E Rate Modernization Overview

CONFIDENTIAL © Copyright 2015. Aruba Networks, Inc. All rights reserved
E-RATE OVERVIEW
What is E-Rate? What is Changing?
Presented by
– Dan Rivera [Aruba Networks]
– Chris Oskuie [Brocade]

Aruba Networks
HQ: Sunnyvale, CA
Founded in February of 2002
$730M in Revenue
2,000 Employees
Leader in Unified Access & NAC
40,000 Customers World-wide
NASDAQ: ARUN
Comprehensive list of Industry Partners
Ecosystem • Channel • Distribution

Addressing the Needs of Digital Learning
SECURE & SIMPLE NETWORK ACCESS
Provide differentiated access to network & enable BYOD
INTELLIGENT APPLICATION HANDLING
Bring curriculum to life with interactive & multimedia apps
FLEXIBLE SOLUTIONS
Invest in architecture & management right for your schools
SIMPLE CLASSROOM MANAGEMENT
Empower teachers in digital classrooms
CLASSROOM-GRADE WI-FI
Boost 1:1 learning on mobile devices

Background
Brocade
Today
•Founded in 1995
•Headquartered in
San Jose, CA
•$2.2+ Billion in
annual revenue
•Operating in 160
countries
•4,100+ employees
• Campus Wired
Ethernet Networking
• Data Center
Switching/SAN
• Service Provider
• Software Defined
Networking
• Network Function
Virtualization
Focus

Hundreds of K-12 Customers in US
E-rate Participation for 17 years
Many National, State/Local Government Contracts
Dedicated Partner/Reseller Community
Classroom Floor/IDF Core/MDF
ICX 6450-C ICX 7450 ICX 7750

Confidential | Brocade | © 2015
Strategic Partnership
Engineering Co-Development
Brocade Network Subscription
Now with Aruba

What is E-Rate?
 Created in the Telecommunications Act of 1996
– First funding year in 1998 (Year 1)
– Funding years are July 1 through June 30 (FY2014: July 1, 2014 – June 30, 2015)
 Provides subsidies of up to 90% for eligible services
 Available to schools and libraries
 Administered by the Universal Service Administration Company (USAC)
– Specifically, the Schools & Libraries Division (SLD)
– Universal Service Program overseen by FCC
 Original Funding Cap of $2.25B, adjusted for inflation
– Currently at $3.9 Billion (Funding Year 2015)
– Funding committed to Category 1, then (if funding remains) Category 2

E-Rate Eligible Services
CATEGORY 1 SERVICES (Formerly Priority 1)
– Telecommunications services
– Telecommunications
– Internet access services
CATEGORY 2 SERVICES (Formerly Priority 2)
– Broadband internal connections
– Managed internal broadband services
– Basic maintenance of eligible broadband internal connections

Category 2 Eligible Services List (FY2015)
-Access Points (LAN/WLAN)
-Wireless LAN Controllers
-Network switches
-Routers
-Cabling, connectors, and related
components
-Racks that support eligible internal
connections components
-Uninterruptible Power Supply (UPS)
-Caching
-Firewalls
-Software supporting each of the
components on this list used to
distribute high-speed broadband
throughout school buildings and
libraries
Eligible Broadband Internal Connections Components
Notes: (1) Functionalities listed above that can be virtualized in the cloud, and equipment that combines eligible
functionalities, like routing and switching, are also eligible. (2) A manufacturer’s multi-year warranty for a period up to
three years that is provided as an integral part of an eligible component, without a separately identifiable cost, may be
included in the cost of the component. (3) For funding year 2015, caching is defined as a method that stores recently
accessed information. Caching stores information locally so that the information is accessible more quickly than if
transmitted across a network from a distance. A caching service or equipment that provides caching, including servers
necessary for the provision of caching, is eligible for funding.

• Services provided by a third party for the operation,
management, and monitoring of eligible broadband internal
connections components are eligible managed internal
broadband services.
• E-rate support is limited to eligible expenses or portions of
expenses that directly support and are necessary for the
broadband connectivity within schools and libraries. Eligible
expenses include the management and operation of the
LAN/WLAN, including installation, activation and initial
configuration of eligible components, and on-site training on
the use of eligible equipment.
• In some managed services models, the third party manager
owns and installs the equipment and school and library
applicants lease the equipment as part of the managed
services contract. In other cases, the school or library may
own the equipment, but have a third party manage it for them.
Eligible Managed Internal Broadband Services
(e.g. Managed WiFi)

Basic Maintenance of Eligible Broadband
Internal Connections Components
E-rate support is available for basic maintenance and technical
support appropriate to maintain reliable operation when provided
for an eligible broadband internal connections component.
The following basic maintenance services are eligible:
• Repair and upkeep of eligible hardware
• Wire and cable maintenance
• Configuration changes
• Basic technical support including online and telephone
based technical support
• Software upgrades and patches including bug fixes and
security patches

E-Rate Process
• ESL Released
• Application Window
Announced
• Form 470/RFP
Filed
Bids
Submitted
• Bids Reviewed
• Service Provider
Selected
Form 471
Filed • PIA Review
• FCDL Issued
• Form 486 Filed
Service
Starts
• Invoices Submitted
(BEAR or SPI)
Funding
Disbursed

