E-rate Update - SLC Clarifies Wide Area Networks
Message Posted March 4, 1998
SLC RELEASES FACT SHEET ON WIDE AREA NETWORKS Today the Schools and Libraries Corporation released a fact sheet on wide area networks, providing clarification on several issues including wireless services, internal connections, and networks leased from non-common carriers (such as cable companies). In general, we believe this document states that wide area networks are eligible for E-rate discounts from non-common carriers (such as cable companies) provided that: 1) the network is leased, 2) the non-common carrier is the most cost effective means of Internet access, AND 3) the network cannot be used for other purposes. (If it is used for other purposes, then the school or library will have to use cost allocation methodologies to separate the various costs. Cost allocation guidelines are due to be released shortly.) Such services should be listed as Internet access. Please review this document carefully, as it answers numerous pending questions.
-- Julie
--------------------------------------------------------------------------------
Definition of Wide Area Networks
A wide area network is a voice or data network that provides connections from one or more computers within an eligible school or library to one or more computers or networks that are external to such eligible school or library. Excluded from this definition is a voice or data network that provides connections between or among instructional buildings of a single school campus or between or among non-administrative buildings of a singlelibrary branch [47 C.F.R. ß 54.506].
Discounts on Wide Area Networks
Discounts will be available on wide area networks only if the services/components can be classified as an eligible service. [Para. 193 of Fourth Order on Reconsideration].
The services or components of a wide area network may be leased telephone lines because such an arrangement constitutes a telecommunications service. [Para. 193, note 585 of Fourth Order on Reconsideration]. Similarly, services leased from a wireless telecommunications carrier to provide a wide area network will be eligible for discounts.
Telecommunications services provided over a leased wide area network may be provided only by telecommunications carriers. Telecommunications carriers may be certificated to operate in a particular state, which may be determined by consulting your state regulatory commission or agency.
The term "lease" is used to refer to contractual arrangements whereby the ownership of the facility remains with the service provider. No ownership attributes will be undertaken by the lessee. The lessee is essentially the "renter" of the service or facility. In conventional telecommunications terms, the lessee is the "ratepayer" of services. Whether or not a contractual arrangement constitutes a lease will be based on a review of commercially reasonable terms and conditions. SLC will not commit to discounts on a contract that is titled or described as a lease when in effect the terms of the agreement constitute a purchase (for example, a lease which includes up front payment of capital costs will not be eligible for discounts).
A wide area network leased from service providers in addition to common carriers that is used to provide access to the Internet may be eligible for discounts, to the extent that the leasing of the wide area networks is the most cost effective means of Internet access. Under this scenario, the key consideration is that the facilities must be leased from a service provider, rather than purchased by the customer. [Para. 193 of Fourth Order on Reconsideration]. The price of Internet access which includes the leased wide area network service must be shown to be the most cost-effective means of obtaining the Internet access at the bandwidth connection provided over the network.
Since wide area networks do not constitute internal connections, the cost of purchasing components/service used for wide area networks will not be eligible for discounts. [Para. 193 of Fourth Order on Reconsideration]. If purchased components of eligible internal connections are also used to serve a wide area network, then the price of the components that may be purchased by an eligible entity to provide the internal connections may be allocated between internal connections and wide area network. The stand-alone price of the facilities/connections used to provide internal connections may be eligible for discounts, as computed in accordance with the SLC's cost allocation guidelines and procedures.
Examples of Discounts on Wide Area Networks
Assume that the computers of a school district and library system are connected and share information among the various buildings, and use the network for voice telecommunications services, data transmission and for Internet access. The connections between the buildings are leased from a telecommunications provider. The price of the connections is eligible for discounts as a telecommunications service.
Assume that the computers of a school district and library system are connected and share access to the Internet. The connections between buildings are telephone lines or wireless services leased from a telecommunications carrier. The cost of leasing the telephone lines is eligible for discounts as a telecommunications service.
Assume that the computers of a school district and library system are connected among the various buildings in order to share access to the Internet. The connections between buildings are leased from a non-telecommunications provider such as a cable company, and are the most cost-effective means of accessing the Internet. The cost of leasing the connections is eligible for discounts as Internet access.
Assume that the computers of a school district and library system are onnected and share information among the various buildings and use the network for voice telecommunications and for the transmission of data. The connections between buildings were purchased and installed by the school district and library system. These connections are not eligible for discounts because the connections are purchased and installed by the school district and library system.
Assume that the computers of a school district and library system are connected and share information among the various buildings, and use the network for voice telecommunications, transmission of data, and Internet access. The connections between buildings are leased from a non-telecommunications service provider. Assume further that this method of accessing the Internet is the most cost effective. The price of the leased lines allocated to the cost of obtaining Internet access is eligible for discounts. This price must be computed in accordance with SLC's cost allocation guidelines. The remaining price attributable to the leased connections for voice telecommunications and data telecommunications is not eligible for discounts.
Assume that the computers of a school district and library system are connected and share information among the various buildings, and use the network for voice telecommunications, transmission of data, and Internet access. Assume further that the school district and library system has purchased and installed routers and hubs and network servers to operate both local area networks and a wide area network. The stand-alone price of the eligible internal connections used for the local area network are eligible for discounts, and the price associated with operating the wide area network must be deducted to establish the appropriate prediscount price for the eligible internal connections. The price must be computed in accordance with SLC's cost allocation guidelines.
Definition of Internal Connections
A service is eligible for support as a component of an institution's internal connections if such service is necessary to transport information within one or more instructional buildings of a single school campus or within one or more non-administrative buildings that comprise a single library branch. Discounts are not available for internal connections in non-instructional buildings of a school or school district, or in administrative buildings of a library, to the extent that a library system has separate administrative buildings, 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. Internal connections do not include connections that extend beyond a single school campus or single library branch. There is a rebuttable presumption that a connection does not constitute an internal connection if it crosses a public right-of-way [47 C.F.R. ß 54.500(I)].
A single school campus may comprise multiple instructional buildings located on one parcel of property that does not cross a public right of way. A single library branch may comprise multiple non-administrative buildings located on one parcel of property that does not cross a public right of way. The multiple instructional buildings may comprise one or more schools, provided that the schools are located on one parcel of property that does not cross a public right of way. A single school campus also comprises one single building in which more than one school is located. For example, a middle school and high school located in one building would constitute a single school campus, and the connections inside the building would be classified as internal connections.
Discounts on Internal Connections
Discounts will be available on internal connections which are purchased by an eligible entity or leased by an eligible entity from a service provider. Any service provider -- both telecommunications and non-telecommunications providers -- may provide internal connections and be reimbursed from the Schools and Libraries Universal Service Program for the cost of the discounts.
| 
Back to 1998 Archives Main