********************* ********************* ************** NOTICE ********************* ********************* ************** This document was converted from WordPerfect or Word to ASCII Text format. Content from the original version of the document such as headers, footers, footnotes, endnotes, graphics, and page numbers will not show up in this text version. All text attributes such as bold, italic, underlining, etc. from the original document will not show up in this text version. Features of the original document layout such as columns, tables, line and letter spacing, pagination, and margins will not be preserved in the text version. If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ********************* ********************* ********************* ** PUBLIC NOTICE FEDERAL COMMUNICATIONS COMMISSION 445 12th STREET, S.W. WASHINGTON, D.C. 20554 DA 00-1272 News media information 202/418-0500 Fax-On-Demand 202/418-2830 Internet: http://www.fcc.gov ftp.fcc.gov Released: June 9, 2000 Proposed Third 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 third quarter of 2000. 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. USAC Projections of Demand and Administrative Expenses Pursuant to section 54.709(a)(3) of the Commission's rules, the Universal Service Administrative Company (USAC) submitted the following projections of demand and administrative expenses for the third quarter of 2000: ($ millions) Program Projected Program Support Admin. Expenses Application of Balance From Prior Period Application of Interest Income Application of Periodic True-Ups Total Program Collectio n Schools and Libraries 554.8539 7.6461 (170.155) (15.926) (19.836) 356.583 Rural Health Care 4.634 0.5662 (0.000) (0.008) (5.203) (0.0108) High-Cost 485.858 1.1974 (0.000) (0.600) (21.617) 464.8384 Low Income 133.060 0.2744 (0.000) (0.530) 1.254 134.0584 Interstate Access 162.500 0.2467 (0.000) (0.000) (0.000) 162.7467 TOTAL 1340.906 9.931 (170.155) (17.064) (45.402) 1118.216 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. Specifically, USAC estimates that the schools and libraries program will have an unused balance of approximately $340 million. According to USAC, this remaining balance occurred for a number of reasons: (1) although USAC has made funding commitments to certain schools and libraries, it received no indication that the services requested have been or will be provided; (2) some schools and libraries ultimately used 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. We direct USAC to apply one-half of the estimated unused balance to reduce the collection requirement for the schools and libraries support mechanism in the third quarter of 2000. This action is consistent with Commission rules and precedent directing that unused contributions be credited back to contributors. Because disbursements for Year 1 of the schools and libraries support mechanism are now nearly complete, we direct USAC to apply one half of the unused balance to offset collections for the schools and libraries support mechanism in the third quarter of 2000. When USAC files its projections of program demand and administrative expenses for the fourth 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 support mechanism in the fourth quarter of 2000. USAC Projections of Industry Revenues 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). The amount is as follows: Total Interstate and International End-User Telecommunications Revenues from July 1, 1999 December 31, 1999: $40.80616 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. Accordingly, the quarterly contribution base for the third quarter of 2000 is as follows: Quarterly Contribution Base for Universal Service Support Mechanisms (Six Month Interstate and International Revenues / 2) - Uncollectibles ($40.80616 billion / 2) - 1% $20.199049 billion Proposed Contribution Factor Using this quarterly contribution base, and the total program collection requirement from the table above, the proposed contribution factor for the third quarter of 2000 is as follows: Contribution Factor for Universal Service Support Mechanisms Total Program Collection / Quarterly Contribution Base $1.118216 billion / $20.199049 billion 0.055360 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. USAC shall then use the contribution factor to calculate universal service contributions for the third quarter of 2000. For further information, contact Praveen Goyal, Accounting Policy Division, Common Carrier Bureau, at (202) 418-7400, TTY (202) 418-0484.