Schools and Libraries
About the Schools and Libraries Program:
- Overview of the Program
- Overview of the Process
- Outreach and Training
- HATS Outreach
- Filing Appeals
- Understanding Audits
Schools and Libraries Tools:
Step 6: Wide Area Network (WAN) Fact Sheet
Leasing a Wide Area Network (WAN) is eligible for Schools and Libraries support but building or purchasing a WAN is not eligible.
This fact sheet provides information on the definition of a WAN, examples of discounts on WANs, the definition of Internal Connections, evaluation of the applicant owner prohibition, and amortization of capital investment costs.
- Definition of a Wide Area Network
- Examples of Discounts on Wide Area Networks
- Definition of Internal Connections
- Evaluation of the Applicant Ownership Prohibition
- Amortization of Capital Investment Costs
1. Definition of a Wide Area Network
A WAN is a voice, data, or video network that provides connections from one or more computers or networks within an eligible school or library to one or more computers or networks that are external to such eligible school or library. Excluded from this definition is a network that provides connections between or among buildings of a single school campus or between or among buildings of a single library outlet or branch, when those connections do not cross a public right of way.
Federal Communications Commission rules provide that, to the extent that states, schools, or libraries build or purchase a WAN, the cost of such networks is not eligible for support. However, WAN capability can be obtained as a Telecommunications Service under the Schools and Libraries Program. Additionally, WAN service can be eligible for discount as Internet Access, if leasing of the WAN is the most cost-effective means of obtaining Internet Access. In that case, the service must be limited strictly to basic conduit access to the Internet.
Applicants can obtain support for the services of WANs by leasing these services under the Program rules that apply to Telecommunications Services and Internet Access, but not by procuring WAN components as Internal Connections. The term "lease" refers to arrangements whereby the ownership of the facility remains with the service provider. No ownership attributes are undertaken by the lessee (applicant). Whether or not an arrangement constitutes a lease will be based on a review of contractual terms and conditions.
An understanding of how USAC defines local area networks (LANs), other Internal Connections, and WANs is important to ensure that applicants submit funding requests that contain only eligible products and services. In addition, applicants should understand the eligibility requirements for the categories of service, such as Telecommunications Services, Internet Access, Basic Maintenance and Internal Connections. For example, Telecommunications Services can only be provided by an eligible telecommunications carrier. See Eligible Services Framework for further information.
FCC rules provide that the actual wires that carry data across public rights-of-way and the components located outside a school or library facility are WAN components and are evaluated for eligibility under Telecommunications Services and Internet Access. Networking components located within a school or library facility are most often Internal Connections rather than WAN components.
However, there is an exception to this general rule. If certain conditions are met, components located at a school or library can be considered part of "end-to-end" Telecommunications Services or Internet Access and can then be supported under these categories of service, rather than as Internal Connections. See On-Premise Priority 1 Equipment for further information.
FCC rules establish a rebuttable presumption that a connection does not constitute an Internal Connection if it crosses a public right-of-way.
2. Examples of Discounts on Wide Area Networks
Example A. Assume that the computers of a school district and library system are connected and share information among the various sites and use the network for voice Telecommunications Services, data transmission, and Internet Access. The connections between the buildings are leased from an eligible telecommunications carrier. The price of the connections is eligible for support.
Example B. Assume that the computers of a school district and library system are connected among the various sites in order to share access to the Internet. The connections between sites are leased from a non-telecommunications carrier such as a cable company and are the most cost-effective means of accessing the Internet. The cost of leasing the connections is eligible for support as Internet Access so long as the service is limited to basic conduit access to the Internet.
Example C. Assume that the computers of a school district and library system are connected and share information among the various sites and use the network for voice telecommunications and for the transmission of data. The connections between sites were purchased and installed by the school district and library system. These connections are not eligible for support because the connections are purchased and installed by the school district and library system.
Example D. Assume that the computers of a school district and library system are connected and share information among the various sites and also use the network for voice telecommunications, transmission of point-to-point video, and Internet Access. The connections between sites are leased from a non-telecommunications carrier. Assume further that this method of accessing the Internet is the most cost-effective. The proportionate price of the leased lines for obtaining Internet Access is eligible for support but the costs attributable to the Telecommunications Services are not eligible. This eligible cost must be determined in accordance with USAC's cost allocation guidelines. The remaining price attributable to the leased connections for voice telecommunications and the point-to-point video service is not eligible for support because the service is not being provided by an eligible telecommunications carrier.
3. Definition of Internal Connections
As previously indicated, there is a rebuttable presumption that a connection does not constitute an Internal Connection (i.e., it is a WAN) if it crosses a public right-of-way. See Eligible Services List and Frequently Asked Questions about Eligibility of Products and Services.
4. Evaluation of the Applicant Ownership Prohibition
Costs of eligible Telecommunications Services and Internet Access must not provide ownership interest to applicants. Eligible costs in these two categories of service are for provision of services only, not applicant ownership.
The FCC has recognized that some business arrangements between an applicant and service provider, even if labeled a lease of services, can reach essentially the same result as a prohibited WAN purchase by applicants. USAC will not provide support on an agreement that is titled or described as a lease when, in effect, the terms of the agreement constitute a purchase.
Factors evaluated when making this determination include whether the applicant has exclusive access to the WAN facilities, whether a lease-purchase agreement exists, and whether a substantial payment for upfront capital costs is part of the agreement. Contracts with an option for the applicant to purchase WAN facilities will not be supported.
Support is not provided for the initial construction costs for WAN facilities being built for the exclusive use of an applicant, except in established rural areas where no acceptable alternatives exist. Except in such rural areas, applicants are expected to use the shared infrastructure facilities of service providers in order to obtain the most cost-effective service.
Although program support may not be used for the full construction costs of WAN facilities in a non-rural area, it may be used for a proportionate cost of WAN facilities that can be shared among multiple organizations.
USAC will review contractual terms, the technical configuration, and up-front construction costs to determine whether exclusive use is being provided. Costs in funding requests may be compared against the total costs of a service provider's construction project. These review steps allow USAC to determine whether the funding request is consistent with a simple lease of facilities (eligible) or whether it reaches essentially the same result as a prohibited WAN purchase by an applicant (not eligible).
5. Amortization of Capital Investment Costs
Eligible Telecommunications Services and Internet Access can include service provider equipment costs and/or a non-recurring charge for capital investment by the service provider. However, in cases where applicants enter a multi-year contract and the upfront or non-recurring charge is $500,000 or more, the total charge must be prorated evenly over a period of at least three years. Applicants may not seek to recover more than one-third of the total non-recurring charges in any one funding year if they are $500,000 or more.
Costs of eligible Telecommunications Services and Internet Access must not provide ownership interest to applicants. Eligible costs in these two categories of service are for provision of services only, not applicant ownership.
