A. On-premise Priority 1 Equipment

Q1. Due to the lower priority for funding Internal Connections, some applicants are not able to obtain discounts for equipment located at their site. Is there a way for applicants to receive funding for such components within the Priority 1 categories of service (Telecommunications Services and Internet Access)?

In certain limited instances, service providers may install equipment on the premises of schools or libraries as part of their provision of eligible Telecommunications Services or Internet Access. That equipment may be considered as part of the provision of end-to-end Telecommunications Services or Internet Access (and not as Internal Connections), but only if the applicant demonstrates that it meets certain specific eligibility criteria for this service. Further information is provided in the document On-premise Priority 1 Equipment located in the Reference Area of this web site. In addition, the next several questions provide further information about this alternative.

Q2. If an applicant owns a router, can an end-to-end service with on-premise equipment include the lease of an additional circuit card, added to the router, as a component of the end-to-end service?

Yes, a demarcation between Priority 1 service and Internal Connections can occur "inside" a component, if the demarcation can be clearly delineated. Such a delineation could occur with a separate circuit card as part of leased end-to-end service, with the router in which the card is located a part of Internal Connections. The circuit card could not be used by the applicant for any other purpose than the specific end-to-end service, and the other conditions of end-to-end service, as provided in the document On-premise Priority 1 Equipment would also apply.

Q3. For an end-to-end service with on-premise equipment, is it acceptable for a leasing company to provide the components to the applicant?

No. One of the requirements for on-premise equipment that is used for an end-to-end Priority 1 service is that the equipment provided must be from the same service provider that provides the service. A contract between the applicant and a third party for provision of equipment is inconsistent with that requirement.

Q4. Can end-user components such as cameras and monitors be included in an end-to-end service with on-premise equipment?

No. Including cameras and monitors into the service package would move the service from a transmission conduit (e.g., telecommunications) to a service that includes the creation and display of information. The end-to-end service must meet the eligibility requirements for the category of service proposed, Telecommunications Services or Internet Access.

Q5. One of the requirements for an end-to-end service with on-premise equipment is that the applicant cannot have a contractual right to exclusive use of the equipment. Are you saying that the service provider could allow other customers to utilize equipment at the applicant site?

Yes. The concept is that service providers can choose to locate some of their own equipment at the applicant site, if certain conditions are met. One of the conditions is that the service provider should be able to make its equipment available on a shared basis to other customers. The applicant may be the only party accessing the equipment, in fact, but there can be no contractual right to such exclusive access if the lease cost of equipment is to be considered part of end-to-end Priority 1 service.

Q6. How should applicants apply for on-premise equipment for end-to-end service?

Equipment located at the applicant site is presumed to be Internal Connections, but this presumption can be rebutted. To do so, applicants should submit, as part of the Form 471 filing, clear information that fully describes the funding request. See the document Item 21 Attachments for Form 471, located in the Reference Area of this web site, for further guidance on the information to be submitted.

Requests must make sense as an end-to-end service, and the clearest way to make this case may be to include the request in a single Funding Request. On the other hand, multiple Funding Requests are acceptable so long as clear information is provided that enables the PIA Review team to understand the full end-to-end service requested. In some cases, multiple Funding Requests can be advantageous.

If the on-premise components do not meet the requirements for an end-to-end service as Priority 1, they are evaluated as Internal Connections. In some circumstances, telecommunications or Internet access services contained in this same Funding Request can be denied, even if these telecommunications or Internet access services could have been approved if they were in a different Funding Request. Thus, submitting the "off-premise" Priority 1 components in a separate Funding Request from on-premise Priority 1 components can afford protection in the event that the on-premise components do not meet the Priority 1 requirements. See Service Categories: SLD Adjustment Process posted in the Reference Area of this web site, for further information.

Q7. Should Internal Connections be included in the Form 470 application if in doubt about whether the proposed on-premise components will be acceptable as a part of an end-to-end Priority 1 service? What about the Form 471?

If on-premise components do not meet the requirements to be a part of an end-to-end Priority 1 service, SLD will move them to Internal Connections, and evaluate them for funding in that category of service. Therefore, for the Form 470, specifying that Internal Connections may be obtained would be important in the event that the components are moved.
For the Form 471, applicants should NOT request funding for the same components twice, once as Priority 1 and once as Internal Connections.

Q8. The Wide Area Network (WAN) Fact Sheet indicates that up-front capital costs for Priority 1 services greater than $500,000 must be amortized over at least three years. How are such requests evaluated when they include on-premise components as part of the Priority 1 service?

For requests that include on-premise Priority 1 equipment, first an evaluation is performed to determine if the requirements are met for a Priority 1 end-to-end service. Then the application is evaluated to determine if non-recurring costs are greater than $500,000.

The $500,000 threshold is evaluated on the basis of the same service provider, same applicant, and same "service package," e.g., videoconferencing, fiber installation, wireless WAN. Thus, PIA in complex cases could evaluate more than a single Funding Request or even more than a single application.