FAQs from USAC’s Eligible Services Office Hour Webinars

These Q&As are very timely and helpful. Give them a read! Thank you to USAC for providing these in the February 11, 2021 Newsbrief.

Q1. If I apply for Category Two services for the first time in FY2022, does my five-year budget cycle run through FY2026?

A1. No. Starting with FY2021, Category Two (C2) budgets are on a fixed five-year budget cycle. The first full cycle starts with FY2021 and ends with FY2025. Your C2 budget for this cycle will be determined in the first funding year during this fixed period that you receive a commitment for a C2 funding request, whether you apply for your organization or your organization is included in a consortium application. All C2 budgets will be reset in FY2026, which starts the second fixed five-year cycle.

Q2. What is the guidance on equipment transfers for FY2021?

A2. Per the Category Two Report and Order FCC 19-117, starting in FY2021 (i.e., July 1, 2021), applicants are no longer required to notify USAC of the equipment transfers, but both the transferor and recipient must maintain detailed records documenting the transfer and the reason for the transfer for five years. Schools, libraries, and consortia are still required to maintain asset and inventory records of equipment purchased and the actual locations of such equipment for 10 years after purchase.

For equipment purchased with FY2020 or earlier funding, if transferred in FY2021 or later within the same eligible school district or library system, the school or library would not need to notify USAC of the transfer, but both the transferor and recipient must maintain detailed records documenting the transfer and the reason for the transfer for a period of five years.

Q3. Can I apply for Basic Maintenance of Internal Connections (BMIC) for eligible equipment if I did not use E-Rate funding to purchase the equipment?

A3. Yes. The equipment must itself be eligible under E-Rate program rules (see the Eligible Services List for the appropriate funding year), but you are not required to have purchased the equipment using E-Rate funds.

Q4. Does an upgrade that involves the purchase of a new piece of eligible equipment fall under Internal Connections or BMIC?

A4. The purchase of a new piece of equipment generally would fall under Internal Connections. Note that BMIC does cover repair and upkeep services including hardware, wiring, and cable maintenance, along with basic technical support and configuration changes, including work performed on eligible products and parts that are repaired or replaced.

Q5. As a service provider, I understand that we should provide a cost allocation of a service that includes components that are not fully eligible under E-Rate. How do I determine our percentage allocation?

A5. USAC can provide that for you. If you believe a cost allocation may be necessary for a product or service you provide, please follow these steps:

• Gather all documentation you have, including a general description of the service; specific details on components of the service, such as the manufacturer name(s), make(s) and model(s) of any included equipment and Stock Keeping Units (SKUs); and any other information that could be relevant to our review.
• Send us an email with a request for USAC to provide a cost allocation for your service. Remember to attach all of your documentation. This option is only available to service providers and manufacturers.
• You can also open a customer service case in EPC and attach your documentation. Include the words “Cost Allocation Request” in the title, choose “Eligible Services” from the Topic menu, and “Eligibility Questions” from the Subtopic menu. Add a short description of the service in the Description field and a note that you are seeking a determination on the cost allocation for the service.

We will review your request and contact you if we have any questions. Be sure to note if we should direct our questions to someone other than the person submitting the request.

After USAC has provided a cost allocation, we encourage the service provider to communicate the cost allocation percentage to their customers. Applicants who need information on a cost allocation percentage should open a customer service case in EPC or call the Client Service Bureau (CSB) at (888) 203-8100.

Q6. Do we have to file separate Funding Request Numbers (FRNs) to separate out C2 equipment by individual school or library branch?

A6. School districts and library systems do not have to separate out equipment for their child entities on separate C2 FRNs. However, they must keep their asset registers or inventories updated with the locations of equipment purchased with E-Rate funds.

Consortia must allocate the costs of C2 equipment among their budgeted entity members (school districts, library systems, independent schools, and independent libraries).

The FCC Form 471 continues to allow all applicants to designate the entities that are sharing products and services.

