Demystifying E-RATE

Overview Schools and Libraries Program –Discounts to eligible schools and libraries for Telecommunications Services, Internet Access, Internal Connections, and Basic Maintenance –Applicants can be schools, libraries, or consortia, but only eligible recipients of service can receive discounts –Annual Applicants must apply for discounts each year (471) –Funding cap each year is $2.25 billion 2

Overview Technology Plan Form 470 & RFP Form 471 Application Filing Window Receipt of recurring services July 1 – June 30 (12 months) Receipt of non-recurring services July 1 – September 30 (15 months) 3

Overview Demystifying E-Rate contains: –The application process for applicants –The Do’s and Don’ts for your application –Suggestions that may help applicants complete the application process successfully. 4

Overview Application process –Eligibility School / School District Library –Technology planning Written Approved –Form 470 / RFP –Competitive bidding 5

Overview Application process –Selecting Vendor –Calculating discounts –Form 471 / Funding requests –Application review / Funding commitments –Starting services / Form 486 –Invoicing USAC / Form 472 or Form 474 6

Overview Forms, Documents and Letters Technology plan –Form 470 Receipt Notification Letter (RNL) –Form 471 Receipt Acknowledgment Letter (RAL) Funding Commitment Decision Letter (FCDL) –Form 486 Form 486 Notification Letter (486NL) –Form 472 or Form 474 BEAR Notification Letter — Form 472 only Quarterly Disbursement Report 7

Overview Forms and Letters for Providers –Form 498 Notification by –Form 499-A Notification by or telephone –Receipt Acknowledgment Letter (RAL) –Funding Commitment Decision Letter (FCDL) –Form 473 –Form 486 Notification Letter (486NL) –Form 472 or Form 474 BEAR Notification Letter / Invoice Status Report Electronic notification 8

Eligibility Applicants Eligible Entities - Schools –Must meet the statutory definition of elementary or secondary school found in the No Child Left Behind Act of –Must be a non-profit institutional day or residential school, including a public charter school, that provides elementary or secondary education, as determined under state law. –Must not be operating as a for-profit business. –Must not have an endowment exceeding $50 million. 9

Eligibility Applicants Eligible Entities - Schools –Pre-kindergarten, Adult Education, Juvenile Justice students/facilities may be eligible. Must provide elementary or secondary education as determined under state law. USAC requests updated eligibility information from state departments of education every two years. 10

Eligibility Applicants Eligible Entities - Libraries –Must meet the statutory definition of library or library consortium in the Library Services and Technology Act (LSTA) of –Must be eligible for assistance from a state library administrative agency under LSTA. –Budget must be completely separate from that of any schools. –Must not be operating as for-profit businesses. 11

Eligibility Applicants Consortia –Eligible schools and/or libraries may form consortia with Other eligible schools and/or libraries Certain health care providers Public sector (governmental) entities –Only eligible entities can receive discounts 12

Eligible Services Both Priority 1 – funded first –Telecommunications Services Basic telephone service — wireline or wireless phone service (local, cellular/PCS, and/or long distance) Voice mail Transmission services (T-1, DSL) –Internet Access Basic conduit access to the Internet 13

Eligible Services Both Priority 2 –Internal Connections (switches, hubs, routers, wiring) –Basic Maintenance on Internal Connections Priority 1 funded first, then Priority 2 begins with neediest applicants (90% first, then 89%, 88%, etc.). Internal Connections funded in only two out of five funding years. 14

Eligibility Applicants Educational Purposes –Activities that occur on library or school property are presumed to be integral, immediate, and proximate to the education of students or the provision of library services to library patrons and therefore qualify as educational purposes. –Customary work activities of employees of a school or library are presumed to fall under the definition of education purposes. 15

Eligibility Applicants SCHOOLS: Administrative buildings School bus barns and garages Cafeteria offices Facilities associated with athletic activities LIBRARIES: Administrative buildings Bookmobile garages Interlibrary loan facilities Library technology centers 16 Examples of Non-instructional Facilities (NIFs) that can receive Priority 1 services

Eligibility Applicants Educational Purposes – Priority 1 –Wireless Telecommunications Services used offsite may be eligible. For example, School bus drivers delivering children to and from school Library staff providing library services on a library’s mobile library unit van Teachers or other school staff accompanying students on a field trip or sporting event. 17

Eligibility Applicants Educational Purposes – Priority 2 –Priority 2 services to NIFs are NOT eligible unless those internal connections are essential for the effective transport of information to an instructional building of a school or to a non-administrative building of a library. 18

