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FCC to Roll Over Unused E-rate Funds in Future

The Federal Communications Commission June 13 adopted an order that will use undisbursed funds from the E-rate program to "stabilize or reduce" the amount of carrier contributions to the Universal Service Fund for up to three calendar quarters. But the commission agreed that no later than the second quarter of 2003, "any unused funds" shall be "carried forward for disbursement in subsequent funding years."

The Commission said it would "develop specific rules implementing this policy not later than second quarter 2003 in order to maximize the availability of these funds for schools and libraries." It also said it would continue to explore "procedural and programmatic changes" to the E-rate program that would help reduce the amount of funds that are not disbursed.

The Commission said, "Over the past several years. . . we have witnessed increasing upward pressure on contributions caused by a variety of events, including declining interstate revenues coupled with increased demand for universal services support." As a result, the commission recently sought comment on possible changes in its methodology for setting carriers' contributions.

The Commission's order noted that schools and libraries "have received over $8.25 billion in funding commitments" as of May 2002, but did not say that only $4.918 billion has been disbursed.

The Universal Service Administrative Company reported to the FCC at the beginning of May that it had not disbursed $533.6 million worth of funding commitments that had it had made for the 2000 funding year. In addition, it appeared that disbursements for the 2001 funding year were also running behind schedule.

The precise way in which the Commission's decision will be implemented in the current funding year was not immediately clear. USAC is scheduled to make another report to the FCC on the size of the Universal Service Fund at the beginning of August.

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