1. www.usac.org 1 Rural Telecommunications Congress Springfield IL, October 14-17, 2007 Universal Service Support for Broadband in Rural Health Care William England, Ph.D., J.D. Vice-President, Rural Health Care Division Universal Service Administrative Company Washington, D.C.

4. Overview of the USAC Rural Health Care Support Program  Support for urban/rural cost difference of telecom or 25% of Internet (Access, web hosting, E-mail).  Service must be for the provision of health care, or prorated if not 100% health care use.  Support of monthly recurring costs.  Support of “standard” installation cost (excludes wiring, cabling, equipment, or “build-out”), but new Pilot Program will support build-out.

9.  Eligible telecommunications providers (ETPs) may provide discounted telecommunications or Internet service.  Internet Service Providers (ISPs), cable companies, or others, may only provide discounted Internet access.  All providers must have a USAC Service Provider Identification Number (SPIN).Service Provider Identification Number Service Provider Eligibility

12. RHC Non-AK Commitments Year HCPs Funding(Mil) Avg/HCP 1998 450 $2.769 $6,153 1999 509 $2.436 $4,785 2000 615 $4.375 $7,114 2001 1049 $6.651 $6,340 2002 1241 $9.361 $7,543 2003 1460 $11.025 $7,552 2004 1912 $15.027 $7,860 2005 2028 $19.940 $9,832 2006* 1883 $16.304 $8,658 *Year 2006 is 90% completed (10/6/07)

24. 12/17/04 FCC’s Second Order on the Rural Health Care Mechanism: New Definition of Rural New definition of rural for Fund Year 2005 (starting 7/1/05). Based on Core Based Statistical Area (CBSA) & census tracts; All tracts in CBSAs that do not contain an urban area >25,000; Tracts in CBSAs >25,000) that do not contain any part of a place or urban area >25,000. Result: 15,863 RuralCensus tracts and 50,441 Urban Currently funded applicants grandfathered 3 years (to 6/30/08).

25. Old vs. New Definition of Rural New Definition Old Def Rural Partial Urban Total Rural2013 234 29 2276 Partial 391 2 96 Urban 119 523 205 847 Total2135 848 236 3219

29. http://gullfoss2.fcc.gov/prod/ecfs/comsrch_v2.cgi

33. Commitments by Applicant Type HCP Type 1998 1999 2000 2001 2002 2003 2004 2005 2006* Educational Inst 10 9 4 0 7 12 19 28 18 Comm Health Ctr 34 75 78 88 137 132 204 238 191 Local Health Dept. 3 10 21 185 207 247 323 294 293 Com Mental Hlth Ct 50 43 30 82 87 128 177 175 162 Hospital 212 279 302 370 495 534 692 734 667 Rural Health Clinic 187 221 308 469 473 604 723 793 773 Total 496 637 743 1194 1406 1657 2138 2262 2104 *FY06 approx 90% complete (10/6/07)

35. FCC FORM 466

36. Calculations Allowable rural rate = $200 + $20 x 90 = $2000 Urban rate = $240  From RHCD Website Support = $2000 - $240 = $1760 per month HCP pays actual - support = $2200 - $1760 = $440 Maximum allowable distance

37. FCC FORM 466-A

38. Enabling E-Certification (on menu on right of RHC website).

41. RHC/USF Applications (466/466A) Status (9/30/07)200220032004200520062007Total Approved - Funding239526103931455541834217716 Approved - Zero funding19428027226411701127 Ready for final approval000113018149 Waiting HCP reply or docs00007478411588 In process by USAC000320955267 Received and Logged00001301302 Duplicate65616856101261 Withdrawn10323233253846721674 Denied - Incomplete4110 0025 Denied - Inelig svc/vendor926221810085 Denied - Program violation8128102106170334 Totals28513238473755515891126023528

42. FCC FORM 467

44. Support by Service Type

46. Things can go wrong if you are not careful

47. Appeals to USAC

48. Post Form 465 before the fund year starts. Lost support

49. Appeal Count by HCP

50. Read instructions at: http://www.universalservice.org/rhc/about/filing- appeals.aspx. Explain clearly why RHCD decision was wrong. Need for support is not a reason to grant an appeal. USAC cannot waive FCC imposed requirements. Appeals

51. FCC RED Light Rule All USF participants need FCC Registration Number including HCPs, svc providers, bill payers, or consultants. Get number at www.FCC.GOVwww.FCC.GOV USAC matches applications to “Red Light” list of FCC or USF debtors. No commitments or disbursements to matched entities.