Eligibility Service Providers Service Providers –Must file Form 498, Service Provider Information Form Request a Service Provider Identification Number (SPIN) Provide/update contact information. –Must file Form 473, Service Provider Annual Certification (SPAC) Form Required for invoices that reference that Funding Year to be paid. 19

Eligibility Service Providers Providers of Telecommunications Services must be authorized as Telecommunications Carriers –Must contribute to the Universal Service Fund, if applicable. –Must provide telecommunications services on a common carriage basis to be deemed a Telecommunications Carrier. 20

Eligibility Service Providers Telecommunications Carriers must –(1) allow the customer to transmit information of its own design and choosing, without change in the form or content of the information, and –(2) provide that capability for a fee directly to the public, or to such classes of users as to be effectively available to the public (i.e., hold itself out to serve indifferently all potential users). 21

Eligibility Service Provider Tips Keep contact information updated by filing revisions to Form 498 –USAC web site SPIN Search reflects information from Form 498 Block 11 –Designate individual program contacts if new or changed –Telecommunications Carriers – provide Form 499 Filer ID 22

Technology Planning Applicants Technology Plans Not required for basic telephone service Must be written before Form 470 filing Must be approved by a certified approver before the Form 486 is filed or discounted services start, whichever is earlier Must cover all 12 months (or all months of service) 23

Technology Planning Applicants Technology Plans Must cover five specific elements: Goals / Strategies for using technology Professional development Needs assessment Sufficient budget Evaluation process 24

Technology Planning Applicant Do’s and Don’ts DO write your technology plan before submitting your Form 470. DO make sure your technology plan covers and is approved for the entire period (usually 12 months) that discounted services will be delivered. DO make sure that your technology plan approver is certified by USAC. DO verify that your certified approval is dated before services begin and before your Form 486 is filed. DO verify that your plan contains all five required elements. 25

Technology Planning Applicant Tips PRINT A COPY of your certified approval for your records. Prepare a technology plan if any of your services fall outside of basic telephone service (such as Centrex, PBX, T-1). 26

Technology Planning Service Provider Tips Refer applicants with questions on technology planning to neutral, third-party sources of information such as state web sites. Avoid giving applicants direct advice on technology planning, especially targeted advice on services you provide. If you offer assistance, make sure it is neutral technical advice. 27

Competitive Bidding / 470 Applicants Filing Form 470 opens a competitive bidding process. Can also issue a Request for Proposals (RFP). Applicants are responsible for ensuring an open and fair process and selecting the most cost-effective provider of the desired services. 28

Competitive Bidding / 470 Applicants Request for Proposal (RFP) –Not required under FCC rules, but a good idea –Must comply with local and state procurement laws –Describes your project scope, location, other requirements in detail –Even if you have an RFP, you must describe the services you desire on your Form

Competitive Bidding / 470 Applicants Competition –Goal is to have as many bidders as possible –Promotes better service and lower prices Fair and open process –All bidders treated the same –No advance knowledge of RFP information –No secrets in the process –All bidders know what is required of them. 30

Competitive Bidding / 470 Applicants Form 470 Deadline –Absolute deadline is 28 days before the close of the Form 471 filing window. –However, if the applicant waits until that date to file a Form 470, the following must all occur on the last day of the window: Selecting a service provider Signing a contract Signing, dating and submitting Form

Competitive Bidding / 470 Applicants Selecting service providers Applicants must choose the most cost- effective solution to their Form 470 or RFP, with price as the primary factor Other factors can be considered, but price must be the most heavily weighted. Evaluation process should be carefully documented and that documentation must be maintained. 32

Competitive Bidding / 470 Service Providers Responding to Form 470 / RFP Download Forms 470 – two options for searching applicant requests –“Search Posted” Must choose Funding Year Can then select other criteria –“Download Reports” Must choose Funding Year One to five days ago or cumulative Delimited files 33

Competitive Bidding / 470 Applicant Do’s and Don’ts DO run an open and fair competitive bidding process. DO wait at least 28 days before selecting your service provider. DO certify your Form 470 promptly. DO indicate a multi-year contract or contract with extensions if appropriate. 34

Competitive Bidding / 470 Applicant Do’s and Don’ts DO list services sought in the correct category of service. If USAC moves your request to another category of service, your Form 470 must have featured that category of service. DO use price as the primary factor when selecting the most cost- effective solution 35

Competitive Bidding / 470 Applicant Tips Retain worksheets, bid evaluation criteria, winning AND LOSING bids Prepare a memo to file if you received only one bid or no bids File (and certify) online Reduces errors and speeds processing USAC will issue you a PIN after successful certification of your Form 470 if you do not already have one. 36

