INFORMATION RENAISSANCE
FAQ





1. Eligible Applicants
2. Services Covered
3. Discounts and Funding
4. Application Procedures
5. Pennsylvania Issues
6. General Questions

The answers to the questions given below represent the current best understanding of the evolving Universal Service discount program on the part of Information Renaissance, the Pennsylvania Department of Education and the Pennsylvania Public Utility Commission. These answers are subject to change based upon subsequent actions by the Federal Communications Commission or the Schools and Libraries Corporation.

1. Eligible Applicants

1.1- What organizations are eligible for discounts under the Universal Service program?
According to the FCC's FAQs (DA-97-1374), to be eligible for universal service discounts, a school must meet the statutory definition of an elementary or secondary school found in the Elementary and Secondary Education Act of 1965, must not operate as a for-profit business, and must not have an endowment exceeding $50 million. Both public and non-public elementary and secondary schools that meet these criteria will be eligible to receive discounts on eligible services. Examples of eligible schools include: The Pennsylvania PUC has also determined that for purposes of the Universal Service Fund, Intermediate Units are considered eligible for discounts.
Examples of ineligible schools: Many libraries are also eligible for discounts. For a discussion of eligible libraries, refer to 1.5, below.
References: Paragraphs 552, 554, 558, 560, note 1087 of FCC 97-157; FCC DA-97-1374.

1.2- Do adult literacy agencies qualify for discounts?
No. Eligible entities are libraries and K-12 schools.
Reference: Paragraph 552 of FCC 97-157.

1.3- Can schools and libraries form consortia to seek Universal Service discounts as a group?
Yes. The FCC encourages the formation of consortia of eligible entities which can negotiate lower base rates from which the discounts will be calculated. Consortia can also be a very effective means of sharing support services and regional infrastructure.
Reference: Paragraph 564 of FCC 97-157.

1.4- If a school or library enters into a partnership with a community center to support the educational objectives of that school or library, will the community center be eligible for discounted services?
No. The availability of Universal Service discounts is limited to schools and libraries.

1.5- What special libraries, such as libraries at state institutions or county law libraries, are eligible?
It is our interpretation based on the FCC's Order that special libraries are not eligible to receive universal service discounts, to the extent that the definition of "special library" does not meet the following criteria. The eligibility criteria require that the organization be a library or library consortium that is eligible for assistance from a State library administrative agency under the Library Services and Technology Act. An additional requirement for academic libraries is that they be funded independent of the funding of any institution of higher education. "Independent" means that the budget of the library is completely separate from any institution of higher institution.
The FCC's definition of library does include research libraries, which means a library that makes publicly available library services and materials suitable for scholarly research and not otherwise available to the public; and is not an integral part of an institution of higher education. "Private Libraries" are eligible to the extent that state in which the library is located determines that the library should be considered a library for purposes of this definition.
Reference: Paragraphs 557-560 of FCC 97-157; 47 CFR Section 54.500(c).

2. Services Covered

2.1- What services are covered by the discount program?
Universal Service discounts apply to all commercially available telecommunications services, including voice and data service, Internet access, internal wiring and associated infrastructure.
Examples of Eligible Services: Examples of Eligible Internal Connections
References: Paragraphs 431-434, 436, 441, 446, 447, 453, 457, 459, 463, 589, note 1145 of FCC 97-157.

2.2- What services are not covered by the Universal Service discount program?
Examples of Ineligible Services Examples of Ineligible Internal Connections References: Paragraphs 441, 444, 445 of FCC 97-157.

2.3- Is any software covered by the discount program?
Only software required for the operation of network servers is covered by the program. It is our interpretation that Windows NT, Novell, and Lantastic are examples of eligible networking software.
References: Paragraphs 459-461 of FCC 97-157.

2.4- What about content? Does the program cover the provision of any online resources?
Generally, no content material is covered by the discount program. The FCC provides for very narrow exceptions to this rule in paragraph 447 of its May 7, 1997 Order. This paragraph provides for exceptions for content only when the content offering is provided by a telecommunications carrier and the content it is bundled with Internet access and a separate rate cannot be discerned and the bundled rate is proven to be the most economical rate.
References: Paragraph 447 of FCC 97-157.

