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

FEDERAL COMMUNICATIONS COMMISSION

445 12th STREET, S.W.

WASHINGTON, D.C. 20554 **DA 00-2065**

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

### Released: September 8, 2000

**Proposed Fourth 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 fourth 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 fourth 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    | 1     | (        | (1     | (      | 37    |
| Libraries     | 2.491 | 0.009 | 169.534) | 6.088) | 3.845) | 3.033 |
+---------------+-------+-------+----------+--------+--------+-------+
| Rural Health  | 2.525 | 1.127 | (0.000)  | (      | (      | 2.833 |
| Care          |       |       |          | 0.013) | 0.806) |       |
+---------------+-------+-------+----------+--------+--------+-------+
| High-Cost     | 65    | 1.442 | (0.000)  | (      | 3.226  | 66    |
|               | 7.122 |       |          | 1.400) |        | 0.390 |
+---------------+-------+-------+----------+--------+--------+-------+
| Low Income    | 16    | 0.296 | (0.000)  | (      | (1     | 15    |
|               | 4.035 |       |          | 0.780) | 1.609) | 1.942 |
+---------------+-------+-------+----------+--------+--------+-------+
| TOTAL         | 137   | 1     | (        | (1     | (1     | **    |
|               | 6.173 | 2.874 | 169.534) | 8.281) | 3.034) | 1188. |
|               |       |       |          |        |        | 198** |
+---------------+-------+-------+----------+--------+--------+-------+

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 \$170 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 direct USAC to apply all of the estimated unused balance of Year 1
funds to reduce the collection requirement for the schools and libraries
program in the fourth quarter of 2000. This action is consistent with
Commission rules and precedent directing that unused contributions be
credited back to contributors.[^8] Because disbursements for Year 1 of
the schools and libraries support mechanism are nearly final,[^9] we
direct USAC to apply the remainder of the unused balance to offset
collections for the schools and libraries support mechanism in the
fourth quarter of 2000.[^10] When USAC files its projections of program
demand and administrative expenses for the first quarter of 2001, it
shall supply an updated estimate of any remaining balance that may be
applied in the future to reduce the collection requirement for the
schools and libraries program.

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

USAC submitted estimated end-user telecommunications revenues for July
through December 1999 based on information contained in the April 2000
Telecommunications Reporting Worksheet (FCC Form 499-A).[^11] The amount
is as follows:

Total Interstate and International End-User Telecommunications Revenues

from July 1, 1999 -- December 31, 1999: \$42.344228 billion

## Contribution Base

To determine the quarterly contribution base, we first divide the
six-month estimate of interstate and international end-user
telecommunications revenues by two. Then, we decrease the revenue
estimate by one percent to account for uncollectible contributions.[^12]
Accordingly, the quarterly contribution base for the fourth quarter of
2000 is as follows:

Quarterly Contribution Base for Universal Service Support Mechanisms

(Six Month Interstate and International Revenues / 2) - Uncollectibles

(\$42.344228 billion / 2) - 1%

\$20.960393 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 fourth quarter of 2000 is as follows:

Contribution Factor for Universal Service Support Mechanisms

Total Program Collection / Quarterly Contribution Base

\$1.188198 billion / \$20.960393 billion

**0.056688**

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 fourth 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]: *See* Federal Universal Service Programs Fund Size Projections &
    Contribution Base For the Fourth Quarter 2000 (filed by USAC Aug. 2,
    2000) (*USAC Filing for Fourth Quarter 2000*). USAC's projected
    demand and expenses for the high cost universal service support
    mechanism include the additional demand and expenses resulting from
    the Commission's new interstate access universal service support
    mechanism. *See* *USAC Filing for Fourth Quarter 2000* at 15-16.

[^5]: *See* *USAC Filing for Fourth Quarter 2000* at 30.

[^6]: USAC projects that the schools and libraries program will have a
    total balance of approximately \$448 million in unused funds after
    all disbursements related to the first program year have been made.
    Some of this amount has already been credited back to contributors
    in offsets against collections for the first, second and third
    quarters of 2000. *See* *Proposed First Quarter 2000 Universal
    Service Contribution Factor*, CC Docket No. 96-45, Public Notice, DA
    99-2780 (rel. Dec. 10, 1999) (applying one-quarter of estimated
    unused schools and libraries balance to offset projected expenses in
    the first quarter of 2000); *Proposed Second Quarter 2000 Universal
    Service Contribution Factor*, CC Docket No. 96-45, Public Notice, DA
    00-517 (rel. Mar. 7, 2000) (applying one-quarter of estimated unused
    schools and libraries balance to offset projected expenses in the
    second quarter of 2000); *Proposed Third Quarter 2000 Universal
    Service Contribution Factor*, CC Docket No. 96-45, Public Notice, DA
    00-1272 (rel. Jun. 9, 2000) (applying one-half of estimated unused
    schools and libraries balance to offset projected expenses in the
    third quarter of 2000). Adjusting for these offsets, USAC estimates
    that the schools and libraries program will have a total balance of
    \$169.534 million in unused Year 1 funds. *See USAC Filing for
    Fourth Quarter 2000* at 29-30.

[^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]: USAC reports that only \$0.115 million in additional Year 1
    commitments have been made since March 31, 2000, i.e., during the
    second and third quarters of 2000. *See USAC Filing for Fourth
    Quarter 2000* at 27-28.

[^10]: USAC's estimate of \$169.534 million in unused Year 1 funds does
    not include a separate \$44 million of remaining Year 1 support, a
    portion of which is subject to the Commission's waiver of the
    September 30, 1999, Year 1 implementation deadline for certain
    classes of schools and libraries applicants, and a portion of which
    is a contingency amount for Year 1 appeals pending before the
    Commission. *See USAC Filing for Fourth Quarter 2000* at 27-28, 30.

[^11]: *See USAC Filing for Fourth Quarter 2000* at 31-33. Funding bases
    for the third and fourth quarters of 2000 are determined by
    subtracting the revenues reported for January through June 1999 (on
    the September 1999 Worksheet) from the revenues reported for January
    through December 1999 (on the April 2000 Worksheet).

[^12]: *See* *USAC Filing for Fourth Quarter 2000* at 33.

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