Competitive Bidding / 470 Applicant Tips Applicant Personal Identification Numbers (PINs) Will be issued by secure mailer to all authorized persons on FY2006 Forms 470, 471 and 486. Will be automatically issued to any new authorized persons filing FY2007 Forms 470, 471 and 486. After accepting Terms and Conditions, can be used immediately to certify online. 37

Competitive Bidding / 470 Applicant Do’s and Don’ts Service Providers must : not complete, sign, or file the Form 470 not prepare or be involved in the preparation of the RFP. remain neutral at all times during the applicant’s competitive bidding process. 38

Competitive Bidding / 470 Service Provider Do’s and Don’ts DO NOT complete, sign, or file the Form 470. DO NOT prepare or be involved in the preparation of the RFP. DO remain neutral at all times during the applicant’s competitive bidding process. 39

Competitive Bidding / 470 Service Provider Tips Service providers may contribute information on technical issues. Service providers may provide basic program information such as timelines and deadlines. 40

Competitive Bidding / 470 Applicants Form 470 Receipt Notification Letter (RNL) –Cover page of important reminders –Notifies applicant that Form 470 has been posted to the USAC web site –RNL generated before certification –Contains Allowable Vendor Selection / Contract Date 41

Calculating Discounts Applicants Discounts are calculated using –% of students eligible for National School Lunch Program (NSLP) –Urban or rural status of county (from web site) s/step05/urban-rural/default.aspx s/step05/urban-rural/default.aspx These two pieces of information are carried into the Discount Matrix 42

Calculating Discounts Applicants 43 Discount Matrix

Calculating Discounts Applicants Calculation for individual school –Percentage of students eligible for NSLP for individual school –Urban/Rural status –Find discount from Discount Matrix 44

Calculating Discounts Applicants Calculation for school district –Determine discount for each individual school in the school district –Calculate the weighted average of the discounts for all schools in the district Discounts of individual schools with more students will be weighted more heavily 45

Calculating Discounts Applicants Calculation for library outlet/branch –Percentage of students eligible for NSLP in the school district in which the library outlet/branch is located –Urban/Rural status –Find discount from Discount Matrix 46

Calculating Discounts Applicants Calculation for library system –Determine discount for each individual outlet/branch in the library system –Calculate the simple average of the discounts for all outlets/branches in the library system 47

Calculating Discounts Applicants Calculation for consortium –Determine the discount for each consortium member –Calculate the simple average of the discounts of all consortium members 48

Calculating Discounts Applicants Non-instructional facilities (NIFs) are eligible for their school district or library system discount –Online - calculate school district or library system discount, then enter that discount for each NIF (“non-matrix discount”) –School NIFs with classroom(s) — calculate as with individual schools using the student count in the classroom(s) 49

Calculating Discounts Applicants Schools with transient populations –Take a snapshot of the student population on a specific day –Report the NSLP eligibility of that student population RETAIN DETAILED DOCUMENTATION OF YOUR CALCULATION 50

Calculating Discounts Applicants Alternative Discount Mechanisms for determining student NSLP eligibility –Must be based on income — family units whose income is at or below 185% of the federal poverty guidelines (Income Eligibility Guidelines) –Must be collected from a survey or from existing sources –Must tie to individual students (with one exception, projections are not allowed) 51

Calculating Discounts Applicants Examples of Alternative Discount Mechanisms –Participation in food stamps, Supplementary Security Income, Federal public housing assistance, Low Income Home Energy Assistance Program –Existing sources that are based on federal poverty guidelines –Matching siblings 52

Funding Requests / 471 Applicants Form 471 Provides specific information on services, service providers selected, and contracts Provides discount calculation information Must be filed for each funding year Contains certifications of compliance Includes one or more funding requests 53

Funding Requests / 471 Applicants Form 471 Deadline Must be filed online or postmarked on or before the close of the Form 471 application filing window. Forms 471 filed after the close of the window will be considered after all Forms 471 filed in-window. Certifications for associated Forms 470 also must be filed online or postmarked before the close of the window. 54

Funding Requests / 471 Applicants Contracts Applicants and service providers must sign contracts for services that are not provided under tariff or under month-to-month arrangements Contracts can cover more than one year or contain extensions, but applicant must indicate these options in the Form

Funding Requests / 471 Applicants State Master Contracts If the state filed a Form 470, then the applicant can cite the state’s Form 470 on its Form 471 Funding Request. If the applicant filed a Form 470, the applicant can consider a state master contract as one of the bids, and can choose it as the winning bid if it is the most cost- effective solution. The state master contract can meet the FCC requirements for a signed contract. 56

