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Projecting the Cutoff on Internal Connections

The Schools and Libraries Division hasn't yet specified what the ultimate cutoff point will be for funding internal connections requests in the 1999-2000 funding year. But if the SLD's initial projections of the demand for E-rate funds hold up, it's not likely to go much lower than the current 65 percent.

In an April projection to the Federal Communications Commission, the SLD said that E-rate applicants had requested a total of $2.43 billion for the 1999-2000 funding year. Of that amount, approximately $789 million was requested for telecommunications services and about $142 million was requested for Internet access, the two categories of services that are supported, no matter what the applicant's discount level is.

If the internal connections requests match the SLD's projections, and half of the requests from applicants with discount rates between 60 and 69 percent are supported, that would involve a total of $2.217 billion in funding commitments, or only $33.4 million less than the FCC will permit the SLD to commit in the current funding year. As it did in the first year, the SLD will presumably retain some funds on which it can draw when an applicant's appeal is successful.

The SLD said in April that its overall projection was subject to a margin of error of 4.6 percent, or about $10 million. The potential for error is larger in the sub-categories of services and discount bands, but still not likely to make a significant difference. If the projections hold up, roughly half of the available funds will go to purchase internal connections for applicants with discount rates of 80 percent or higher.

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