NTIA changes to BEAD rules are WIN for community broadband
Eased capital rules make infrastructure funding more accessible for community-focused ISPs
We’re pleased to see the National Telecommunications and Information Administration (NTIA) issue guidance today changing the Letter of Credit (LOC) requirement in the $42.5B Broadband Equity Access and Deployment (BEAD) Program.
We applaud NTIA on this new guidance which makes great strides towards including small, and community-focused ISPs essential to ending the digital divide. While still studying the details, we see real improvements to the rule which had previously called for applicants to obtain a standby letter of credit equivalent to 25% of their grant amount — a requirement that more than 300 community leaders, internet service providers (ISPs), broadband experts, and public interest groups warned would exclude small and community-focused ISPs, municipalities, and minority- and women-owned businesses.
These changes will reduce the amount of local capital that underconnected communities will need to bring to the table and help ensure all types of providers will be able to participate in this historic broadband investment.
We are grateful that NTIA leadership has listened to voices from across the sector and made changes that will help ensure this historic program lives up to its promise of connecting all Americans. While we believe the requirement should be waived entirely, we appreciate the NTIA’s pragmatic approach to balance its mandate to responsibly steward resources while delivering an equitable program that can successfully deliver for America’s unserved and underserved communities. We are also encouraged by the NTIA’s apparent openness to additional waiver requests from states and territories.
This progress is a huge win for everyone who spoke out on this issue in an effort to make BEAD the most successful program it can be. Connect Humanity will continue to work alongside partners to ensure the implementation of these changes are sufficient to remove capital barriers for the ISPs best placed to build fast, reliable internet networks in the communities that most need them.
The waiver outlines four key changes:
Credit unions can issue Letters of Credit
Credit Unions are to be able to issue Letters of Credit in addition to banks. Broadening the entities able to issue bonds may help address the lack of supply of LOCs in the marketplace, which has been raised as an issue.
Performance bonds are an alternative to the Letter of Credit
Providers will have the option to obtain a performance bond for 100% of the project cost in place of a Letter of Credit. This option may be more feasible than the LOC for many smaller and community-focused providers that are unable to lock away valuable working capital.
The letter of credit amount can be reduced over time
The Letter of Credit can now be reduced over the construction period with States setting milestones to incrementally decrease the LOC as grantees meet them. This approach can avoid tying up provider capital for the full grant duration, which can be up to 10 years and far beyond project completion.
For delayed reimbursement, requirements can be reduced to 10%
If states reimburse grantees by incremental milestones rather than upfront, the LOC or performance bond coverage can be reduced to 10% of the grant amount. This lowers the amount of working capital required to be tied up, potentially enabling more providers to participate in BEAD.
For full details of these changes, read the NTIA’s Letter of Credit waiver