2.5- Does the E-Rate apply to "Communication Nerve Centers" which continuously monitor their clients' networks and trouble-shoot problems as they arise?
No, the discounts do not apply to commercial nerve centers, only to schools and libraries. It is our interpretation that even for schools and libraries, no value-added services will be covered, including network management functions (also may be called a nerve center).

2.6- Will it be necessary to put out for bid local services we are now receiving for free?
To our knowledge, this specific issue has not been addressed by the FCC. It is our interpretation that the way in which the program is administered will not result in a cash payment to the customer. The discounts are to be paid from the Fund Administrator to the carrier. If a customer is obtaining service for free, the "pre-discount" price is zero. There is no discount to apply to a pre-discount price of zero. Under those circumstances, it would not make sense to bid out the services. If, however, the customer wants to procure additional services which are eligible for discounts and which would have a pre-discount price greater than zero, then it may make sense to bid out all of the telecommunications services, including the services currently being provided for free, to determine which of the responses to the bids is most cost effective. The customer can always choose to forego contracting for the provision of services currently being received for free, if the responses to the bids do not yield a more cost effective approach.

3. Discounts and Funding

3.1- What level of discounts is available?
Discounts range from 20% to 90%. The following table describes applicable discounts on the basis of eligibility for the national school lunch program:

SCHOOLS AND LIBRARIES DISCOUNT MATRIX DISCOUNT LEVEL
HOW DISADVANTAGED? urban
discount
(%)		 rural
discount
(%)
% of students eligible
for national
school lunch program		 (estimated %
of US schools
in category)
< 1 3 20 25
1-19 31 40 50
20-34 19 50 60
35-49 15 60 70
50-74 16 80 80
75-100 16 90 90

According to the FCC's FAQs (FCC DA-97-1374 released on July 2, 1997), a school's level of economic disadvantage will be defined by the percentage of its students eligible for either a free or reduced price lunch under the national school lunch program. That is, a school will determine percentage of its students whose family income falls within 185% of the poverty line.
It is important to note that schools need not actually participate in the national school lunch program in order to compute their level of economic disadvantage for purposes of applying for universal service discounts. The FCC's criteria focuses on the percentage of students eligible, not actually enrolled, in the school lunch program. A school which either does not participate in the national school lunch program or which experiences a problem with undercounting eligible students may use federally approved alternative mechanisms to determine the percentage of their students eligible for the school lunch program. A description of federally approved alternative mechanisms can be found at 34 C.F.R. 200.28(a)(2)(I)(B). For example, a school may choose to conduct a survey or use eligibility for tuition scholarship program to determine the percentage of its students eligible for the national school lunch program for purposes of applying universal service discounts.
Reference: Paragraph 520 of FCC 97-157; FAQ No. 11 of FCC DA 97-1374.

3.2- How is the discount level determined for a library?
A library's discount is based upon the discount available to the school district in which the library is located.
Reference: Paragraphs 512-515, 524 of FCC 97-157.

3.3- Does the discount apply to a school district or an individual school building?
The discounts are computed for individual school buildings.
Reference: Paragraphs 492, 493, 520 of FCC 97-157.

3.4- If a school or school district has telecommunications services already contracted beyond January, 1998, will they receive Universal Service discounts for that portion of the service which is received after January 1, 1998?
Contracts for services negotiated prior to November 7, 1996 are considered "existing contracts" and are eligible for discounts. Services contracted between 11/8/96 and the date the competitive bidding system becomes operational are eligible if services are provided on or before December 31, 1998.
This is a complicated issue and schools and libraries should keep in mind that they should seriously consider these dates when signing contracts before the competitive bidding process is operational. It also is one that currently is under reconsideration by the FCC.
Reference: Paragraphs 432, 545, 546, 549 of FCC 97-157; paragraphs 2, 5, 6-11 of FCC 97-246.

