Entitites

30. Section 54.501(d)(1) implements the Commission's determinations in the Universal Service Order as to when eligible entities seeking discounts as part of a consortium can obtain interstate telecommunications services at prices below tariffed rates.   The Commission found that there was congressional support for allowing eligible schools and libraries to obtain services at pre-discount prices below tariffed rates.   However, it concluded that where such eligible entities sought services as members of a consortium including private sector non-eligible members, allowing the private non-eligible businesses to obtain below-tariff rates would compromise federal and state policies of non-discriminatory pricing.   The Commission therefore concluded that a consortium that included private sector ineligible members could obtain tariffed services only if "the pre-discount prices of [the tariffed services] are generally tariffed rates."
-  In Re Schools and Libraries Universal Service Support Mechanism, CC Docket No. 02-6, NPRM (January 16, 2002) http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-02-8A1.doc
 

        Eligible Services

13. Applicants under the universal service discount mechanism for schools and libraries may apply for discounts for eligible telecommunications services, Internet access, and internal connections.  The Commission currently directs the Administrator to determine whether particular services fall within the eligibility criteria established under the 1996 Act and the Commission's rules and policies.  The Administrator evaluates, on an on-going basis, particular services offered by service providers, and determines their eligibility.  In order to provide applicants with general guidance, the Administrator makes available on its website a list of categories of service that are eligible or ineligible, though not specific brands or items.   Applicants or service providers can appeal a determination by the Administrator that a given service is ineligible for discounts only after a requested service is rejected.
-  In Re Schools and Libraries Universal Service Support Mechanism, CC Docket No. 02-6, NPRM (January 16, 2002) http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-02-8A1.doc

26. Currently, acting pursuant to Commission oversight, the Administrator utilizes a 30 percent processing benchmark when reviewing funding requests that include both eligible and ineligible services.   If less than 30 percent of the request seeks funding of ineligible services, the Administrator normally will consider the request and issue a funding commitment for the eligible services, denying funding only of the ineligible part.  If 30 percent or more of the request is for funding of ineligible services, the Administrator will deny the funding request in its entirety.  The 30 percent policy allows the Administrator to efficiently process requests for funding that contain only a small amount of ineligible services without expending significant fund resources working with applicants to determine what part of the discounts requested is associated with eligible services.  It also provides an incentive to applicants to eliminate ineligible services from their requests before submitting their applications, further reducing the Administrator's administrative costs.  For example, without the procedure, an applicant who has contracted for the construction of a new school for a lump sum might submit a request for the entire amount knowing that the Administrator must then perform the necessary work to identify the costs of any eligible components, such as the telecommunications wiring.  Because the Administrator's annual administrative costs are drawn from the same $2.25 billion that supports the award of discounts, an increase in the administrative costs of eligibility review would directly reduce the amount of funds available for actual discounts.
-  In Re Schools and Libraries Universal Service Support Mechanism, CC Docket No. 02-6, NPRM (January 16, 2002) http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-02-8A1.doc
 

            Internet Access Bundled with Content

23. In the Universal Service Order, the Commission concluded that schools and libraries may receive discounts on access to the Internet, but not on separate charges for particular proprietary content or other information services.   The Commission held that if it is more cost-effective for a school or library to purchase Internet access provided by a telecommunications carrier that bundles a minimal amount of content with such Internet access, a school or library may obtain discounts on that bundled package.   If the telecommunications carrier provides bundled Internet access with proprietary content to a school or library, and also offers content separate from Internet access, the school or library may only obtain discounts on the price of the Internet access, as determined by the price of the bundled access and content less the price of the separately-priced content.   Thus, if the only Internet access a provider offers is bundled with content for a total of $50.00 per month, and that provider sells the content separately for $30.00 per month, a school or library purchasing the bundled package would currently be eligible for discounts on $20.00 per month.
-  In Re Schools and Libraries Universal Service Support Mechanism, CC Docket No. 02-6, NPRM (January 16, 2002) http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-02-8A1.doc
 

