Confidential and proprietary information of Ingram Micro Inc. — Do not distribute or duplicate without Ingram Micro's express written permission _ 1 E-Rate Update John Halpin VP Strategic Programs Center for Digital Education November 14, 2012

Confidential and proprietary information of Ingram Micro Inc. — Do not distribute or duplicate without Ingram Micro's express written permission _ 2 E-Rate Program Overview ■ Largest funding source for technology in schools ■ $2.3 billion available each year – growing with inflation ■ Open to all K-12 schools (public & private non-profit) and to public libraries ■ Provides discounts of percent on: – Telecommunications Services – Internet Services – Internal Connections (Equipment required for network connectivity) – Maintenance of network infrastructure

Confidential and proprietary information of Ingram Micro Inc. — Do not distribute or duplicate without Ingram Micro's express written permission _ 3 Who Runs E-Rate ■ Program administered by the Universal Service Administrative Company (USAC) – USAC collects funds from carriers and disburses E-Rate funds through the SLD ■ Schools and Libraries Division (SLD) of USAC reviews applications and approves funding – Headquartered in Washington, DC; – Contractors in Lawrence, KS, & Whippany, NJ ■ Policies and funding level determined by Federal Communications Commission (FCC)

Confidential and proprietary information of Ingram Micro Inc. — Do not distribute or duplicate without Ingram Micro's express written permission _ 4 Who Can Apply? ■ Individual schools ■ School Districts ■ Library Systems ■ Consortia ■ Both Public and Private institutions are eligible

Confidential and proprietary information of Ingram Micro Inc. — Do not distribute or duplicate without Ingram Micro's express written permission _ 5 Discount Calculations ■ Based on NSLP (federal school lunch) eligibility as of Oct 1 ■ Calculated for each school site ■ Use weighted average for District services % NSLP EligibleUrban Rural Less than 1%20%25% 1% - 19%40%50% 20% - 34%50%60% 35% - 49%60%70% 50% - 74%80% 75% - 100%90% E-Rate Discount

Confidential and proprietary information of Ingram Micro Inc. — Do not distribute or duplicate without Ingram Micro's express written permission _ 6 Priority 1 - True Services ■ Dial Tone connection services ■ Internet connection services ■ Web hosting, VoIP, Video over IP, etc. as a service ■ Desktop connectivity to the internet as a service (CENTREX-like)

Confidential and proprietary information of Ingram Micro Inc. — Do not distribute or duplicate without Ingram Micro's express written permission _ 7 On Premise Equipment ■ Service provider-owned and maintained ■ Located on school property ■ Eligible when required for delivery of eligible telecomm or Internet services ■ Technical requirements – Single point of demarcation – Independent function of local network

Confidential and proprietary information of Ingram Micro Inc. — Do not distribute or duplicate without Ingram Micro's express written permission _ 8 ■ School infrastructure purchases ■ Hardware/software components necessary to deliver voice, video, Internet and ■ Must be on school property ■ Limited use at admin buildings Priority 2 - Internal Connections

Confidential and proprietary information of Ingram Micro Inc. — Do not distribute or duplicate without Ingram Micro's express written permission _ 9 Internal Connections Examples ■ Copper or fiber wiring – Data, voice, and video ■ Telephony infrastructure – PBX, VoIP, voic ■ Network electronics – Routers, switches, wireless LAN, firewalls ■ Certain servers – DNS, DHCP, , web ■ Virtualization Software

Confidential and proprietary information of Ingram Micro Inc. — Do not distribute or duplicate without Ingram Micro's express written permission _ 10 Applicable Goods and Services Eligible – Installation & configuration – Equipment racks – Miscellaneous wiring components – Uninterruptible power supply – Added in 2010  Virtualization software  School Spots for public use  Black fiber services Ineligible −End-user devices* −Electrical wiring, HVAC, asbestos… −Network management and monitoring −Internet and SPAM filtering −Non-hub, non-instructional sites

Confidential and proprietary information of Ingram Micro Inc. — Do not distribute or duplicate without Ingram Micro's express written permission _ 11 ■ “Break-fix” support – Applies to Internal Connections – July 1 to June 30 (of funding year) ■ Warranty & Service agreements – Specify quantities, makes & models – Clearly delineate ineligible services Maintenance and Services

Confidential and proprietary information of Ingram Micro Inc. — Do not distribute or duplicate without Ingram Micro's express written permission _ 12 Equipment & Services Presence Flow of information to classrooms Service to school buildings Telephone Data lines Internet access Purchase or Maintain Wiring Network hardware Software Not Eligible End-user Devices Non-critical infrastructure Management On-premise Equipment

Confidential and proprietary information of Ingram Micro Inc. — Do not distribute or duplicate without Ingram Micro's express written permission _ 13 Internal Connections Stats ■ Traditionally - $ billion in potential internal connections business each year (impacted in 2012) ■ Funding limitations – 2 in 5 rule – Minimum 3 year rule – 5 year minimum to scrap or recycle (new in 2010)

