Update to Bundled VOIP Handset Eligibility
December 12, 2012
In Funding Years 2011 and 2012, several hosted VOIP providers began offering free handsets with their Hosted VOIP Service to schools and libraries, claiming the entire package was 100% E-rate eligible. Their rationale was based on a broad interpretation of a footnote that was included with the FCC’s Gift Rules Clarification Order (DA 10-2355 released December 10, 2010) which allowed schools and libraries to take advantage of free cellular phone offers without violating the new E-rate gift rules.
This eligibility claim was in stark contrast to the Eligible Services List which states that no end user equipment is E-rate eligible. While USAC held all funding requests related to the VOIP services offered by these vendors, the vendors asked the FCC to clarify that such free handsets were eligible. In the meantime, numerous other vendors -- including many national telecommunications providers -- began offering similar bundles to schools and libraries.
Several organizations filed comments with the FCC this summer requesting that the agency quickly clarify the rules pertaining to hosted VOIP. The FCC has since warned applicants that sign agreements containing such end-user devices (whereby there is no added cost for the phone) to ‘do so at your own risk.’
This morning, the major vendor that first offered the free handset bundled VOIP service sent a blast e-mail stating that after meeting with the FCC on several occasions, they have decided NOT to continue to market the free handsets hosted VOIP bundle, but instead to offer schools and libraries the option to rent the handsets (of which, of course, the rental cost would not be E-rate eligible). I expect that the other vendors marketing similar free handset bundles may also cease these service offerings. While the FCC has not yet issued their decision with regard to these free-phone bundles, this vendor's e-mail may give us an insight into which way the FCC is leaning.
My advice to Pennsylvania schools and libraries is that they should not sign Hosted VOIP Service contracts that contain free handsets if they cannot afford to pay for the handsets without E-rate funding. If applicants want to sign such contracts that contain free phones in hopes the FCC will issue a favorable opinion, please be aware that such a funding request may delay all of your funding requests for FY 2013 from being reviewed/funded until the FCC releases their decision. Also, you'll want to budget for the full cost of the phones (that are being marketed as free) in the event the FCC deems them ineligible.
If you have any questions pertaining to this issue, please don't hesitate to contact me at jtschell@comcast.net.
-- Julie
Julie Tritt Schell
PA E-rate Coordinator
717-730-7133 - o
717-730-9060 - f
jtschell@comcast.net
www.e-ratepa.org
Penn*link
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