Two weeks ago, in our newsletter of December 5th, we began a discussion of the confusion that has arisen surrounding the FAQs in the FY 2017 Eligible Services List (DA 16-1023), USAC’s Schools and Libraries News Brief of December 2nd, and the additional questions these “clarifications” raised regarding the definition of a “campus” and the nature of the connections between various buildings and/or campuses.
The current rule is that connections between two campuses are Category 1, but connections within a single campus are Category 2. On the surface, this sounds fine. E-Rate Central, however, believes that additional advice is needed on dealing with what we used to consider internal connections (Priority 2), particularly within a single building, but which are now potentially considered Category 1.
Let’s review. It used to be pretty easy to determine how a given building or location was treated for E-rate purposes. The “rebuttable presumption,” and the basis for most decisions involving the difference between Priority 1 and Priority 2, was that a public right-of-way constituted a dividing line between two locations. That is no longer the case. Now that applicant-owned WANs are eligible for Category 1 support, the E-rate Modernization Order specificallyeliminated the presumptive public right-of-way distinction.
Instead, the FY 2017 ESL introduced a new concept of a “geographically contiguous” property. By way of contrast, the ESL referred to buildings “located miles apart” as being non-contiguous. That situation is pretty clear. But how about two sites one mile apart? Or 100 yards apart? Or does contiguous vs. non-contiguous depend on some other factor? By discarding a public right-of-way as a dividing line, the FCC threw out a reasonably well understood term. And substituted it with — what?
Perhaps realizing that more clarification was needed, USAC issued (presumably with FCC concurrence) its December 2nd News Brief. In our view, this has made the situation worse. At one point, the News Brief seems to suggest that, although a public right-of-way is no longer considered a dividing line, a “major thoroughfare” might be. USAC expands that distinction further when the News Brief indicates that the separation between non-contiguous grounds might be simply “a stream or a road.”
A “geographically contiguous” property, however, is only part of the definitional problem. The FCC also defines “campus” as one or more buildings of a single school on a geographically contiguous property. This means that if there are multiple schools on a geographically contiguous property, there are multiple campuses. To narrow the focus even more, it also means that multiple schools in a single building would be deemed to be separate campuses.
Consider, for example, a school district with a junior high school and a senior high school in the same building. If the state considers the JHS and the SHS to be separate schools, the building might have two campuses for E-rate connection purposes. We say “might” because the December 2nd News Brief goes on to explain that connections between separate schools in a single building would be eligible for Category 1 support — if the schools do not share any classrooms. If, on the other hand, the schools share classrooms, connections to these rooms would be Category 2 (and the shared costs must be allocated between the budgets of each school).
Ostensibly, the advantage of treating some connections in a multi-school building as Category 1 is that their costs would not be subject to the schools’ Category 2 budget limitations. In our view, such an advantage is far outweighed by the complexities. Unless the intra-building network has been specifically designed to partition the network into separate zones for each school, identifying the points of connection and the associated costs is likely to be a difficult exercise. Category 1 costs, even if easily identified, may be insignificant — perhaps a few jumper cables.
Another, but generally unrecognized, problem with treating intra-building connections as Category 1 is procurement. Such connections would normally be part of the applicant’s own network. As special construction, under the E-rate Modernization Order, these connections would be “self-provisioned.” To be eligible for E-rate, such connections would presumably have to be bid and assessed (in the unlikely event there were any bids) against a third-party leased carrier solution.
For Form 470 purposes, our advice to applicants seeking E-rate support for intra-building connections (or even connections between separate, but adjoining, buildings) is to file under both Category 1 and Category 2. Pending further guidance to the contrary, our recommendation for Form 471 purposes is to treat the entire network as Category 2. If separate schools are involved, allocating the Category 2 costs between the schools should be easier than trying to allocate the costs between Category 1 and Category 2.