The Schools and Libraries Committee of the Universal Service Administrative Company decided April 5 that assuming that the Federal Communications Commission authorizes the full $2.25 billion for Year 3 of the E-rate program, that it will not be able to support the internal connections requests of applicants with discount rates of 80 percent or below.

SLD officials said that when the FCC sets the funding level for Year 3, it will begin issuing internal connections funding commitments for applicants at the 90 percent level, assuming that the FCC decides to set the cap at its maximum level. Applicants with discount rates of between 89 and 81 percent will have to wait for the SLD to process more funding commitments before the fate of their applications will be determined.

Under regulations that were revised last year, the SLD is supposed to lower the threshold for internal connections support by a percentage point at a time until it determines it does not have adequate funds to support those applicants at the next lowest percentage point.

The SLD said it will be able to fund applications for telecommunications services and Internet access for all eligible applicants. However, with applicants submitting requests projected at $4.72 billion for the program's third year, the support for internal connections will be considerably tighter than in the past.