52. Improper Payments Information Act of 2002 (IPIA) Covers all FCC payment programs For 2006-7, audited 89 RHC applicants Expect audits to continue in 2007-8 Work done by public audit firms Final Report to Congress will be public Audits cover –Competitive bidding process –Timely payment of applicant share –Amounts received and invoiced to USAC –Eligibility of products and services –Record retention (for support received)

54. Improper Payments Information Act of 2002 (IPIA) (Preliminary Results) Statistical results released by FCC 10/3/07 at: http://fjallfoss.fcc.gov/edocs_public/attachmatch /DOC-277103A7.doc http://fjallfoss.fcc.gov/edocs_public/attachmatch /DOC-277103A7.doc Erroneous payments for RHC listed as 20%. Failure to retain documenation (up to 5 years) counted as erroneous payment and was 13%. Compliance with rules was high. 16% of audited commitments are being recovered (but 13% is one applicant).

55. Rural Health Care Site Visit Outreach Initiative Between 3/07 and 8/07, USAC made 50 site visits to: View USF support in use Assess USAC outreach and education efforts Observe best practices Ensure that applicants know regulatory requirements and are using funds appropriately.

56. FOR IMMEDIATE RELEASE September 26, 2006 FCC ADOPTS PILOT PROGRAM UNDER RURAL HEALTH CARE MECHANISM Pilot will Enhance Access Health Care Providers’ Access to Advanced Telecommunications and Information Services Washington, D.C. – Today, the Federal Communications Commission (FCC) adopted an Order that establishes a pilot program to help public and non-profit health care providers build state and region-wide broadband networks dedicated to the provision of health care services, and connect those networks to [a] dedicated nationwide backbone…

59. Pilot Program - Facts Support for up to 85% of cost to construct and operate state or regional broadband network and for “services” provided over the network. Pilot capped at $100M minus current program (~$47-53M) or about $50M/yr for 2 years. Non-eligible HCPs can use network, but must pay their direct or “fair share” of cost. Urban HCPs are eligible, but rural component must be significant. Application deadline was May 7, 2007 for FY 2006.

60. Pilot Program – Application Summary (From public search of FCC website) 81 applications filed. Total requested 1 st year support about $320M. Total project budgets about $665M. Applications represent 42 states and territories and 7,400 health care provider sites.

63. Pilot Program – Application Summary Projects range from 1 to 1,637 sites. 22 are 1-10 sites 24 are 11-50 sites 18 are 51 to 250 sites 6 are 251 to 600 1 is 1637 (250 first year)

64. Pilot Program – Application Summary Total project costs range $0.015 to $100M. First year requests range $0.015 to $65M. Per site costs range $1000 to $2.5M 46 projects total <$50M  16 first year are $0.15 to $0.5M  11 first year are $0.5 to $1.0M  26 first year are $1.1 to $3.0M  18 first year are $3.1 to $10M  7 first year are $10.1 to $16M  1 is $65M

66. USAC Rural Health Care Program www.universalservice.org/rhc/ 202-776-0200 RHC Service Desk=> 800-229-5476 Monday-Friday 8 AM-8 PM

67. Ten Ways to Avoid Universal Service Rural Health Care Support 10. Don’t apply. 9. File the application in your desk drawer (only). 8. Leave to become a consultant before filing the application. 7. Request support for a non-existant carrier. 6. Request support for a 5,000 mile circuit. 5. Fail to reapply each year. 4. List the same cost for urban and rural service. 3. Show a rural rate that is lower than the urban rate. 2. File with your home address and disconnected phone #. 1. Send in a blank application.