E-Rate FY2015 Timeline
APPLICANTS CAN POST
FORM 470
DRAFT ESL RELEASED
DRAFT ESL COMMENT DATE
DRAFT ESL REPLY COMMENT
DATE
FINAL ESL RELEASED
FORM 471
APPLICATION
WINDOW OPENS
(JANUARY 14, 2015)
LAST DAY TO POST FORM
470 (FEBRUARY 26, 2015)
FORM 471
APPLICATION
WINDOW CLOSES
(MARCH 26, 2015)
CAT2 NON-RECURRING
INSTALLATIONS CAN BEGIN
(APRIL 1, 2015)
RECURRING SERVICES BEGIN
(JULY 1, 2015)
1 Jul 1 Aug 1 Sep 1 Oct 1 Nov 1 Dec 1 Jan 1 Feb 1 Mar 1 Apr 1 May 1 Jun 1 Jul

WHAT CHANGED?
E-Rate Modernization Order

E-rate Modernization Order (E-rate 2.0) Highlights
Focus on Wi-Fi
Reorientation of Services
Category Two Budgets
Maximum amounts set
Eligible Services
Significant changes to the ESL
Discount Methods
Calculations / Classifications
Cost-Effective Purchases
Pricing Transparency
Preferred Master Contracts
Consortia Purchasing Encouraged
Streamlined Application Process
Multi-year Form 470/471
Tech Plan Eliminated
Competitive Bid Exemptions
Electronic Filing Requirement

E-rate Modernization Order (E-rate 2.1) Highlights
Increased Funding Cap
$3.9 Billion FY2015
Category Two Budgets
Extended through FY2019
Increased Library Support
Up to $5.00/sq’ Cat 2 Budget
Urban Areas Redefined
Population greater than 25k
Cat 1 Construction Costs
Amortization Policy Suspended
Applicant match spread over 4 years
Equalizing Lit/Dark Fiber*
Modulating Equipment Eligible
Cat 1 Self-Construction*
Can start Jan 1 of Funding Year
Must be most cost-effective
Additional Cat 1 Support*
Up to 10% additional support when States
match funds for high speed broadband
construction
Must be most cost-effective
*Starting in FY2016

E-Rate Modernization Order (E-rate 2.0)
Change in Nomenclature
– Priority 1, now Category 1
– Priority 2, now Category 2
$3.9 Billion Funding Cap
FY2015
– Category 2 has annual target budget
of $1B; Keyword “Target”
5-Year Category 2 Budget
Maximum for Applicants
– Schools: $150/student ;
Libraries: $2.30/sq.ft & $5.00/sq.ft
– Rolling Budget, eliminates 2-in-5 rule
 Flexible spending patterns
 Subscription-based pricing
 Fresh start in FY2015

E-rate Modernization Order (E-rate 2.0)
School # of
Students
Pre-Discount Cat2
Budget
Post-Discount Cat2
Budget
Elementary
School
500 500*150 = $75,000 $63,750
Middle School 750 750*150 = $112,500 $95,625
High School 1000 1000*150 = $150,000 $127,500
Cont. HS 50 50*150 = $9,200 (floor) $7,820
District Office 0 $0 (NIFs don’t qualify) $0 (NIFs don’t qualify)
Category Two Budget Example
Sample School with a Discount Rate of 85%

NEW DISCOUNTING
Category 2 maximum discount
reduced to 85%
FASTER RESPONSE
Target FCDL issue date of
Sept.1 of each funding year
FUNDING FLOOR
Establishes a funding floor of
$9,200 in Category 2 support
ADDS & REMOVES
(+) Managed internal broadband
eligible in FY2015 (Managed LAN &
WLAN)
(--) Voice & Video components
removed from Cat-2 in FY2015 ESL
PRICING TRANSPARENCY
Item 21 embedded in Form 471

PREFERRED MASTER
CONTRACTS
Bureau will designate specific national
contracts as “Preferred Master
Contracts”
Allows applicants to bypass the Form
470 filing requirement
For equipment purchases only; no
labor services
EARLY INSTALLATIONS
Category 2 non-recurring installations can begin on April 1 of
funding year
 Eliminate RFP process
 Choose pre-negotiated contracts

Aruba Product Eligibility*
?
*Per FY2015 ESL. Subject to change. ** When purchased as a managed service.

E-rate Modernization Order
 Voice services being phased down beginning FY2015
– 20-Point reduction each year. FY2015 max discount 70%, FY2016 max
discount 50%, etc.
 Legacy telephone features eliminated
– Paging, Text, Directory Assistance, Inside wire maintenance
 Email, Web Hosting, Voice Mail eliminated
 Wireless Data Plans and Air Cards eligible in certain
circumstances only
– Only eligible when proven to be most cost-effective way to connect students

E-rate Modernization Order
 Discount Method Modified
 Discounts are District-Wide
 Urban/Rural status now determined for entire school district or library system
 New rules for Discount Surveys
 Document retention increased to 10-Years from last date of install
 Contract signature requirements eased
 Appeals must be filed with USAC first
 Applicants can receive BEAR disbursements directly from USAC
 Invoice deadline extensions will be automatically granted one-time
for 120-Days
– No other extensions will be granted

IMPORTANT LINKS
Aruba E-Rate Resources
http://www.arubanetworks.com/solutions/primary-education/e-rate/
http://community.arubanetworks.com/t5/Primary-K-12-Education/gp-p/Primary-K-12-Education
USAC E-Rate Modernization Resources
http://www.usac.org/sl/tools/modernization-order/default.aspx
FCC (E-Rate Specific) Website
http://www.fcc.gov/guides/universal-service-program-schools-and-libraries
E-Rate Modernization Order
http://transition.fcc.gov/Daily_Releases/Daily_Business/2014/db0723/FCC-14-99A1.pdf
Second Modernization Order
http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-14-189A1.pdf
FY2015 ESL
http://hraunfoss.fcc.gov/edocs_public/attachmatch/DA-14-1556A1.pdf

THANK YOU
Dan Rivera
Chris Oskuie

E Rate Modernization Overview

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