3.5- How are discounts calculated for groups which aggregate services for a number of schools or libraries?
This answer may change as the FCC is reexamining the issue of aggregation as part of a recent request for comments. The current answer depends on whether the school district is aggregating traffic through a central site (that is, a shared facility, such as shared router connected over a T1 1.544 Mbps circuit to an Internet Service Provider), or whether it is cooperatively bidding services (another method of aggregation) as part of a consortia. Reference: Paragraphs 476, 477, 523-525 of FCC 97-157.

3.6- How are discounts calculated for groups which aggregate services for a number of libraries?
Each library consortium may compute the discounts on the basis of the school district in which each consortium member is located or it may compute an average discount; in either case, each library consortium shall strive to ensure that each of its members receives the full benefit of the discount to which it is independently entitled.
According to the FCC's Frequently Asked Questions (DA 97-1374), No. 15, a library system which orders services on behalf of its branches and has branches located in different school districts, will determine the discount to which each of the school districts in which its branches are located is entitled. The library system will then add the discount percentages and divided by the number of branches, which will yield the system-wide discount percentage.
Reference: FAQ No. 15 of FCC DA 97-1374.

3.7- Who actually gets the money involved in the program?
Service providers directly receive the funds from the Program, as reimbursements for services already rendered to schools and libraries. Schools and libraries pay to the service providers the discounted price for services. The provider will then be reimbursed for the difference between the discounted price and the pre-discount price from the universal service fund. For example, if the service costs $1,000 and the school is eligible for a 90% discount, the school would pay the provider the discounted prices of $100. The provider then would seek reimbursement of $900 (the cost of the discount) from the Fund.
Reference: Paragraphs 580, 586 of FCC 97-157; paragraph 51 of FCC 97-253.

3.8- How much money is involved?
There is an annual cap of $2.25 billion. If not all of this money is spent, it can be carried over to subsequent years (but no more than half of the fund can be carried over in this manner).
Reference: Paragraphs 425, 529 of FCC 97-157.

3.9- Where does this money come from?
All companies that provide interstate telecommunications services will contribute to Universal Service support mechanisms.
Reference: Paragraphs 775-779 of FCC 97-157.

3.10- Can schools or libraries resell telecommunications services for which they receive Universal Service discounts?
No resale is permitted by the FCC. This means that schools and libraries cannot charge fees for any of these services, although fees are permitted for associated services not eligible for Universal Service discounts such as computer lab fees to help defray the cost of computers or training fees. It is important to distinguish between cost sharing, which is allowed, and reselling, which is not. Also, refer to 3.5 above and to excerpts from the MERIT Web page.
Reference: Paragraphs 483, 553, 566-569 of FCC 97-157.

3.11- What determines whether a school district is classified as rural or urban?
The FCC determined that rural areas should be defined in accordance with the definition adopted by the Office of Management and Budget's Metropolitan Statistical Area (MSA) designation of metropolitan and non-metropolitan counties, adjusted by the most recent Goldsmith Modification. Pennsylvania has requested a modification of the FCC's definition which would reclassify nine Pennsylvania counties as rural (indicated by *). The classifications are as follows:
Rural: Adams, Armstrong, Bedford, Bradford, Cameron, Clarion, Clearfield, Clinton, Crawford, Elk, Forest, Franklin, Fulton, Greene, Huntingdon, Indiana, Jefferson, Juniata, Lawrence, McKean, Mifflin, Monroe, Montour, Northumberland, Potter, Schuylkill, Snyder, Sullivan, Susquehanna, Tioga, Union, Venango, Warren, and Wayne.
Urban: Allegheny, Beaver, Berks, Blair, Bucks, Butler*, Cambria, Carbon*, Centre, Chester, Columbia*, Cumberland, Dauphin, Delaware, Erie, Fayette*, Lackawanna, Lancaster, Lebanon*, Lehigh, Lycoming, Luzerne, Mercer, Montgomery, Northampton, Perry*, Philadelphia, Pike*, Somerset*, Washington, Westmoreland, Wyoming*, and York.
Reference: Paragraph 504 of FCC 97-157.

