PUBLIC NOTICE![](media/image1.png){width="0.95in"
height="0.9055555555555556in"}

FEDERAL COMMUNICATIONS COMMISSION

445 12th STREET, S.W.

WASHINGTON, D.C. 20554 **DA 00-517**

News media information 202/418-0500 Fax-On-Demand 202/418-2830 Internet:
http://www.fcc.gov ftp.fcc.gov

### CORRECTED VERSION Released: March 7, 2000

**Proposed Second Quarter 2000 Universal Service Contribution Factor**

CC Docket No. 96-45

In this Public Notice, the Common Carrier Bureau announces the proposed
universal service contribution factor for the second quarter of
2000.[^1]

## Rules for Calculating the Contribution Factor

Contributions to the federal universal service support mechanisms are
determined using a quarterly contribution factor calculated by the
Commission. Under section 54.709 of the Commission's rules, the
Commission shall calculate the quarterly contribution factor based on
the ratio of total projected quarterly costs of the universal service
support mechanisms to total end-user interstate and international
telecommunications revenues.[^2]

## USAC Projections of Demand and Administrative Expenses

Pursuant to section 54.709(a)(3) of the Commission's rules,[^3] the
Universal Service Administrative Company (USAC) submitted the following
projections of demand and administrative expenses for the second quarter
of 2000: [^4]

(\$ millions)

+---------------+-------+-------+----------+--------+--------+-------+
| Program       | Proj  | A     | App      | Appli  | Appli  | Total |
|               | ected | dmin. | lication | cation | cation | Pr    |
|               | Pr    | Exp   | of       |        | of     | ogram |
|               | ogram | enses | Balance  | of     | Pe     | Colle |
|               | Su    |       | From     | In     | riodic | ction |
|               | pport |       | Prior    | terest | Tr     |       |
|               |       |       | Period   | Income | ue-Ups |       |
+---------------+-------+-------+----------+--------+--------+-------+
| Schools and   | 55    | 7.269 | (50.438) | (1     | (1     | 48    |
| Libraries     | 5.231 |       |          | 3.909) | 7.221) | 0.932 |
+---------------+-------+-------+----------+--------+--------+-------+
| Rural Health  | 3.344 | 0.861 | (0.000)  | (      | (      | 4.102 |
| Care          |       |       |          | 0.009) | 0.094) |       |
+---------------+-------+-------+----------+--------+--------+-------+
| High-Cost     | 48    | 1.359 | (0.000)  | (      | 6.562  | 49    |
|               | 7.689 |       |          | 0.600) |        | 5.010 |
+---------------+-------+-------+----------+--------+--------+-------+
| Low Income    | 12    | 0.346 | (0.000)  | (      | 0.841  | 12    |
|               | 5.705 |       |          | 0.530) |        | 6.362 |
+---------------+-------+-------+----------+--------+--------+-------+
| TOTAL         | 117   | 9.835 | (50.438) | (1     | (      | **    |
|               | 1.969 |       |          | 5.048) | 9.912) | 1106. |
|               |       |       |          |        |        | 406** |
+---------------+-------+-------+----------+--------+--------+-------+

USAC reports that, based on current data, it does not believe that it
will need to disburse the full amount of funds that it was authorized to
collect for the first year of the schools and libraries program.[^5]
Specifically, USAC estimates that the schools and libraries program will
have an unused balance of approximately \$202 million.[^6] According to
USAC, this remaining balance will occur because: (1) although USAC has
made funding commitments to certain schools and libraries, it has
received no indication that the services requested have been or will be
provided; (2) some schools and libraries ultimately may use only a
portion of the funds committed to them; and (3) a portion of the funds
reserved to pay for successful appeals of funding denials is not likely
to be needed.[^7] We anticipate that USAC will be able to determine the
actual amount of the unused balance at the close of the first quarter
2000.

We direct USAC to apply one-quarter of the estimated unused balance to
reduce the collection requirement for the schools and libraries program
in the first quarter of 2000. This action is consistent with Commission
rules and precedent directing that unused contributions be credited back
to contributors.[^8] Because the unused balance projected for the
schools and libraries program is an estimate at this time, we find that
it would be prudent to apply only one-quarter of the estimated unused
balance to reduce the contribution factor in the second quarter of
2000.[^9] When USAC files its projections of program demand and
administrative expenses for the third quarter of 2000, it shall supply
an updated estimate of the remaining balance that may be applied to
reduce the collection requirement for the schools and libraries program
in subsequent quarters of 2000.

