Minutes for July 28, 2004 Service Provider Call

Q.

Usually for internal connection project, the delivery of equipment is only part of the project and not the first part. Wiring and network design, etc are usually prior to it. Does it mean that 486 can not be filed at the start of the project but must wait till the end of the project?

R.

Form 486 must be submitted within 120 days of the SSD, so within 120 days of when the work BEGINS, not generally after it ends. If it is not submitted within 120 days of the SSD, USAC will not pay for work done before the date to which will we adjust the SSD. If applicants are concerned that USAC may pay invoices for IC work not performed, they can ask to be notified before USAC makes payment (see December’s “What's New”).

Be aware that, in general, network design is a service typically performed well prior to the actual installation of products and services, and in such an instance would not be eligible for E-rate funding. Some design and engineering expenses can be eligible under certain conditions. See the entry "Technical Services" in the Miscellaneous section of the Eligible Services List for further details.

Q.

According to the 486 instruction, a service provider is not obliged to begin providing discounts to a Billed Entity until the 486 approval letter is received. If the service provider does not have a 486 approval letter when the project is completed, does it mean that the school should be billed 100%?

R.

This is a contractual issue between the parties. The SP can bill the applicant 100% or just the non-discounted portion and invoice USAC for the discounted amount. The FCC Rules require the applicant to pay its undiscounted share for products and services.

Q.

If the school has a very bad credit record, can a service provider require the school to make deposits before or during the project?

R.

This is a contractual issue between the parties.

Q.

Would an applicant be in violation of the rules if it enters into an annual contract with Nextel Partners with a fixed rate plan and contract period and then, during the funding year, chooses to take advantage of a change in rate in order to better suit the needs of that customer (e.g., high telecom overages) by entering into a new contract with a newly extended time period?

R.

Yes, an applicant would be in violation of the rules. An applicant may change the rate plan in the middle of the funding year whether through a month-to-month or contractual agreement as long as such change constitutes a minor contract modification pursuant to the FCC’s rules and state and local procurement law. However, it could constitute a program violation for the parties to enter into a new contract/service agreement for the sole purpose of changing the rate plan and term dates after the filing of a completed Form 471.