Confidential and proprietary information of Ingram Micro Inc. — Do not distribute or duplicate without Ingram Micro's express written permission _ 14 Annual E-Rate Program Cycle E-Rate Funding Annual Process Calendar ProcessesJulAugSepOctNovDecJanFebMarAprMayJunJulAugSepOct Planning Assess District Needs Engagement Form 470 Process Execution Form 471 Process Patience Waiting for Funding Implementation Install Equipment

Confidential and proprietary information of Ingram Micro Inc. — Do not distribute or duplicate without Ingram Micro's express written permission _ 15 Beginning in 2011 funding year Bumped funding 3% to reflect inflation since 1996 ($2.3B) Fund will grow by inflation rate year over year Places schools under federal gifting guidelines (GSA) Streamlines application process for Priority 1 services FCC E-Rate Changes

Confidential and proprietary information of Ingram Micro Inc. — Do not distribute or duplicate without Ingram Micro's express written permission _ 16 Details of Recent E-Rate Updates Gift giving  No single gift should exceed more than $20 per event/individual Virtualization software eligibility  Refers to virtualized servers that provide an eligible server function  Servers must serve as a conduit for information to individual classrooms rather than the source of content Maintenance costs  An inside wire maintenance plan for telephone service components is eligible as charges are minimal  Maintenance charges for non-telecommunication components and content are not eligible Web hosting is eligible

Confidential and proprietary information of Ingram Micro Inc. — Do not distribute or duplicate without Ingram Micro's express written permission _ 17 Gifting Rules – From GSA Handbook Gifts may be given/accepted if.. Gifts of $20 or less Gifts based on a personal relationship Discounts and similar benefits Awards and honorary degrees Gifts based on outside business or employment relationships Gifts in connection with political activities permitted by the Hatch Act Widely attended gatherings and other events Social invitations from persons other than prohibited sources

Confidential and proprietary information of Ingram Micro Inc. — Do not distribute or duplicate without Ingram Micro's express written permission _ 18 Gifting Rules – From GSA Handbook Rule 1 explanation ($20 rule) An employee may accept an unsolicited gift of $20 or less per occasion But not more than $50 in a calendar year from one person If the market value of a gift on any single occasion exceeds $20, the employee may not pay the excess value over $20 in order to accept the gift If the aggregate value of tangible items offered on a single occasion exceeds $20, the employee may decline any distinct and separate item in order to accept those items aggregating $20 or less. * Additional information on Standards of Ethical Conduct may be found at 5 U.S.C or refer to agency ethics training.

Confidential and proprietary information of Ingram Micro Inc. — Do not distribute or duplicate without Ingram Micro's express written permission _ 19 FY 2012 E-Rate Actual Numbers ■ Applicant Funding Totals in FY2012 – 46,838 applications – $5.08 billion ■ Only 2 nd time in the program’s 15 year history – total demand exceeded $5 billion – represents an 11% increase over the demand estimate for Funding Year 2011 ■ The first year that there was not enough funds to satisfy even the Priority 1 demand ■ FCC infused $1.05B of unused dollars for FY2012

Confidential and proprietary information of Ingram Micro Inc. — Do not distribute or duplicate without Ingram Micro's express written permission _ 20 SECA Petition ■ State E-Rate Coordinators Alliance (SECA) ■ Filed in July, Still pending ■ At issue – Footnote 25 – For example, many cell phones are free or available to the general public at a discounted price with the purchase of a two-year service contract. Schools and libraries are free to take advantage of these deals, without cost allocation, but cannot accept other equipment with service arrangements that are not otherwise available to some segment of the public or class of users. Therefore, a service provider may not offer free iPads to a school with the purchase of telecommunications or Internet access services eligible under E-rate, if such an arrangement is not currently available to the public or a designated class of subscribers. – Impact on money available for Priority 2

Confidential and proprietary information of Ingram Micro Inc. — Do not distribute or duplicate without Ingram Micro's express written permission _ 21 ■ Form 471 filing window should open early January and close Mid March (Should be new reality going forward) ■ Don’t expect ruling on bundled Priority 1 services (Footnote 25) in time to impact FY 2013 ■ Any additional money for FY 2013 and beyond? – Funds for Learning, SECA, et. al. – Want FCC to tap the Connect America Fund – Education entities pushing for more federal dollars – FCC’s National Broadband Plan might help in the future E-Rate FY 2013 Status

Confidential and proprietary information of Ingram Micro Inc. — Do not distribute or duplicate without Ingram Micro's express written permission _ 22 Questions John Halpin VP Strategic Programs Center for Digital Education

Confidential and proprietary information of Ingram Micro Inc. — Do not distribute or duplicate without Ingram Micro's express written permission _ 23