        Restrictions

37. Our rules provide that eligible services purchased at a discount "shall not be sold, resold, or transferred in consideration for money or any other thing of value."   Nothing in our rules, however, prevents transferring equipment obtained with universal service discounts from the eligible recipient to another entity without consideration for money or anything of value.  We have received reports from state authorities, schools and libraries, and the Administrator that some recipients are replacing, on a yearly or almost-yearly basis, equipment obtained with universal service discounts, and transferring that equipment to other schools or libraries in the same district that may not have been eligible for such equipment.
-  In Re Schools and Libraries Universal Service Support Mechanism, CC Docket No. 02-6, NPRM (January 16, 2002) http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-02-8A1.doc
 

    41. The Act requires that discounts on services be provided for educational purposes to schools and libraries.   In the Universal Service Order, the Commission implemented this provision by requiring schools and libraries to certify that the services obtained through discounts from the schools and libraries mechanism will be used solely for educational purposes.   The Commission determined that the certification rules, including the educational purposes rule, were reasonable and not unnecessarily burdensome, especially in light of the Commission's goals to reduce fraud, waste, and abuse.
    42. In some instances, the discounted services received by schools and libraries through the schools and libraries program are provided on a non-usage sensitive basis and are used for educational purposes during hours when the schools and libraries are open, but remain unused during off-hours when the entities are closed.  As a result, due to the non-usage sensitive nature of the services, services that could be used after the operating hours of schools and libraries presently go unused.
-  In Re Schools and Libraries Universal Service Support Mechanism, CC Docket No. 02-6, NPRM (January 16, 2002) http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-02-8A1.doc
 

Enforcement

    58. In its December 2000 report, the General Accounting Office proposed strengthening application and invoice review procedures in order to reduce the amount of funds inadvertently spent on ineligible services.   The Administrator has implemented a number of procedural changes suggested by the report, and has undertaken numerous measures on its own initiative.  Working closely with the Commission's Office of the Inspector General (OIG), the Administrator has significantly stepped up its efforts aimed at detecting and resolving instances of waste, fraud, and abuse.  For example, it has increased the number of audits, withheld suspect payments, withdrawn posted FCC Forms 470 from its website and rejected FCC Form 471 applications, and has increasingly coordinated its efforts with federal, state, and local law enforcement to combat fraud and other potentially criminal activity.  We, in turn, have examined our rules to consider whether our existing enforcement tools should be strengthened in any way.
-  In Re Schools and Libraries Universal Service Support Mechanism, CC Docket No. 02-6, NPRM (January 16, 2002) http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-02-8A1.doc
 

Third Party Liability

Subsection (c)(1) of section 230 thus immunizes providers of interactive computer services (service providers) and their users from causes of action asserted by persons alleging harm caused by content provided by a third party.  This form of immunity requires (a) the defendant be a provider or users of an intteractive computer service; (2) the cause of action treat the defendant as a publisher or speaker of information; and (3) the information at issued be provided by another information content provider. (47 U.S.C. s 230(c)(1).) -- Gentry v. Ebay, Super Ct No GIC746980 (Court of Appeals, 4th App. District, State of California (June 26, 2002).

