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 PUBLIC  NOTICE  FEDERAL  COMMUNICATIONS  COMMISSION  445  12th  STREET,  S.  W.  WASHINGTON,  D.  C.  20554  DA  02-  2221  News  media  information  202/  418-  0500  Fax-  On-  Demand  202/  418-  2830  Internet:  http://  www.  fcc.  gov  ftp.  fcc.  gov 
 Released:  September  10,  2002 
 Proposed  Fourth  Quarter  2002  Universal  Service  Contribution  Factor 
 CC  Docket  No.  96-  45 
 In  this  Public  Notice,  the  Wireline  Competition  Bureau  announces  the  proposed  universal  service  contribution  factor  for  the  fourth  quarter  of  2002.  1  Under  section  54.709  of  the 
 Commissions  rules,  the  quarterly  contribution  factor  is  based  on  the  ratio  of  total  projected  quarterly  costs  of  the  universal  service  support  mechanisms  to  total  end-  user  interstate  and 
 international  telecommunications  revenues,  net  of  prior  period  actual  contributions.  2  Under  section  54.507,  however,  funds  collected  in  the  schools  and  libraries  support  mechanism  that  are 
 unused  shall  be  applied  to  stabilize  universal  service  contributions  in  accordance  with  the  public  interest  and  consistent  with  section  54.709(  b)  for  no  more  than  three  quarters,  beginning  with  the 
 third  quarter  2002.  3  As  discussed  in  greater  detail  below,  the  third  quarter  2002  contribution  factor  of  0.072805  will  therefore  remain  unchanged  for  the  fourth  quarter  of  2002. 

 USAC  Projections  of  Demand  and  Administrative  Expenses 
 Pursuant  to  section  54.709(  a)(  3)  of  the  Commissions  rules,  4  the  Universal  Service  Administrative  Company  (USAC)  submitted  the  following  projections  of  demand  and 
 administrative  expenses  for  the  fourth  quarter  of  2002:  5 

 1  See  47  C.  F.  R.    54.  709(  a). 
 2  See  47  C.  F.  R.    54.  709(  a)(  2). 
 3  See  47  C.  F.  R.    54.  507(  a). 
 4  47  C.  F.  R.    54.  709(  a)(  3). 
 5  See  Federal  Universal  Service  Support  Mechanisms  Fund  Size  Projections  for  the  Fourth  Quarter  2002,  available  at 
 <http://  www.  universalservice.  org/  overview/  filings>  (filed  August  2,  2002)  (USAC  Filing  for  Fourth  Quarter  2002  Projections).  See  also  Federal  Universal  Service  Support  Mechanisms  Fund  Size  Quarterly  Contribution  Base  for 

 the  Fourth  Quarter  2002,  available  at  <http://  www.  universalservice.  org/  overview/  filings>  (filed  August  30,  2002)  (USAC  Filing  for  Fourth  Quarter  2002  Contribution  Base). 
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 ($  millions) 
 Program  Projected  Program 
 Support 
 Admin.  Expenses  Application  Of  Interest 
 Income 
 Application  of  Periodic  True- 
 Ups 
 Total  Program  Collection 

 Schools  and  Libraries  553.260  9.240  (11.574)  1.050  551.976 
 Rural  Health  Care  8.604  1.004  (0.  071)  (0.  083)  9.454 
 High-  Cost  856.648  1.730  (0.  539)  (16.498)  841.341 
 Low  Income  181.278  0.691  (0.  420)  2.097  183.646 
 TOTAL  1599.  79  12.  665  (12.  604)  (13.  434)  1586.  417 

 The  Universal  Service  Administrative  Company  (USAC)  has  therefore  projected  that  program  demand  and  administrative  expenses  for  the  fourth  quarter  of  2002  will  be 
 approximately  $1.586417  billion.  USAC  also  has  submitted  estimated  end-  user  telecommunications  revenues  of  $18.487996  for  April  through  June  2002  based  on  information 
 contained  in  the  second  quarter  2002  Telecommunications  Reporting  Worksheet.  6  Taking  into  account  USACs  estimate  of  $1.330758  billion  in  actual  contributions  in  the  second  quarter  of 
 2002  as  well  as  uncollectible  contributions  of  one  percent,  we  project  a  contribution  base  of  $16.985667  billion.  7  The  fourth  quarter  2002  contribution  factor  for  universal  service  support 
 mechanisms  would  therefore  be  0.093397  (total  program  collection  requirement  /  quarterly  contribution  base),  absent  any  adjustment  to  stabilize  the  contribution  factor. 

