Q7: If a library offers patrons e-mail service for a $25 per year administration fee, does this violate the no-resale rule?

A: A $25 administration fee would violate the no-resale rule if the fee is applied toward any services or facilities for which the applicant receives a USF discount. This would be true even if the $25 fee is applied only toward helping to support a non-discounted portion of a specific service or facility that might in part be eligible for a USF discount. If the fee covers the costs of other services or facilities for which no USF discounts are received (such as library staff time required to operate the e-mail system or provide assistance to users), then it would not violate the no-resale rule. Schools and libraries would need to maintain careful records so that they could demonstrate how the fee is being used.

Revised 8September97
Q8: Does the prohibition against resale also include cost recovery issues like administrative time in bandwidth sharing? i.e. if a library offers cooperative bandwidth sharing with local schools, can the library charge administration time to manage the shared bandwidth connection to the school?

A: Administrative time is not eligible to receive a USF discount and so charging for administration time does not violate the prohibition against resale.

Revised 8September97
Q47: Is charging a percentage of the costs of sharing our T1 costs considered "reselling services?"

A: Cost sharing within a consortium is not considered reselling. Cost sharing in situations that are less formal than a consortium are also allowed as long as the sharing is with other eligible schools or libraries. Charging a percentage of the costs of sharing a T1 might also be allowed as long as the costs to be recovered are administrative or other overhead costs that have not received a universal service discount. If the costs to be charged did receive a universal service fund discount and the cost sharing arrangement is not part of a consortium or not part of an informal cost sharing arrangement with other eligible schools and libraries, then it would be considered "reselling" and would make the services ineligible for USF discounts.

Q101: My school, in partnership with a local telephone company, sells residential and business Internet accounts. This relationship also provides my school with its connectivity. Can USF moneys be used by my district to enhance this system's services? If not, by providing such a service, would it hinder my school from receiving USF moneys for other internal school connectivity?

A: This sounds like an interesting and very beneficial arrangement for your school. Without knowing a lot more about the division of responsibilities and benefits between the school and local telephone company, we aren't going to be able to give you a good answer to your first question. You may want to modify your partnership with the local telephone company, so that there are explicit prices associated with the services you provide and receive. This may allow you to receive USF discounts on Internet access and make it clear that it is the local telephone company and not the school that is selling Internet access (if that is in fact the case). Even if you are not able to receive USF discounts on your Internet access, you should be able to receive USF discounts on other telecommunications services and internal connections as long as those facilities and services are not used to support the residential and business Internet accounts that are being sold.

Reference: MERIT's Universal Service Fund FAQ.
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