Introduction
The E-rate News for the Week, prepared by E-Rate Central, is sponsored by the Council of Chief State School Officers("CCSSO") and made possible by a grant from the AT&T Foundation. Official SLD news is in the "What's New!" section of the SLD's Web site . Additional information is on the State Education Telecommunications Alliance's ("SETA") Web site.
Priority One vs. Priority Two: Seven Key Conditions
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With limited funding available for Priority Two (internal connection) services, SLD reviewers are looking hard at requests for funding of on-premise equipment that applicants are seeking to classify as Priority One. In a key appeal decision in 1999, known as the "Tennessee Decision", the FCC ruled that, under prescribed circumstances, certain on-premise equipment such as routers may be considered an integral part of Internet access (Priority One)
In recent years, the criteria for making a distinction between Priority One and Priority Two services has become clearer and the SLD has begun asking ever more detailed questions. The overriding criteria for Priority One status is that the equipment be owned and used by the vendor in the provision of an Internet or telecommunications service, and that it not be provided for the applicant's own internal use or ultimate ownership.
More specifically, the following seven conditions must be met (see WAN Reference):
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| (1) |
The equipment "will be provided by the same service provider that provides the service, and ownership will not transfer to the school or library in the future." |
| (2) |
"The relevant contract or lease does not include an option to purchase the equipment." |
| (3) |
"The school or library has no contractual right to exclusive use of the equipment."
Note: Applicants need to be particularly careful in answering SLD questions on this condition. The issue is a bit tricky. Although an applicant, in fact, may be the only party using the equipment, the question is whether the supplier is contractually prohibited from sharing it with another customer. If so, the SLD may consider that the supplier has effectively transferred the equipment to the school or library. For additional information on this condition, see Question 6 in the SLD's FAQ on eligible products and services . |
| (4) |
"Upfront, non-recurring charges are less than 67% of total charges (recurring plus non-recurring)." |
| (5) |
"The equipment will not be used by the school or library for any purpose other than the receipt of eligible Telecommunications Services or Internet Access." |
| (6) |
"The Local Area Network for data communications of the school or library is functional without dependence on the equipment." (Alternatively, if the equipment is needed for internal data communications, the equipment is clearly serving an internal connection function.) |
| (7) |
"Responsibility of maintaining the equipment rests with the service provider." |
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