Liable and Defamation

Zeran

In Zeran v America Online, Inc. (4th Cir. 1997) 129 F.3d 327 (Zeran), cert, den. (1998) 524 U.S. 937 [118 S.Ct. 2341, 141 L.Ed.2d 712], the court held section 230, by its "plain language," created a federal immunity to any cause of action that would make interactive service providers liable for information originating with a third-party user of the service. (Id. at p. 330.) "Specifically, s 230 precludes courts from entertaining claims that would place a computer service provider in a publisher's role.  Thus, lawsuits seeking to hold a service provider liable for its exercise of a publisher's traditional editorial functions - such as deciding whether to publish, withdraw, postpone or alter content - are barred."  (Zeran, supra, at p. 330.) Reinterating Congress' findings and policy statements in section 230 subdivisions (a) and (b), the court observed: "Congress recognized the threat that tort-based lawsuits pose to freedom of speech in the new and burgeoning Internet medium.  The imposition of tort liability on service providers for the communications of others represented, for Congress, simply another form of intrusive government regulation of speech.  Section 230 was enated, in part, to maintain the robust nature of Internet communication and, accordingly, to keep government interference in the medium to a minimum ... [p]  None of thise means, of course, that the original culpable party who posts defamatory messages would escape accountability. While Congress acted to keep government regulation of the Internet to a minimum, it also found it to be the policy of the United States ' to ensure vigorous enforcement of Federal criminal laws to deter and punish trafficking in obscenity, stalking, and harassment by means of computer.'[Cittation]. Congress made a policy choice, however, nott to deter harmful online speech through the separate route of imposing tort liability on companies that serve as intermediaries for other parties' potentially injurious messages." (Zeran, supra, at pp. 330-331).  -- Gentry v. Ebay, Super Ct No GIC746980 (Court of Appeals, 4th App. District, State of California (June 26, 2002).

PatentWizard, Inc. v. Kinko;s Inc. (DSD 2001) 163 F.Supp.2d 1069, 1071-1072 [defamation liability] . . . Blumenthal v. Drudge (DDC 1998) 992 F.Supp. 44, 49-52 [barring defamation claims against AOL for statements made in the Drudge Report, an online gosspip column, even though AOL had contracted for the reports, retained certain editorial rights as to its content, and aggressively promoted the report; the court expressed sympathy with the palintiff but concluded Congress had made a policy choice to provide immunity "wven whee the interactive service provider has an active, even aggressive role in making available content prepared by others"].) -- Gentry v. Ebay, Super Ct No GIC746980 (Court of Appeals, 4th App. District, State of California (June 26, 2002).

Offensive Content

(See e.g. Kathleen R. v. City of Livermore (2001) 87 Cal.App.4th 684, 692 [court of appeal affirmed judgment of dismissal in City's favor holding a city was immune under section 230 from liability under state causes of action for misuse of public funds, nuisance and premises liability for library's acts in providing computers allowing access to pornography]; Doe v. America Online Inc. (Fla. 2001) 783 So.2d 1010, 1013-1017 [following Zeran in concluding section 230 directly preempted Florina law in a negligence action based upon America Online, Inc.'s (AOL) distribution of informattion depicting child pornography; the court rejected the argument that allegations AOL knew or should have known about the distribution of such materials created liability distinct from that of any publisher] -- Gentry v. Ebay, Super Ct No GIC746980 (Court of Appeals, 4th App. District, State of California (June 26, 2002).

Misc Torts

Gentry v. Ebay, Super Ct No GIC746980 (Court of Appeals, 4th App. District, State of California (June 26, 2002) (holding Ebay not liable where third parties sold fake sports memorabilia through the service, providing description of goods on Ebay and selecting classification on site; court found that Sec. 230 preempted state consumer causes of action).

Schneider v. Amazon.com, Inc. (Wash. App. 2001) 31 P.3d 37 [Internet book vendor was immune for tort (negligent misrepresentation, interference with business expectancy) and contractual liability arising from allegedly false statements about the plaintiff and his business made by third parties in the book review section] . . . Doe v. Oliver (Conn. Super. Ct. 2000) 755 A.2d 1000, 1003-1004 [barring claims for negligence, negligence per se, failure to prevent transmission of email in violation of a Connecticut statute, intentional nuisance and infliction of emotional istress based upon senidng of online emails] -- Gentry v. Ebay, Super Ct No GIC746980 (Court of Appeals, 4th App. District, State of California (June 26, 2002).

Preemption

Doe v. America Online Inc. (Fla. 2001) 783 So.2d 1010, 1013-1017 [following Zeran in concluding section 230 directly preempted Florina law in a negligence action based upon America Online, Inc.'s (AOL) distribution of informattion depicting child pornography; the court rejected the argument that allegations AOL knew or should have known about the distribution of such materials created liability distinct from that of any publisher] -- Gentry v. Ebay, Super Ct No GIC746980 (Court of Appeals, 4th App. District, State of California (June 26, 2002).
 
 
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