DA 01-1196

Released: May 11, 2001

**COMMON CARRIER BUREAU ANNOUNCES NO CHANGE IN SECOND**

**QUARTER 2001 UNIVERSAL SERVICE CONTRIBUTION FACTOR**

**CC Docket No. 96-45**

In this Public Notice, the Common Carrier Bureau announces that the
second quarter 2001 universal service contribution factor of 0.068823
that was proposed on March 9, 2001 and became effective on March 23,
2001[^1] will remain unchanged for the duration of the second quarter.

On March 14, 2001, the Commission released the *Contribution Interval
Order* which modified the methodology used to assess contributions that
carriers make to the federal universal service support mechanism.[^2]
Specifically, the Commission modified the contribution methodology to
reduce from 12 months to six months the interval between the accrual of
revenues and the assessment of contributions based on those revenues.
The Commission accomplished this reduction by requiring carriers to
submit revenue data on a quarterly basis, rather than on the semi-annual
basis provided under the prior rules.[^3] The Commission took such
action to ensure that carrier contributions would more closely reflect
current market conditions.

In order to implement this revised methodology for the second quarter
2001, the Commission recognized the possibility that it would need to
make a one-time adjustment to the contribution factor in the second
quarter of 2001. Specifically, the Commission did not yet have carrier
revenue data for the fourth quarter of 2000 when it calculated the
second quarter 2001 contribution factor. Therefore, the Commission
provided that, when such revenue data became available from the
Universal Service Administrative Company (USAC) in May 2001, the
contribution factor would be modified if necessary.[^4]

On May 2, 2001, USAC submitted a revised estimate of the revenue base
for the fourth quarter of 2000.[^5] The revenue base for the fourth
quarter of 2000 is \$852.91 million lower than the revenue base used to
calculate the second quarter 2001 contribution factor. USAC reports,
however, that sufficient funds are available so that no adjustment is
necessary in the second quarter 2001 contribution factor. Specifically,
through their normal operation, several of the universal service support
mechanisms have accrued unused funds that are not necessary to meet
program demand. These unused funds total \$49.62 million.[^6] By
applying these unused funds to offset the collection requirement for the
second quarter of 2001, the existing contribution factor of 0.068823
will be sufficient to meet estimated program demand in the second
quarter of 2001.

We therefore direct USAC to apply the unused funds described above to
offset the collection requirements for these programs in the second
quarter of 2001. This action is consistent with Commission rules and
precedent directing that unused funds be credited back to
contributors.[^7]

For further information, contact Gregory W. Guice or Anita Cheng,
Accounting Policy Division, Common Carrier Bureau, at (202) 418-7400,
TTY (202) 418-0484.

[^1]: *Proposed Second Quarter 2001 Universal Service Contribution
    Factor*, CC Docket No. 96-45, Public Notice, DA 01-614 (rel. Mar. 9,
    2001).

[^2]: *Federal State-Joint Board on Universal Service and Petition for
    Reconsideration Flied By AT&T*, CC Docket No. 96-45, Report and
    Order and Order on Reconsideration, FCC 01-85 at para. 2 (rel. Mar.
    14, 2001) (*Contribution Interval Order*).

[^3]: *Id*.

[^4]: *Id.* at para. 17.

[^5]: *See* Federal Universal Service Support Mechanisms Fund Size
    Projections for the Third Quarter and Contribution Base for the
    Second Quarter 2001, available at
    \<http://www.universalservice.org\> (filed May 2, 2001).

[^6]: USAC has collected funds that were not disbursed in the third
    quarter of 2000 for the High Cost Interstate Access mechanism
    (\$22.55 million), the fourth quarter of 2000 for the Low Income
    mechanism (\$14.97 million), and the first quarter of 2001 for the
    High Cost mechanism (\$9.39 million) and the Rural Health Care
    mechanism (\$2.71 million).

[^7]: 47 C.F.R. § 54.709(b); *Proposed First Quarter 1999 Universal
    Service Contribution Factors and Proposed Actions*, CC Docket No.
    96-45, Public Notice, FCC 98-318 (1998).