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The Schools and Libraries Program, also known as E-rate, is a Universal Service Fund program designed to help public schools and libraries gain access to affordable telecommunication services and high-speed Internet access. Public school districts and libraries may apply annually for eligible services, which they can procure through service providers at a discounted rate.

The services fall into two groups: Category 1 and Category 2. Category 1 services are defined by the Universal Service Administrative Company (USAC) as “services that provide the basic conduit access to the Internet.” Category 2 services are those “needed to enable high-speed broadband connectivity and broadband internal connections components.” See the USAC website for additional information.Since E-rate’s establishment two decades ago, school technology needs have evolved greatly while the program itself remained unchanged until 2014. In a series of change orders, the Federal Communications Commission (FCC) overhauled E-rate.

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Determining if a Connection Is Category 1 or Category 2

The classification of connections between multiple buildings of a single school is determined by whether the buildings are located on the same campus. A “campus” is defined as the geographically contiguous grounds where the instructional buildings of a single eligible school are located. A single school may have multiple campuses if it has instructional buildings located on grounds that are not geographically contiguous. Different schools located on the same grounds do not comprise a single campus. The portion of the grounds occupied by the instructional buildings for each school is a campus for that school.

A high school, middle school, and elementary school are located in separate buildings on the same piece of property.
A high school and middle school share the same building.
A high school has 2 buildings on separate pieces of property.
An elementary school has multiple buildings on the same piece of property.
Category 1 & 2

Determining if on-Premise Equipment Is Eligible for Category 1

In certain circumstances eligible services that are normally funded with Category 2 may be eligible for Category 1.



If your service provider bundles basic firewall service (as well as DNS and DHCP) with your Internet connection and bills it as part of your monthly recurring cost for Internet, then this is eligible for Category 1 funding. If your provider bills it separately or the service is supplied by another vendor then it IS NOT eligible for Category 1 funding and is considered a Category 2 service.

Network Equipment

On-premises equipment that connects to a Category 2 eligible LAN is eligible for Category 1 support if it is necessary to make a Category 1 broadband service functional. A common example is the switches or routers needed to light dark fiber. These would be eligible for Category 1 support. If the price for components that enable the LAN can be isolated from the price of the components that enable the Category 1 service, those costs should be cost allocated out of the Category 1 funding request. Consider the following examples:

Scenario A

A district has a leased dark fiber WAN and purchases a router for each school to place the dark fiber into service. Each router has 2 ports: 1 to light the dark fiber and 1 to connect to the building LAN.

Scenario B

A district has a self-provisioned WAN and purchases a router for each school to place the fiber into service. However, they opt to purchase routers with an expansion module so they can connect all of their LAN switches to it.

Leased Dark Fiber WAN Connection
District Owned Fiber WAN Connection

In scenario A, the routers would be fully eligible for Category 1 funding because the router is only being used to place the Category 1 fiber into service. Given that the purpose of a router is to connect 2 networks, the port connecting to the building LAN cannot be isolated from the price of the router. However, in scenario B, the routers are not fully eligible for Category 1. Since the district purchased routers with an expansion module to provide LAN functionality, this exceeds the necessary function to place a Category 1 connection into service and can be isolated from the Category 1 functionality. The associated costs of the expansion module would have to be allocated out from the Category 1 funding request.

The eligibility of on-premise network equipment depends on the configuration of the networks involved. If you are unsure of your specific situation you should contact USAC for guidance.