Form 470 Options for Bundled Internet Access and Transport:
USAC guidance for requesting bundled Internet access and transport services on a Form 470 is highly unintuitive. If the guidance stands — and USAC is being encouraged to change it — it may mean that many applicants will misfile their Form 470s for FY 2018 and risk Form 471 denials. Be very careful!
In an August 22nd Special Edition News Brief, USAC announced “simplified” Form 470 drop-down options for requesting Category 1 services on the Form 470. This was followed by more detailed Form 470 Instructions. The new drop-down menu included the following options with most of the discussion focused on the various fiber alternatives:
As we indicated at the time in our newsletter of August 28th, “the choices are not quite as simple as advertised.” Indeed, we over-simplified — and apparently got wrong — the use of the “Internet Access & Transport Bundled” option. Unless USAC changes its guidance, others will undoubtably make the same mistake.
Acccording to USAC, the proper way to request bundled Internet access and transport service depends upon what type of transport you want — even if you are concerned only with Internet speed and are indifferent as to the delivery technology. Here is how USAC is interpreting its own Form 470 instructions on bundled Internet:
For Internet access and non-fiber transport (e.g., cable modem) select:
- Internet Access & Transport Bundled
For Internet access and fiber transport select:
- Internet Access & Transport Bundled
- Leased Lit Fiber
- Internet Access: ISP Service only
For Internet access, but no preference for transport, select:
- Internet Access & Transport Bundled
- Leased Lit Fiber
- Internet Access: ISP Service only
The rationale appears to be that bundled Internet access service delivered over a fiber circuit effectively includes leased lit fiber (which could be provided separately). If lit fiber is not selected on the Form 470, USAC seems to believe that fiber providers may overlook this opportunity to bid. However, if the applicant receives bids for lit fiber only, it must also consider bids for standalone Internet service. In other words, applicants seeking fiber-based Internet must bid for the service on both a bundled and unbundled basis.
Applicants specifically interested in bundled non-fiber Internet access are unlikely to have unbundled options and need only bid for bundled. Applicants with no preference for circuit type might receive fiber-based bids, thus must also bid the unbundled fiber combination.
Editorial Comment: USAC’s guidance on bundled Internet and transport services is a significant change from past years and is being implemented without any public FCC direction. In our view, this is a myopic interpretation of the FCC’s fiber rules. If USAC enforces this guidance, it will likely lead to a significant number of denials for applicants who picked only the most obvious Form 470 option. If USAC is truly concerned with lit fiber providers missing potential opportunities, a much easier alternative is to instruct them to search for Form 470s that include the Internet Access & Transport Bundled option.
Applicants who have already begun their competitive bidding process for bundled Internet services, and who filed Form 470s without reference to this guidance, may have a problem. There appears to be three options.
- Wait a couple of weeks and hope that USAC revises its guidance.
- Do nothing and plan to appeal if denied — assuming the FCC will show more common sense.
- Restart the procurement process by filing another 470 using the new USAC guidance.