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*****************************************************                                    News media information  202 / 418-0500
                                            Fax-On-Demand  202 / 418-2830
                                            Internet:  http://www.fcc.gov
                                                        ftp.fcc.govPUBLIC
                                                                   NOTICE
                                                                         
                                        Federal Communications Commission
                                                         1919 M St., N.W.
                                                   Washington, D.C. 20554
                                                                         
                                    
                                      Released: August 18, 1998
                                                     DA 98-1649
                                
Proposed Fourth Quarter 1998 Universal Service Contribution Factors Announced
                      CC Docket No. 96-45
                                
     In this Public Notice, the Accounting Policy Division of the Common Carrier Bureau
announces proposed universal service contribution factors for the fourth quarter of 1998.  On
July 31, 1998, the Universal Service Administrative Company (USAC), Schools and Libraries
Corporation (SLC), and Rural Health Care Corporation (RHCC) submitted the following
projections of fourth quarter 1998 demand and administrative expenses:

                          ($ millions)

Program
Program
Demand
Administrative
Expenses
Interest
Income
Total
Program
Costs


Schools and Libraries 
320.1
4.9
(0.0)
325.0


Rural Health Care 
 24.3
1.5
(0.8)
25.0


     Subtotal
344.4
6.4
(0.8)
350.0


High Cost 
422.5
1.9
(0.7)
423.7


Low Income 
116.4
0.3
(1.0)
115.8


     Subtotal
538.9
2.2
(1.7)
539.4


TOTAL
884.0
8.5 
(2.5)
889.5


     In the Fifth Order on Reconsideration, the Commission adjusted the 1998 collection
amounts for the schools and libraries support mechanism.  Specifically, the Commission directed
USAC to collect only as much as required by demand, but in no event more than $325 million per
quarter for the third and fourth quarters of 1998 and the first and second quarters of 1999 to
support the schools and libraries universal service support mechanism.  The Commission further
directed SLC to approve applications totalling no more than $1.925 billion for disbursement
during 1998 and the first half of 1999.  The Commission also directed USAC to collect for the
rural health care support mechanism only as much as required by demand, but in no event more
than $25 million per quarter for the third and fourth quarters of 1998.  
     
     Based on information contained in the Universal Service Worksheets, FCC Form 457,
USAC submitted on July 31, 1998, end-user telecommunications revenue for the 1997 calendar
year.  Funding bases for the third and fourth quarters are determined by subtracting the revenues
reported for January through June 1997 (on the September Worksheet) from the 1997 calendar
year revenues reported on the March Worksheet.  The amounts are as follows: 

          Total Interstate, Intrastate, and International End-User Telecommunications
     Revenues from July 1, 1997 - December 31, 1997:  $94.482 billion

          Total Interstate and International End-User Telecommunications Revenues from July 1,
     1997 - December 31, 1997:  $34.228 billion. 

To account for uncollectible contributions, we decrease by one percent the revenue estimates
listed above.  In addition, we estimate quarterly revenues by dividing by two the six-month
revenue estimates. 

     Taking into account the one percent uncollectible factor, the proposed contribution factors
for the fourth quarter of 1998 are as follows:

          Contribution factor for the schools and libraries and rural health care support
     mechanisms:

     Total Program Costs / Contribution Base (Interstate, International, and Intrastate) = 
       $0.350 billion / ( $93.537 billion / 2) = 0.0075

          Contribution factor for the high cost and low income support mechanisms:

          Total Program Costs / Contribution Base (Interstate and International) =
     $0.539 billion / ($33.885 billion / 2) = 0.0318

     These factors are the proposed fourth quarter 1998 universal service contribution factors. 
If the Commission takes no action regarding these proposed factors within the 14-day period
following release of this Public Notice, the projections shall be deemed approved by the
Commission and shall be used by USAC to calculate third quarter universal service contributions. 


     For further information, contact Lori Wright, Accounting Policy Division, Common
Carrier Bureau, at (202) 418-7400.

      -- Action by the Chief, Accounting Policy Division --