3.12- Is there a disincentive for schools and libraries to aggregate service with an ineligible agency? Does this disincentive apply to aggregation with local governments or academic libraries?
Schools and libraries will qualify for universal service discounts and prices below tariffed rates for interstate services, obtained from incumbent local exchange companies only if any consortia they join include only other eligible schools and libraries, rural health care providers, and public sector (governmental) customers. Eligible schools and libraries participating in consortia that include ineligible private sector members will not be eligible to receive universal service discounts unless the pre-discount prices of any interstate services obtained from incumbent local exchange companies are generally tariffed rates. Please keep in mind that this limitation applies only to those interstate services provided by incumbent local exchange companies.
The PA PUC Universal Service Task Force has recommended to the PUC that they continue to apply a different rule for intrastate services that would not have those disincentives based on the PUC's current pricing policies.
Reference: Paragraphs 478-479 of FCC 97-157.

3.13- How are library systems to calculate discounts? Are they to use an unweighted average (adding the discounts applicable to each branch and dividing by the number of branches)? How does this differ from the weighted average that schools are supposed to use?
Library systems use simple average while school districts are currently required to use a weighted average. That provision, however, is currently under reconsideration by the FCC.

3.14- Is a consortium expected to compute the discount each member would have received had it applied directly and pass that exact discount back to the consortium member?
This provision also is under reconsideration by the FCC. However, the May 7 Order states that entities should strive to allocate discounts to which they are entitled.

3.15- If a consortium uses an annual membership fee instead of billing each member for actual services, would this fee be interpreted as "reselling"?
An eligible entity cannot apply for reimbursement for such membership fee. Any membership fee will have to be broken out to determine what the exact fee is for each service provided by membership in consortium so that only eligible services can be identified.

3.16- Will this initiative continue after initial funding has been exhausted?
Yes. The Universal Service discount program is meant to be a continuing program, with discounts at the prescribed level (up to an annual maximum of $2.25 billion) year after year. Neither the Telecommunications Act nor the FCC Order provides for a termination date to the program. The FCC's May 8, 1997 Order states its intention to re-convene a Federal-State Joint Board by no later than January 1, 2001 to review all of the universal service programs.

4. Application Procedures

4.1- What is the current time-line for the process?
The start date for the Universal Service discount program is January 1, 1998. The FCC is currently working to develop application forms which will be made available through the FCC's Web site (among other places). Once those forms are in place schools and libraries will be able to begin to specify services requested under the discount program. The FCC projects that application forms will be available in November, 1997. On October 10, 1997, the FCC hosted a workshop to receive comments from interested parties on draft forms which the FCC posted to its website earlier in the week.
Reference: Paragraph 607 of FCC 97-157.

4.2- What does a state have to do so that its schools and libraries can participate in the Universal Service program?
The state must adopt a "discount matrix" which provides discounts at the same or higher level than that proposed by the FCC. Pennsylvania has already fulfilled this requirement.

4.3- What initial steps must schools and libraries take to prepare for the Universal Service discount program?
Schools and libraries will have to self-certify that they have an approved technology plan. In addition, they will have to self-certify that they have completed a technology inventory.
Reference: Paragraphs 570-573 of FCC 97-157.

4.4- What will need to be included in the districts technology plan - specifics?
A technology plan should indicate how the school or library plans to integrate technology into its curriculum or services. For schools, Pennsylvania is requiring that technology plans meet the criteria outlined in Title III, Improving America's Schools Act. Refer to the PA Dept. of Education E-Rate home page for details. Commonwealth Libraries in the Pennsylvania Department of Education also has develop criteria for technology plans which will be available on the web site as well.
Reference: Paragraphs 572, 573 of FCC 97-157.

4.5- How is an application made?
A more complete information source is available on the Pennsylvania Department of Education's web page. It may be accessed through the Pennsylvania Home Page, www.state.pa.us, or directly as pde.state.pa.us. An excerpt from this site summarizes the procedure that is to be followed.
Reference: Paragraphs 575-577 of FCC 97-157.

