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When a product or service is partially eligible for support, but contains ineligible components, a cost allocation is usually employed so that funding can be provided for the eligible portion. However, in some cases, ineligible features are an insubstantial and inseparable component part of a product or service and Federal Communications Commission (FCC) rules allow full funding for the product or service in certain limited cases.
If a product or service contains ineligible features on an ancillary (i.e., subordinate, auxiliary, or supplemental) basis, and no separate pricing is available for those features, then costs need not be allocated to the ineligible functionality.
Ineligible functionality is considered "ancillary" if:
For example, the standard pricing for some Internet access services include caching and/or spam filtering services that are not themselves eligible. Since these components are part of the standard product offering, and they meet all the conditions above, then the full package can be eligible for support.
If the above Internet access package was available with an improved caching and/or spam filtering service at an itemized additional cost, those improved ineligible features would not be eligible for support. Applicants and service providers must be sure that they do not "hide" the attempted procurement of separable ineligible features in funding requests through the use of a single line item charge that is not cost allocated. The costs attributable to separable ineligible options are not to be included in funding requests, but rather, the applicant must pay for the ineligible features with their own funds if they are provided.