Q7. If a school district wants to install and fully pay for a second internet circuit for a school – say to use for traffic shaping and not for redundancy – can they still get E-Rate funding for their primary internet circuit?

A7. Yes. We suggest that you keep that service entirely separate (separate procurement, separate invoicing, and so on) from the service that is supported by E-Rate funding.

Q8. I would like to purchase services and equipment from a state master contract. What do I need to keep in mind?

A8. First, you should determine which FCC Form 470 you will cite on the FCC Form 471.

• Use the state’s FCC Form 470 on your FCC Form 471 if the state posted an FCC Form 470 that resulted in the state master contract.
• Use your own FCC Form 470 on your FCC Form 471 if you post an FCC Form 470 and are considering a state contract as a bid response.

There may be additional work if the state chose multiple service providers (a “multiple-award schedule”) as a result of its competitive bidding process.

• To use the state-filed FCC Form 470, you must conduct a mini-bid among the winners of the state’s competitive bidding process that are able to provide the service to you. See the Conducting a Mini-Bid Evaluation section on the State Master Contract guidance page on the USAC website.
• If you post your own FCC Form 470 and you want to consider a specific state master contract as a bid response, you must consider all other applicable state master contracts as well. However, you do not have to take this step if you receive bids from service providers who may have a state master contract with the state.

Refer to the State Master Contract guidance on the USAC website and the documents linked to that webpage for specific information.

Q9. Is BMIC eligible for school-owned equipment that is housed at a leased location that doesn’t serve students?

A9. It can be, if the equipment is eligible for E-Rate funding. You can designate the leased location of the equipment as a non-instructional facility (NIF), even if it is a specific section of a larger facility.

Q10. When are licenses considered Internal Connections and when are they considered BMIC?

A10. Licenses can fall under either the Internal Connections or the BMIC service type, depending on their function. Note that both the FCC Form 470 and the FCC Form 471 must have requested the license under the appropriate service type.

• An internal connections license is software that allows the eligible internal connections equipment to function and distribute high-speed broadband throughout school and library buildings. For example, although you may pay once to purchase a wireless access point (WAP), you may need to pay an annual fee to the manufacturer to allow you to use the WAP. The annual fee is the internal connections license (e.g., right-to-use software or client access license).
• A BMIC license includes Maintenance Support Service (software upgrades and patches, including bug fixes and security patches, as well as technical support). For example, after purchasing a switch, you may need to pay a separate annual fee to be able to download software updates and get technical support for the device.

Q11. Do I have to keep equipment that is purchased with E-Rate fund if it is broken? What if it cannot be repaired?

A11. First, check your warranty if you have one. Warranties of up to three years that are bundled in the price of the equipment (in other words, a separate price for the warranty cannot be determined) are eligible for E-Rate funding. If the equipment is still under warranty and cannot be fixed, you may be able to get a replacement from the manufacturer or supplier.

Second, check your BMIC requests. If the equipment can be repaired, the work may be covered under an approved BMIC funding request.

If the equipment is broken and cannot be repaired, you must keep the equipment for five years after the date it was installed before you can dispose of it. If you purchase a replacement and request E-Rate funding to cover the discount share of the cost, you should note the serial numbers of the old and new equipment in your asset register or inventory, and the pre-discount cost of the replacement will be charged against your C2 budget.

Q12. When is a firewall eligible as a Category One (C1) service?

A12. A basic firewall that is offered as part of a bundled internet access service is eligible as a C1 service. However, if the price of the firewall can be determined separately, a service offering with an added firewall would not be considered a bundled service. For example, if a service provider offers an internet service and presents a menu of service options that you can choose to add to your request, a firewall option (and other offered options) would not be eligible to be included as an eligible C1 service.

A basic firewall is eligible as a C2 service, either as Internal Connections or as part of a Managed Internal Broadband Service (MIBS).