Funding Requests / 471 Applicant Do’s and Don’ts WAIT AT LEAST 28 DAYS BEFORE Selecting a service provider Signing a contract Signing and dating the Form 471 Submitting the Form 471 These actions must occur in this order. Refer to 470 RNL for allowable date. Both applicants and service providers must sign and date all contracts. 57

Funding Requests / 471 Applicant Tips Remove ineligible costs from funding requests Document ineligible costs carefully 30% rule – if 30% or more of the dollar value of the request is for ineligible products and services, the entire request will be denied Work with your service provider(s) to create your Item 21 attachment(s) 58

Funding Requests / 471 Applicant Tips Enter recurring and non-recurring costs carefully in the cost summary of each Funding Request Recurring costs ALWAYS must be received by June 30 of the Funding Year. Non-recurring costs must be received by September 30 following the Funding Year, and this deadline can be extended under certain circumstances 59

Funding Requests / 471 Applicant Tips Don’t combine Priority 1 and Priority 2 requests on the same Form 471. Review of Priority 2 requests may hold up Priority 1 commitments. File (and certify) online Reduces errors and speeds processing USAC will issue you a PIN after successful certification of your Form 471 if you do not already have one. 60

Funding Requests / 471 Service Provider Do’s and Don’ts DO work with applicants to separate pricing for eligible services from pricing for ineligible services. DO sign and date any contracts with your applicants. DO comply with state contract law and state and local procurement laws. DO work with applicants to choose the method of payment — discounts (Form 474) or reimbursements (Form 472). 61

Funding Requests / 471 Service Provider Tips Offer to work with applicants to help create their Item 21 attachments and ask for a copy of the final submission. Provide correct SPINs, contact information, billing account numbers, and other information. Update contact information by filing a revised Form 498. File Form 473 now to avoid invoicing problems later. 62

Funding Requests / 471 Form 471 Receipt Acknowledgment Letter (RAL) –Cover page of important reminders –Provides confirmation of certain information entered from Form 471 Data entry errors may be corrected within three weeks by using the RAL (including Block 4 worksheets)*** Applicants can request funding reductions but not funding increases 63

Application Review Applicants Forms 471 are reviewed by Program Integrity Assurance (PIA) for compliance with program rules concerning areas such as: Competitive bidding process Contracts Discount calculation Sufficient budget Establishing Form 470 Technology plan Children’s Internet Protection Act 64

Application Review Applicant Tips Provide information to PIA promptly Work with your service provider to comply with information requests. Make sure your answers respond completely to the questions asked. Ask for more time to respond if you need it. However, if you ask for more time, your PIA representative will work on other applications and you may wait longer for a decision. 65

Application Review Service Provider Tips You can assist applicants in responding to requests for information, especially on technical issues, but not with questions on the competitive bidding process. Communicate through the applicant or copy the applicant on any responses to PIA. 66

Funding Commitments Both Funding Commitment Decision Letter (FCDL) –Cover page of important reminders –Reports status of individual funding requests: Funded Not funded As yet unfunded (Priority 2 requests) –Service provider does not receive this status Cancelled –May receive more than one FCDL 67

Funding Commitments Applicant Tips Check all entries on the FCDL carefully to make sure there are no data entry errors. Use the information on the FCDL to prepare your Form

Starting Services / 486 Applicants Form 486 Notifies USAC that services have started and invoices can be paid Certifies that Tech Plan (if required) meets program requirements. Certifies the status under Children’s Internet Protection Act (CIPA). Lead members of consortia may be required to collect CIPA certifications from consortium members on a separate form (Form 479). 69

Starting Services / 486 Applicants Children’s Internet Protection Act Applicants must certify compliance with requirements CIPA does not apply to Telecommuni- cations Services, but applicant must still certify that it receives only those services 70

Starting Services / 486 Applicants Children’s Internet Protection Act Applicants must certify compliance with requirements: Internet safety policy Public notice or meeting Technology protection measure (filter) CIPA does not apply to Telecommuni- cations Services, but applicant must still certify that it receives only those services 71

Starting Services / 486 Applicants Form 486 Deadline Form 486 must be filed online or postmarked no later than 120 days after the Service Start Date OR 120 days after the date of the FCDL whichever is later. If the Form 486 is late, the date 120 days before the Form 486 online filing or postmark date will become the start date for discounted services and funding may be reduced. 72

Starting Services / 486 Form 486 Service Start Date USAC may adjust the Service Start Date in order to comply with program rules: Form 486 filed after the deadline Technology plan approval issues CIPA compliance issues Conflict with Form 470 allowable contract date The adjusted date is the earliest date that discounted services may be provided. Invoices for services provided before that date will not be paid. 73

