How to make sense of the new eRate gift rules

Through no fault of its own, USAC found itself in the middle of an effort to interpret federal regulations that are wrought with gray areas. Understandably, the unofficial responses from USAC on most of these questions were filled with greater ambiguity—and, in some cases, silence.

On Aug. 5, USAC sought further clarification from the FCC regarding the gift regulations, and as of the date of this writing, the FCC had yet to respond.

In its latest request, USAC posed nine questions to the FCC that it has received since the new gift rules were implemented. The questions are divided into four areas: charitable donations and free equipment, widely attended gatherings and speaking and writing engagements, tracking and curing gift violations, and timing and applicability.

Charitable donations and free equipment

A December 2010 FCC clarification stated that “service providers cannot offer special equipment discounts or equipment with service arrangements to eRate recipients that are not currently available to some other class of subscribers or segment of the public.”

From this verbiage, USAC is seeking clarification on what is considered a “class of subscribers.” USAC is also asking where to draw the line between free equipment as a donation vs. a violation of eRate gift rules that requires cost allocation.

Widely attended gatherings and speaking and writing engagements

USAC is questioning how to handle service provider raffles and/or door prizes commonly conducted at trade shows. It further seeks to define a “collateral event” at a conference or show.

USAC also is asking for clarification whether a school or library employee may provide a testimonial for a service provider’s product, and whether paid or non-paid testimonials are permitted.

Tracking and curing gift violations

USAC is asking if applicants can rectify potential violations by returning an unsolicited gift and what, if any, documentation should be kept regarding gift receipt and/or refusal.

Timing and applicability

USAC is asking for further information regarding which funding years are affected by a violation. For example, if a violation occurs during a multi-year contract, does the violation invalidate all or only a portion of the contract?

Finally, USAC wants to know how to apply the gift rules to gifts provided before the applicant participated in the eRate program, as well as gifts received by an applicant from a service provider that currently does not provide service to the recipient.

Until the FCC issues further clarification of these issues, how can eRate applicants remain compliant and avoid violating any of the new gift rules?

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