4.6- How do vendors respond to these requests?
Competing vendors will make bids on the basis of information provided in a request from a given school or library. The requesting organization must allow four weeks for these bids to be provided. The bidders must supply pre-discount prices which are no higher than the lowest price provided to similarly situated non-residential customers.
Reference: Paragraphs 575 576 579 of FCC 97-157.

4.7- Will the process be so complicated that a district will need a consultant to figure out the information needed for the E-Rate process?
The FCC has repeatedly asked that reporting requirement associated with the Universal Service not be burdensome for participating schools and libraries. This, for example, is why the FCC suggested the use of school lunch data as a basis for eligibility, since this data is already compiled for other federal programs. If aspects of the program do prove to be burdensome, schools and libraries will have recourse through petitions to the FCC or their state PUC to rectify this deficiency in the program. The Link-To-Learn initiative, PDE, and the PaPUC will continue to provide assistance to schools and libraries when implementing the program.

4.8- Can a library system submit a centralized request for a centrally operated system while system member libraries submit individual requests for their phone service and LANs?
Yes; schools also are permitted to do so.

4.9- Can one organization submit several requests - one for phone service, one for LAN installation and one for Internet service?
Yes. Organizations can submit requests to the Fund Administrator to post at any time and for any mix of required services.

4.10- Can the application deadline be extended past January 1, 1998?
January 1, 1998 refers to the starting date for services that can be provided under the program. As long as the fund has not been exhausted in any given year, applications may be accepted at any time.

4.11- What is the simplest possible way for the small, very rural libraries to apply for the E-rate?
We hope that the information provided here and at the Pennsylvania Department of Education Web page will be helpful. Libraries are encouraged to contact the Department or Commonwealth Libraries for additional assistance.

5. Pennsylvania Issues

5.1- How does an Intermediate Unit compute the discount for which it should be eligible?
We do not have a definitive answer at this time, and expect that the Fund Administrator and/or the FCC will have the ultimate decisionmaking power on this issue. It is the ultimate responsibility of School Corporation, the Fund Administrator, to compute the discount for each applicant. Our current thinking on the issue:

5.2- What can an IU, that will be forming a consortium, be directing the districts to be doing, at this time, in order to be prepared for the E-Rate application?
Districts will have to certify that they have a technology plan and will have to perform a technology inventory in advance of applying for Universal Service discounts. Intermediate units can assist school districts in meeting these requirements. IUs can begin exploring consortium opportunities for their member districts, including nonpublic, private, parochial schools and public libraries.

5.3- In all this effort to tie us all together, what are we doing to preserve our state character and sense of uniqueness?
The E-rate program is being implemented in Pennsylvania in a manner consistent with our state character and with consideration for the unique requirements of our state. An example is the previously mentioned petition to change the definition of rural for Pennsylvania counties to reflect more accurately their unique characteristics. The PaPUC and PDE will continue to work on this program in this manner.
With respect to connections which help "tie us all together," we believe that it helps us to share our unique talents and resources, rather than somehow causing their loss.

5.4- Will the PaPUC consider extending Pennsylvania's interpretation of Universal Service to include consortia of community groups that support the objectives of school and libraries?
The FCC, not the PaPUC, has decided that only schools and libraries are eligible for discounts, and community groups are not included in the FCC definition of eligibility. For the time being, the recommendation of the Universal Telephone Service Task Force is that the PaPUC should not establish a separate fund within our state, which must be funded from within the state. We must, therefore, observe the FCC rules for eligibility.

5.5- Would it be of value for Pennsylvania to establish organizations similar to the Universal Service fund administrator and the Schools and Libraries Corporation?
Such entities would be duplicative, and burdensome. Since Pennsylvania had no separate state Universal Service fund, there is no need for a separate administrator. Were such a fund established in the future, however, there would need to be mechanisms to assure its proper implementation.
As stated previously, it is the recommendation of the Task Force that no separate fund be established; that the FCC program be monitored closely in the first year to determine its adequacy in meeting the needs of Pennsylvania.