Starting Services / 486 Form 486 Service Start Date Cannot be before July 1 of the funding year. Can be as early as the date that the service provider ships the product to the applicant — or earlier, depending on the arrangements between the applicant and the service provider and/or the terms of the contract. 74

Starting Services / 486 Form 486 Notification Letter (486NL) –Cover page of important reminders –Provides confirmation that a Form 486 has been successfully data entered. –Reports Service Start Date or Adjusted Service Start Date –USAC will accept invoices from applicants (Form 472) or service providers (Form 474) once the Form 486 is certified. 75

Starting Services / 486 Applicant Tips VERIFY THE SERVICE START DATE YOU REPORT. Also verify any adjustment on the 486NL. Work with your service provider to file your Form 486 so that neither you nor the service provider is disadvantaged. Initiate an Invoice Check if you want to monitor the invoices (Forms 474) your service provider sends to USAC. 76

Starting Services / 486 Service Provider Tips VERIFY THE (ADJUSTED) SERVICE START DATE ON THE 486NL. Invoices dated before that date will not be paid. Invoices for services provided before that date will not be paid. Work with your applicant to file your Form 486 so that neither you nor the applicant is disadvantaged. 77

Starting Services Service Providers Form 473 – Service Provider Annual Certification (SPAC) Form Service providers are required to file on an annual basis. USAC will only pay invoices for a funding year if a SPAC is on file for that year. SPACs are required for both BEARs and SPIs. SPIN Search Tool lists funding years for which a SPAC is on file. 78

Starting Services Obligation to Pay Non-discount Share Applicants are required to pay their share of the cost (the “non-discount” portion or share) — this share cannot be donated, forgiven or ignored. Service providers cannot waive or credit the applicant’s share. Offers to reduce price must be incorporated into the “total pre-discount amount.” Service provider must bill the applicant for non-discount share of services. 79

Starting Services Service delivery deadlines Recurring Services (June 30) Non-recurring Services (September 30) Deadline automatically extended to September 30 of the following year for FCDLs, service substitution approvals, and SPIN change approvals dated on or after March 1 of the funding year. Applicants can also request extensions for specific reasons involving difficulties with delivery of services by service provider. 80

Invoicing / 472 or 474 BEAR (Billed Entity Applicant Reimbursement) Form 472 is filed by the applicant and certified by the service provider after the applicant receives services and pays for the services in full. SPI (Service Provider Invoice) Form 474 is filed by the service provider after providing services and billing the applicant for its non-discount share. 81

Invoicing / 472 or 474 Applicant Do’s and Don’ts Form 472 (BEAR Form) DO verify that your service provider has signed the last page of the form before you submit it. DO check your calculations. Make sure you have service provider bills that agree with your reimbursement request. Form 474 (SPI Form) DO make sure you have paid your non- discount share. 82

Invoicing / 472 or 474 Service Provider Do’s and Don’ts Form 474 (SPI Form) DO check your calculations. DO NOT use Form 474 to request a service substitution. Form 472 (BEAR Form) DO reimburse your applicant within 20 days of receiving payment from USAC. 83

Invoicing / 472 or 474 Both Invoicing deadlines Form 472 or 474 must be filed online or postmarked no later than 120 days after the last date to receive service OR 120 days after the date of the 486 NL whichever is later. If the invoice is late, payment will be denied. Extensions of invoicing deadlines may be requested under certain conditions. 84

Invoicing / 472 or 474 BEAR Notification Letter –Cover page of important reminders –Provides confirmation that a Form 472 has been successfully data entered. –Indicates what amounts are being paid and reasons for reductions or denials. Invoice Status Report / E-notification –Indicates what amounts are being paid and reasons for reductions or denials. –Sent only to service providers. 85

Invoicing / 472 or 474 Quarterly Disbursement Report –Sent only to applicants Authorized person Billed Entity (BEN) address. –Contains all invoice (Form 472 and Form 474) payment authorization amounts for the Billed Entity for all funding years approved during that quarter. 86

Appeals USAC decisions can be appealed to USAC or to the FCC. Generally, appeal first to USAC. Can appeal to the FCC if USAC does not grant the appeal. Can be filed electronically or on paper. Must be filed electronically or postmarked within 60 days of the USAC decision. Requests for waivers of rules must be filed with the FCC. 87

General Tips If you submit something to USAC: Check your work Sign and date it (online or on paper) Submit it by the deadline Keep a copy and proof of submission If USAC sends something to you: Read it Take all appropriate actions Save it 88

Assistance Schools and Libraries / USAC web site Client Service Bureau Use the “Submit a Question” link on the web site Fax toll-free at Telephone toll-free at Form instructions 89

Questions? 90