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NEW RULE: Equipment trade-ins

Have you ever seen Real Time with Bill Maher?* Toward the end of the show, there is usually a segment called “New Rules,” which consists of short quips about politics and other absurdities. To wit:

New Rule: Starting this year, every appliance doesn’t need a clock on it. My stove, my dishwasher, my microwave, my VCR — all have clocks on them. If I really cared that much about what time it was (or what year it was), would I still have a VCR?


I sometimes feel a little like Bill Maher when I’m reading over the USAC website. On occasion, you run across a particular page that has been changed recently, and you say: “Hey, look at that! New Rule!”

The latest apparent New Rule deals with trade-ins of equipment which was purchased with E-rate discounts. Until a few days ago, USAC’s guidance stated that applicants could trade in previously funded equipment at any time, as long as they deducted the trade-in credit they received from the pre-discount cost of a new funding request. Here’s what the “Transfers of Equipment” page said on January 2, 2012:

E-Rate-funded equipment can be traded-in within three years of the date of purchase, but if it is traded in, it can only be used to reduce the pre-discount cost of new equipment; it cannot be used to "pay" the applicant's non-discount share on other eligible equipment.


The “Frequently Asked Questions About Eligibility of Products and Services” had similar guidance:

Equipment purchased with USF support may not be transferred for anything of value at any time. Such equipment may be traded in, if the trade-in amount is applied to the purchase of new eligible equipment and the pre-discount amount on the Form 471 is reduced by the trade-in amount.


The pages above appear to have changed on January 9, and the guidance regarding equipment trade-ins was removed from both. Trade-ins are now addressed in the “Disposal or Trade-in of Equipment” area. Here’s the New Rule:

Equipment purchased with Schools and Libraries program discounts can also be traded in, but no sooner than five years after the equipment is installed.


      • Trade-ins are not allowed before this five-year period has elapsed.
      • The value of a trade-in does not have to be deducted from the pre-discount amount of a new funding request.


That’s a fairly significant change – whereas applicants could trade in funded equipment “at any time” just a few weeks ago, it now appears that trade-ins are prohibited before the five year equipment disposal time period.

We can only speculate as to why this New Rule was made. The Sixth Report and Order did provide guidance regarding the disposal of previously funded equipment, but it did not specifically require that trade-ins must only be performed after the five year disposal timeframe. In fact, it did not address trade-ins prior to the five year mark at all. Whatever the reason, we certainly hope that applicants and service providers are paying close attention to the USAC website for the latest guidance, as we would hate to see someone denied funding due to a New Rule that they didn’t notice. Come to think of it, maybe I could make a New Rule of my own:

New Rule: Applicants and service providers deserve to be notified when New Rules are created!


*Not to be construed as an endorsement. As with anything political and/or political humor, some of you probably love Bill Maher, and others can’t stand him. We like you either way. Be free.

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