5.6- What is the best way to marry E-rate discounts with L2L funding? Dollars coming from L2L could now focus more on material things and training and leave the services to E-rate. We could use some guidance on this.
As noted in the question, the E-rate program offers the opportunity to leverage Link-to-Learn, as well as other program funds. Guidance is being provided through Link-to-Learn Workshops being conducted by the Pennsylvania Department of Education during October and November. Please visit the PDE or L2L Web sites for additional information.

5.7- Have the rural communities that were challenged federally been approved? Wyoming County was classified as a urban community and by no stretch of the imagination should it be.
No, the FCC has not, as yet, issued a ruling on whether or not to grant PA's request for waiver. It is being given serious consideration. The PaPUC continues to monitor progress of this request very closely.

5.8- The IU's direction in E-rate is not clear. If we go for discounts can we no longer charge our districts for internet service?
Again, this question raises the issue of aggregation, currently being evaluated by the FCC. Per our earlier comments, there are variations which may answer some of the questions raised within the scope of this question. Please refer to the discussion under 3.5 and 3.9, above.

6. General Questions

6.1- What incentives are there for school districts and libraries to share lessons learned about effective architecture, training, staffing patterns and applications?
Both the program and the technology is complex, offering opportunities for schools to share lessons learned, group training, etc. Incentive to begin a dialogue to explore opportunities for cooperative relationships that lead to greater efficiencies sharing of staff, cost savings, etc.

6.2- What resources of technical expertise -- other than vendors -- are available to help school districts and libraries make wise choices?
Resources from the PUC, Department of Education, and Office for Information Technology will be available to help schools and libraries secure their discounts. Examples include the development of a comprehensive guide and a web site for distributing information. Intermediate Units and institutions of higher education are also excellent resources. Schools and libraries should exercise discernment when entering into consulting contracts as a number of consultants have arisen which play upon the fear created by the complexity of the program. Carefully evaluate what "added value" a consultant offers. Finally, consider the following additional support options:

6.3- How does an Internet Service Provider bid on a service request made by an eligible school or library?
Competing vendors will make bids on the basis of information provided in a request from a given school or library. The requesting organization must allow four weeks for these bids to be provided. The bidders must supply pre-discount prices which are no higher than the lowest price provided to similarly situated non-residential customers.

6.4- What is planned to help schools and libraries understand that the important factor is the 'bottom line' cost, and not necessarily the discount? Certainly the discounts are important, it's the bottom line cost after the discount has been applied to the 'bid rate' that is what is of most importance to schools and libraries.
There is a lot of emphasis being placed on the "bottom line," both at the FCC and the PaPUC/PDE level. Schools and libraries are required to have a technology plan, and approved budget, before applying for services under the E-rate discount program. Link-to-Learn strives to make every dollar spent on technology a meaningful investment in education, and in our state's future. Those principles will continue to guide us in the implementation and administration of the E-rate program here in Pennsylvania.

6.5- What will prevent price inflation from expenses charged by vendors to set up procedures for dealing with the discount program or bids padded with equipment which schools and libraries may not need but which under the discount program they can now afford?
As discussed above, Link-to-Learn and the E-rate program are being administered in Pennsylvania with careful attention paid to the educational outcome. Technology is not being supported for its own sake; it will not be acquired by use of Link-to-Learn funds or E-rate discounts simply because it is affordable. The technology plans, especially under Link-to-Learn, require schools to plan for sustainable and educationally justified use of the technology. Libraries in Pennsylvania already engage in similar planning to justify their acquisition of technology. We believe in the commitment of those in our schools and libraries to use these opportunities wisely. The Commonwealth, though its government and institutions, is striving to help them meet their challenges and obligations.
It is hoped, in fact, that efforts like Link-to-Learn and the E-rate program will help to make advanced technology and telecommunications services more affordable by stimulating the demand that will attract increased private investment in the technology infrastructure of our state. That hope is not far fetched. With cooperation and commitment, we can realize that vision.

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