The following FAQs pertain to the eligibility and classification of Category One and Category Two services as noted in the Funding Year 2017 (FY) Eligible Services List, Appendix B.
A1. Yes. Beginning in FY2016, costs related to applicant-owned WANs will be eligible for Category One support. In the Second E-rate Modernization Order, the Commission established a mechanism for applicants to seek Category One support for self-provisioned networks when self-provisioning is the most cost-effective option to meet their connectivity needs. Consistent with that decision, the Commission eliminated a prior rule that prohibited E-rate support for applicant-owned WANs. As a reminder, lease arrangements for non-exclusive access to service provider WANs have long been eligible for Priority One/Category One support through the Schools and Libraries (E-rate) Program.
A2. For broadband, connections forming a data network between multiple eligible schools or libraries are WAN connections for the purposes of the E-rate Program. WAN connections do not include connections between or among multiple buildings of a single school campus or single library branch. Such connections are Category Two internal connections under the E-rate Program rules.
A3. Yes. Under the rules adopted by the Second E-rate Modernization Order, connections installed between two or more schools or libraries are eligible for Category One support, irrespective of whether the schools are located on the same campus.
Take, for example, a high-rise building with three different schools located on three different floors. As one option for meeting their connectivity needs, the three schools consider constructing a network that connects their facilities on different floors of the building, with a single connection running out to a service provider’s point-of-presence (PoP). That configuration would be a WAN for the purposes of the E-rate Program. The costs associated with installing the connection running out to the PoP and between the three schools within the building would be eligible for Category One support. Similarly, a connection between a middle school and high school located on the same campus would be eligible for Category One support.
A4. No. Before the Modernization Orders, the E-rate program’s definition of “internal connections” included a rebuttable presumption that a connection that crossed a public right-of-way was not an internal connection. The purpose of that rebuttable presumption was to distinguish between connections that may be eligible for what was formerly called Priority Two support as part of an applicant’s LAN from those that would not be eligible for E-rate support at all because they were part of an applicant-owned WAN.
Now that applicant-owned WANs are eligible for Category One support, there is no need for that distinction. In fact, the E-rate Modernization Order removed the rebuttable presumption and the reference to a public right-of-way from the definition of internal connections altogether.
The Commission now defines internal connections as services "necessary to transport or distribute broadband within one or more instructional buildings of a single school campus or within one or more non-administrative buildings that comprise a single library branch." (47 C.F.R Section 54.500)
In short, the classification of a connection as a Category One or Category Two service turns on the function of the connection, i.e., whether it is part of a WAN connecting multiple eligible schools or libraries, or whether it distributes broadband within a single school campus.
A5. Correct. The connections between the instructional facilities located on different floors of the high-rise building would distribute broadband within a single school campus. They would, therefore, be internal connections eligible for Category Two support.
A6. Yes. The connections installed between the buildings on either side of the public right-of-way would distribute broadband to the instructional buildings of a single school campus, and would be internal connections eligible for Category Two support as opposed to WAN connections eligible for Category One support.
A7. No. Internal connections distribute broadband within one or more instructional buildings of a single school campus, or within one or more non-administrative buildings that comprise a single library branch. Connections that distribute broadband to buildings of a single school located on multiple campuses located miles apart would not be internal connections, and may be eligible for Category One support.