**[USAC Projections of Industry Revenues]{.underline}**

USAC submitted estimated end-user telecommunications revenues for
January through June 2000 based on information contained in the
September 1999 Telecommunications Reporting Worksheet (FCC Form
499-S).[^10] The amount is as follows:

Total Interstate and International End-User Telecommunications Revenues

from January 1, 1999 - June 30, 1999: \$39.216250 billion

## Contribution Base

To determine the quarterly contribution base, we first reduce the
six-month estimate of interstate and international end-user
telecommunications revenues by the projected amount that will be
exempted from the contribution base as a result of the limited
international exception.[^11] Next, we estimate quarterly revenues by
dividing the six-month revenue estimate by two. Then, we decrease the
revenue estimate by one percent to account for uncollectible
contributions.[^12] Accordingly, the quarterly contribution base for the
second quarter of 2000 is as follows:

Quarterly Contribution Base for Universal Service Support Mechanisms

((Interstate and International - International Exception) / 2) -
Uncollectibles

((\$39.216250 billion - \$0.072355 billion) / 2) - 1%

\$19.376228 billion

**[Proposed Contribution Factor]{.underline}**

Using this quarterly contribution base, and the total program collection
requirement from the table above, the proposed contribution factor for
the second quarter of 2000 is as follows:

Contribution Factor for Universal Service Support Mechanisms

Total Program Collection / Quarterly Contribution Base

\$1.106406 billion / \$19.376228 billion

**0.057101**

If the Commission takes no action regarding the proposed contribution
factor within the 14-day period following release of this Public Notice,
the contribution factor shall be deemed approved by the Commission.[^13]
USAC shall then use the contribution factor to calculate universal
service contributions for the second quarter of 2000.

For further information, contact Praveen Goyal, Accounting Policy
Division, Common Carrier Bureau, at (202) 418-7400, TTY (202) 418-0484.

[^1]: *See* 47 C.F.R. § 54.709(a).

[^2]: *See* 47 C.F.R. § 54.709(a)(2).

[^3]: 47 C.F.R. § 54.709(a)(3).

[^4]: In an order released concurrently with this Public Notice, the
    Commission waives the quarterly cap on collections and disbursements
    under the rural health care support mechanism for the first and
    second quarters of 2000, and waives the quarterly cap on
    disbursements under the schools and libraries support mechanism for
    the second quarter of 2000. *See* *Federal-State Joint Board on
    Universal Service*, CC Docket No. 96-45, Order, FCC 00-79 (rel. Mar.
    7, 2000). These waivers will ensure that lags between the collection
    and disbursement of funds in these support mechanisms will not delay
    the disbursement of support to applicants in the first and second
    quarters of 2000. These waivers do not affect the *annual*
    collection and disbursement caps on the rural health care support
    mechanism and the schools and libraries support mechanism.

[^5]: *See* Federal Universal Service Programs Fund Size Projections &
    Contribution Base For the Second Quarter 2000 at 27 (filed by USAC
    Feb. 1, 2000) (*USAC Filing for Second Quarter 2000*).

[^6]: USAC estimates that the schools and libraries program will have a
    total balance of approximately \$259 million in unused funds after
    all disbursements related to the first program year have been made.
    *See USAC Filing for Second Quarter 2000* at 27. For the first
    quarter of 2000, the Common Carrier Bureau directed USAC to apply
    one quarter of estimated unused schools and libraries support funds,
    or \$57.250 million, against demand for that quarter. *See*
    *Proposed First Quarter 2000 Universal Service Contribution Factor*,
    CC Docket No. 96-45, Public Notice, DA 99-2780 (rel. Dec. 10, 1999).
    This yields a difference of approximately \$201.75 million in
    estimated remaining unused funds.

[^7]: *See USAC Filing for Second Quarter 2000* at 27.

[^8]: *See* 47 C.F.R. § 54.507. Specifically, at the end of the fourth
    quarter of 1998, the rural health care program had a balance of
    approximately \$86 million because collections accrued faster than
    actual demand for program support. To ensure that unused collections
    were credited back to contributors, the Commission directed that the
    unused balance be applied over two quarters to reduce the
    contribution factors. *See Proposed First Quarter 1999 Universal
    Service Contribution Factors and Proposed Actions*, CC Docket No.
    96-45, Public Notice, FCC 98-318 at 3-4 (rel. Dec. 4, 1998).

[^9]: *See Proposed First Quarter 2000 Universal Service Contribution
    Factor*, CC Docket No. 96-45, Public Notice, DA 99-2780 (rel. Dec.
    10, 1999) (similarly applying one-quarter of estimated unused
    schools and libraries funds to offset projected expenses for the
    first quarter of 2000).

[^10]: *See* Letter of Robert Haga, Universal Service Administrative
    Company, to Magalie R. Salas, FCC, dated February 24, 2000. The
    revenues on which contributions are assessed in the first and second
    quarters of 2000 are the revenues reported on the September 1999
    Worksheet for the period from January through June 1999.

[^11]: *See* 47 C.F.R. § 54.706(c). *See also Federal-State Joint Board
    on Universal Service*, CC Docket No. 96-45, *Access Charge Reform*,
    CC Docket No. 96-262, Sixteenth Order on Reconsideration in CC
    Docket No. 96-45, Eighth Report and Order in CC Docket No. 96-45,
    Sixth Report and Order in CC Docket No. 96-262, FCC 99-290, at
    paras. 15, 19-29 (rel. Oct. 8, 1999).

[^12]: *See* *USAC Filing for Second Quarter 2000* at 29.

[^13]: *See* 47 C.F.R. § 54.709(a)(3).