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 NEWS  News  media  Information  202  /  418-  0500  TTY  202  /  418-  2555  Fax-  On-  Demand  202  /  418-  2830  Internet:  http://  www.  fcc.  gov  ftp.  fcc.  gov  Federal  Communications  Commission  445  12  th  Street,  S.  W.  Washington,  D.  C.  20554  This  is  an  unofficial  announcement  of  Commission  action.  Release  of  the  full  text  of  a  Commission  order  constitutes  official  action.  See  MCI  v.  FCC.  515  F  2d  385  (D.  C.  Circ  1974).  FOR  IMMEDIATE  RELEASE:  NEWS  MEDIA  CONTACT: 
 June  13,  2002  Michael  Balmoris  202-  418-  0253  Email:  mbalmori@  fcc.  gov 
 FCC  RESOLVES  ISSUE  OF  UNUSED  FUNDS  FROM  UNIVERSAL  SERVICE  PROGRAM 
 Action  Ensures  that  USF  Line  Item  on  Phone  Bills  Remains  Stable  for  the  Immediate  Future 
 Washington,  D.  C.  –  Today,  the  Federal  Communications  Commission  (FCC)  adopted  an  Order  to  ensure  that  the  universal  service  fund  (USF)  line  item  on  consumer 
 telephone  bills  remains  stable  for  the  immediate  future.  Specifically,  unused  funds  from  the  USF’s  schools  and  libraries  program  will  be  applied  to  stabilize  the  amount  of 
 contributions  to  USF  for  no  more  than  the  next  three  quarters,  ending  March  2003.  Following  that  period,  unused  funds  will  be  distributed  to  the  schools  and  libraries 
 program,  increasing  the  funds  available  for  the  program. 
 The  annual  funding  cap  for  the  schools  and  libraries  program  is  $2.25  billion,  and  as  of  May  2002,  the  program  has  received  over  $8.25  billion  in  funding  commitments 
 since  its  inception  in  1998. 
 The  framework  adopted  today  for  the  treatment  of  unused  funds  for  the  schools  and  libraries  program  will  provide  predictability  and  stability  to  the  universal  service 
 fund  by  making  the  USF  line  item  on  phone  bills  constant  in  the  near  term,  while  the  FCC  considers  reforming  how  monies  to  support  USF  are  collected.  Currently, 
 contributions  to  the  USF  are  generally  based  on  a  telecommunications  carrier’s  reported  interstate  revenues  from  the  prior  two  quarters. 


 Over  the  last  four  years,  overall  demand  on  the  universal  service  fund  has  grown  considerably,  rising  from  $1.9  billion  in  1997  to  $5.5  billion  in  2002.  At  the  same  time, 
 the  universal  service  revenue  base  has  become  smaller,  causing  the  contribution  factor  and  therefore  carrier  contribution  obligations  to  increase,  and  carriers  have  generally 
 passed  through  much  of  these  increases  to  their  customer  base. 
 Recognizing  these  trends,  the  FCC  released  a  Notice  of  Proposed  Rulemaking  (Notice)  in  May  2001  and  a  Further  Notice  of  Proposed  Rulemaking  (Further  Notice)  in 
 February  2002  to  seek  comment  on  measures  to  ensure  the  long-  term  predictability  and  stability  of  the  fund.  It  expects  to  take  action  on  the  proceeding  and  implement  the 
 changes  adopted  by  April  1,  2003. 
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