Today, NTIA announced that it will loosen Letter of Credit (LOC) requirements for the $42.5 billion Broadband Equity Access Development (BEAD) infrastructure funding program and provide more options for eligible organizations to demonstrate their financial qualifications for completing the broadband infrastructure funded by the BEAD program.
Previously, under the BEAD Notice of Funding Opportunity (NOFO), subgrantees receiving state funds would be required to provide a letter of credit for 25 percent of the total project, an amount that would severely limit the ability for smaller broadband providers and community-based partnerships to qualify compared to national incumbent carriers. On September 6, 2023, Public Knowledge joined other allies in a letter highlighting this barrier to smaller competitive carriers and trusted local entities from participating in the BEAD program. The adjustments to the LOC requirement would provide alternatives to these smaller players that would allow them to compete with the largest broadband providers, through the use of performance bonds and intermediate credit milestones that require less up-front capital, and by permitting letters of credit from credit unions with stronger relationships to local organizations.
The following can be attributed to Chris Lewis, President and CEO of Public Knowledge:
“The changes made to the BEAD program today are important steps to ensure competition for these infrastructure dollars, and to ensure that some of the most trusted organizations in local communities can join in the goal to connect all Americans to quality high-speed broadband. Before today, small organizations would need to put up millions of dollars to even qualify for the grants from states and other eligible entities. This may be easy for a national incumbent, but not for small local providers or community partnerships. In many communities, the smallest carriers are the only providers who choose to provide service, rather than national names like Verizon or Comcast. The small companies who have taken the risk to serve outside major metropolitan areas should be given a chance to do so for more communities. The changes made to the BEAD program LOC requirement today will provide affordable options for credit and participation. States and other eligible entities will also continue to have the option to seek waivers from these requirements if they fit the needs of their communities. We are grateful for the swift action by Administrator Alan Davidson and the NTIA team to this technical, but important issue.”
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