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Hot Topics: Advance Installation of Internal Connections

In the FCC’s Seventh Report and Order, E-rate rules were changed to allow applicants the ability to begin installation of non-recurring Category 2 products in the summer months while students are not in session.  The FCC states the following:

Category Two Installation Can Begin on April 1.

We also amend our rules for category two non-recurring services to permit applicants to seek support for category two eligible services purchased on or after April 1, three months prior to the start of funding year on July 1. This will provide schools with the flexibility to purchase equipment in preparation for the summer recess and provide the maximum amount of time during the summer to install these critical networks. We agree with commenters who note that the last day of school is often in May or June and schools need to be able to use the entire summer recess to ensure the networks are ready when students return to school. This is also consistent with our previous decision to allow advance installation and construction under certain conditions.

Starting with applications filed for Funding Year 2015, applicants will be able to receive E-rate discounts on most Internal Connections purchases made on or after April 1, 2015.  Here are some of the more frequently asked questions Funds For Learning has received regarding early installation:

Q:  Does the April 1 date apply to all types of service?

A:  No.  The April 1 early installation exemption applies only to non-recurring Category 2 purchases.  As in years past, all recurring services (most Category 1 services as well as recurring C2 services like Basic Maintenance) must still be delivered between July 1 and June 30 of the funding year in order to qualify for discounts.

Q:  Can an applicant start work on a non-recurring Category 2 project before their E-rate funding application has been approved?

A:  Yes.  This approach is not prohibited by E-rate rules.  However, applicants and service providers should review their contracts carefully to determine what terms and conditions apply.  For example, in most cases applicants who proceed with a project before funds are approved will be expected to pay for the entire cost of goods and services purchased upfront (they can then seek reimbursement of the E-rate discount via the BEAR process once their funding application has been approved.)

Q:  Can invoicing take place before July 1?

A:  Service providers may bill applicants for non-recurring Category 2 services delivered on or after April 1 immediately after service delivery, according to the invoicing terms and conditions specified in their contracts.  E-rate payment paperwork (BEAR and SPI Forms) and disbursements will not be processed by USAC until July 1 or the applicant’s funding request and Form 486 approval, whichever is later.

Q:  What happens if an applicant makes non-recurring Category 2 purchases prior to the approval of a funding request, but that funding request is ultimately denied?

A:  In this case, each party’s rights and responsibilities are dictated by the terms and conditions of their contract.  When E-rate funds are denied, FCC rules do not specify any further course of action; instead, it is presumed that the applicant and vendor will proceed in a manner consistent with applicable contract terms and state/local law.

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