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Intranet web hosting now e-Rate eligible

In an important change that comes two months after schools already applied for FY2009 e-Rate discounts, intranet web hosting has been classified as e-Rate eligible beginning with the FY2009 program year.

The Schools and Libraries Division (SLD) of the Universal Service Administrative Co. (USAC), the outfit that manages the $2.25 billion-a-year federal e-Rate program, announced the rule change April 10, more than eight weeks after the FY2009 filing window closed.

In previous years, the portion of the cost of web hosting services that paid for access to intranet or password-protected web sites has not been eligible for e-Rate coverage. That meant applicants had to calculate and break out these costs separately on their e-Rate applications–a cumbersome process for both applicants and service providers.

Listening to feedback from e-Rate applicants and service providers, SLD officials said they decided to approve intranet web hosting after consulting with the Federal Communications Commission.

"This change will allow an opportunity for both applicants and service providers to get the benefits of this decision now and also to plan ahead and adjust their future needs and products accordingly," read an SLD statement. "However, this will mean some extra work during the current review of applications."

Schools and libraries that have applied to have eligible components of web hosting services funded by the e-Rate can follow a USAC procedure to update these funding requests, which now can include intranet or password-protected web sites. 

First, applicants should contact their service providers to verify that their funding request cost allocation is still accurate. A cost allocation is used when a service has some components that are eligible for e-Rate funding, and others than are ineligible.

In this case, a cost allocation initially would have classified intranet and password-protected web sites as ineligible services. If schools and libraries applied for web hosting services that include access to intranet or password-protected web sites, those cost allocations now will be changed as a result of the SLD’s decision.

The SLD advises applicants to ask for a revised cost allocation from their service provider, and to have their service provider give this information directly to USAC as well. Applicants then can calculate the adjustment they would make to their funding requests, so they are prepared to give this information to their program reviewers.

The SLD’s web site includes an example of three different scenarios for applicants who applied for the same web hosting services that cost $100 per month. The services include 80 percent eligible services, 10 percent access to intranet or password-protected web pages, which are now eligible, and 10 percent ineligible services.

Using the SLD’s example, the new eligible percentage for these services would be 90 percent–meaning $90, not $80, of each monthly service fee could be discounted according to an applicant’s appropriate discount rate.

To make sure FY2009 e-Rate applications are adjusted correctly, the SLD says it also plans to reach out directly to service providers to obtain an updated cost allocation of their service offerings that include intranet or password-protected web pages. The agency will use this information to help update and verify the cost allocation of their customers’ requests.

USAC will contact e-Rate service providers for this information by May 1, according to an e-Rate news brief from the agency.


Schools and Libraries Division of USAC

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