1. Universal Service Administrative Company THE ABCs OF E-RATE March 1, 2007

2. Universal Service Administrative Company Overview Schools and Libraries Program Provides discounts to eligible schools and libraries for Telecommunications Services, Internet Access, Internal Connections, and Basic Maintenance Applicants can be schools, libraries, or consortia, but only eligible recipients of service can receive discounts Applicants must apply for discounts each year (Form 471 application filing window) Funding cap each year is $2.25 billion 2

3. Universal Service Administrative Company Overview Application process Eligibility Technology planning Competitive bidding / Form 470 Calculating discounts Funding requests / Form 471 Application review / Funding commitments Starting services / Form 486 Invoicing USAC / Form 472 or Form 474 3

4. Universal Service Administrative Company Overview Forms and Letters for Applicants Technology plan Form 470 Receipt Notification Letter (RNL) Form 471 Receipt Acknowledgment Letter (RAL) Funding Commitment Decision Letter (FCDL) Form 486 Form 486 Notification Letter (486NL) Form 472 or Form 474 BEAR Notification Letter — Form 472 only Quarterly Disbursement Report 4

5. Universal Service Administrative Company Overview Forms and Letters for Providers Form 498 Notification by e-mail Form 499-A Notification by e-mail or telephone Receipt Acknowledgment Letter (RAL) Funding Commitment Decision Letter (FCDL) Form 473 Form 486 Notification Letter (486NL) Form 472 or Form 474 BEAR Notification Letter / Invoice Status Report Electronic notification 5

6. Universal Service Administrative Company Eligibility Applicants Eligible Entities - Schools Must meet the statutory definition of elementary or secondary school found in the No Child Left Behind Act of 2001. Must be a non-profit institutional day or residential school, including a public charter school, that provides elementary or secondary education, as determined under state law. Must not be operating as a for-profit business. Must not have an endowment exceeding $50 million. 6

7. Universal Service Administrative Company Eligibility Applicants Eligible Entities - Schools Pre-kindergarten, Adult Education, Juvenile Justice students/facilities may be eligible. Must provide elementary or secondary education as determined under state law. USAC requests updated eligibility information from state departments of education every two years. 7

8. Universal Service Administrative Company Eligible Services Both Priority 1 – funded first Telecommunications Services Basic telephone service — wireline or wireless phone service (local, cellular/PCS, and/or long distance) Voice mail Transmission services (T-1, DSL) Internet Access Basic conduit access to the Internet 8

9. Universal Service Administrative Company Eligible Services Both Priority 2 Internal Connections (switches, hubs, routers, wiring) Basic Maintenance on Internal Connections Priority 1 funded first, then Priority 2 begins with neediest applicants (90% first, then 89%, 88%, etc.). Internal Connections funded in only two out of five funding years. 9

10. Universal Service Administrative Company Eligibility Applicants Educational Purposes Activities that occur on library or school property are presumed to be integral, immediate, and proximate to the education of students or the provision of library services to library patrons and therefore qualify as educational purposes. Customary work activities of employees of a school or library are presumed to fall under the definition of education purposes. 10

11. Universal Service Administrative Company Eligibility Applicants SCHOOLS: Administrative buildings School bus barns and garages Cafeteria offices Facilities associated with athletic activities LIBRARIES: Administrative buildings Bookmobile garages Interlibrary loan facilities Library technology centers 11 Examples of Non-instructional Facilities (NIFs) that can receive Priority 1 services

12. Universal Service Administrative Company Eligibility Applicants Educational Purposes – Priority 1 Wireless Telecommunications Services used offsite may be eligible. For example, School bus drivers delivering children to and from school Library staff providing library services on a library’s mobile library unit van Teachers or other school staff accompanying students on a field trip or sporting event. 12

13. Universal Service Administrative Company Eligibility Applicants Educational Purposes – Priority 2 Priority 2 services to NIFs are NOT eligible unless those internal connections are essential for the effective transport of information to an instructional building of a school or to a non-administrative building of a library. 13

14. Universal Service Administrative Company Eligibility Service Providers Providers of Telecommunications Services must be authorized as Telecommunications Carriers Must contribute to the Universal Service Fund, if applicable. Must provide telecommunications services on a common carriage basis to be deemed a Telecommunications Carrier. 14

15. Universal Service Administrative Company Technology Planning Applicants Technology Plans Not required for basic telephone service Must be written before Form 470 filing Must be approved by a certified approver before the Form 486 is filed or discounted services start, whichever is earlier Must cover all 12 months (or all months of service) Must cover five specific elements 15

16. Universal Service Administrative Company Technology Planning Applicants Technology Plans Must cover five specific elements: Goals / Strategies for using technology Professional development Needs assessment Sufficient budget Evaluation process 16

17. Universal Service Administrative Company Technology Planning Applicant Do’s and Don’ts DO write your technology plan before submitting your Form 470. DO make sure your technology plan covers and is approved for the entire period (usually 12 months) that discounted services will be delivered. DO make sure that your technology plan approver is certified by USAC. DO verify that your certified approval is dated before services begin and before your Form 486 is filed. DO verify that your plan contains all five required elements. 17

18. Universal Service Administrative Company Technology Planning Applicant Tips Use each required area as a heading in your plan and address that area under the heading. PRINT A COPY of your certified approval for your records. Make sure your technology plan is approved for the entire period (usually 12 months) that discounted services will be delivered. Prepare a technology plan if any of your services fall outside of basic telephone service (such as Centrex, PBX, T-1). 18

19. Universal Service Administrative Company Competitive Bidding / 470 Applicants Filing Form 470 opens a competitive bidding process. Can also issue a Request for Proposals (RFP). Applicants are responsible for ensuring an open and fair process and selecting the most cost-effective provider of the desired services. 19

20. Universal Service Administrative Company Calculating Discounts Applicants Discounts are calculated using Percentage of students eligible for National School Lunch Program (NSLP) Urban or rural status of county in which school or library is located (from web site) These two pieces of information are carried into the Discount Matrix 20

21. Universal Service Administrative Company Calculating Discounts Applicants 21 Discount Matrix

22. Universal Service Administrative Company Calculating Discounts Applicants Calculation for individual school Percentage of students eligible for NSLP for individual school Urban/Rural status Find discount from Discount Matrix 22

23. Universal Service Administrative Company Calculating Discounts Applicants Calculation for school district Determine discount for each individual school in the school district Calculate the weighted average of the discounts for all schools in the district Discounts of individual schools with more students will be weighted more heavily 23

24. Universal Service Administrative Company Calculating Discounts Applicants Calculation for library system Determine discount for each individual outlet/branch in the library system Calculate the simple average of the discounts for all outlets/branches in the library system 24