 Adjustment  to  Stabilize  Contribution  Factor 
 Consistent  with  section  54.507  of  the  Commissions  rules  and  the  Schools  First  Report  and  Order  in  CC  Docket  No.  02-  6,  8  we  direct  USAC  to  apply  sufficient  unused  funds  from  the 
 schools  and  libraries  support  mechanism  to  maintain  the  fourth  quarter  contribution  factor  at  0.072805.  9 

 In  the  Schools  First  Report  and  Order,  the  Commission  concluded  that  unused  funds  from  the  schools  and  libraries  support  mechanism  would  be  applied  to  stabilize  the  collection 
 requirement  for  universal  service  for  the  third  and  fourth  quarters  of  2002,  and  the  first  quarter  2003,  if  necessary,  while  it  examines  whether  more  fundamental  reform  of  the  basis  for  assessing 

 6  See  USAC  Filing  for  Third  Quarter  2002  Contribution  Base  at  4.  The  revenue  base  on  which  contributions  are 
 assessed  in  the  third  quarter  of  2002  is  derived  from  the  revenues  reported  on  the  First  Quarter  2002  Telecommunications  Reporting  Worksheet.  See  id. 

 7  See  id.  at  5. 
 8  See  Schools  and  Libraries  Universal  Service  Support  Mechanism,  CC  Docket  No.  02-  6,  First  Report  and  Order, 
 FCC  02-  175  (rel.  June  13,  2002)  (Schools  First  Report  and  Order). 
 9  When  USAC  files  its  projections  of  program  demand  and  administrative  expenses  for  the  first  quarter  of  2003,  it 
 shall  supply  an  updated  estimate  of  the  remaining  balance  that  may  be  applied  to  stabilize  the  collection  requirement  as  necessary  for  first  quarter  2003. 
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 universal  service  contributions  is  warranted.  10  Thereafter,  unused  funds  from  the  schools  and  libraries  support  mechanism  will  be  carried  forward  to  increase  disbursements  to  schools  and 
 libraries  in  subsequent  years.  11  The  Commissions  treatment  of  unused  funds  from  the  schools  and  libraries  support  mechanism  helps  to  ensure  the  predictability  of  contribution  obligations  and 
 stabilize  contributions  to  universal  service  by  contributors  and  their  customers,  without  jeopardizing  the  sufficiency  of  the  universal  service  support  mechanisms. 

 If  the  Commission  takes  no  action  regarding  the  projections  of  demand  and  administrative  expenses  and  the  proposed  contribution  factor  within  the  14-  day  period  following 
 release  of  this  Public  Notice,  they  shall  be  deemed  approved  by  the  Commission.  12  USAC  shall  use  the  contribution  factor  to  calculate  universal  service  contributions  for  the  fourth  quarter  of 
 2002.  USAC  includes  these  amounts  in  invoices  sent  to  contributors.  Contribution  payments  are  due  on  the  dates  shown  on  the  invoice.  Contributors  will  pay  interest  for  each  day  for  which  the 
 payments  are  late.  Contributors  failing  to  pay  contributions  in  a  timely  fashion  may  be  subject  to  the  enforcement  provisions  of  the  Communications  Act  of  1934,  as  amended,  and  any  other 
 applicable  law.  In  addition,  contributors  may  be  billed  by  USAC  for  reasonable  costs  of  collecting  overdue  contributions.  13 

 For  further  information,  contact  Jon  Secrest,  Telecommunications  Access  Policy  Division,  Wireline  Competition  Bureau,  at  (202)  418-  7400,  TTY  (202)  418-  0484. 

 10  Id. 
 11  Id. 
 12  See  47  C.  F.  R.    54.  709(  a)(  3). 
 13  See  47  C.  F.  R.  54.  713. 
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