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Forecasting the FY 2010 Priority Two Discount Threshold-Crunching the Numbers

Each year I get asked by many stakeholders if I can look into my E-rate crystal ball to forecast and provide an estimate on where the priority two discount threshold will ultimately fall. This is a very valid concern and it arises because the SLD can only disburse $2.25 billion and on average $2.14 billion is requested in priority one applications. Crunching the numbers, it would seem that this would leave very little money to fund priority two projects.

Now, let’s really crunch the numbers:

  • History tells us that not all 90% priority two applications will get funded. From 2007 – 2009 the SLD denied approximately $155 million each year for priority two applications at the 90% level
  • History also tells us that from FY 2007-2009 the SLD denied approximately $147 million each year for priority one applications
  • Since 2007, USAC has reduced funding requests on average by $43 million each year
  • In FY 2010, $1.07 billion was requested at the 90% level, however, the FCC is authorized to rollover unused commitments from previous funding years. As a matter of fact, in 2007, 2008 and 2009, the FCC rolled over $650 million , $600 million and $900 million respectively
  • USAC now projects they have $900 million that could be rolled over for FY 2010. The FCC will make the decision on how much they will rollover by July
  • In FY 2009, there was $804 million in priority two requests and to date, the SLD is funding priority two requests at 80% and may go down to 78%
    Based on these many factors and assuming the FCC ultimately rolls over much of the $900 million available for use in FY 2010, it would seem likely that USAC should be able to at least fund the FY 2010 priority two applications at 90% and could conceivably get as low as the 80% level.

    And that’s how the numbers seem to crunch.

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