The Federal Communications Commission staff has proposed directing the Universal Service Administrative Company to apply one-fourth of the estimated unused funds for the E-rate program's first year to reduce the level of contributions required from telecommunications carriers in the first quarter of 2000. If the full commission does not object, the proposal will take effect on Dec. 24.
In proposing the "contribution factors" for the Universal Service Fund for the first quarter of 2000, the FCC staff said that the schools and libraries program had estimated it would have an unused balance of about $229 million after all of the disbursements for the first funding year were made. (For most applicants, the paperwork associated with first-year payments was due by Dec. 15, and some observers expect that the amount of unspent funds will actually be higher than that.) However, because the FCC staff said the number was only a projection, it said it was "prudent" to apply only one-quarter of the amount to reduce the funds that would have to be collected from telecommunications carriers in the first quarter. By March 2000, it noted, USAC should be able to determine the actual amount of unused funding from year one.
Some E-rate stakeholders have argued that the unspent monies should be used to increase the level of available funding for year two, which runs until June 30, 2000, or to make funds available to year one applicants whose discount rates were below the 70 percent level that turned out to be the threshold for approved internal connections requests.