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NARUC Ratchets Up Call for State Involvement in Disbursement of Broadband Stimulus Funds

WASHINGTON, April 2, 2009 – The National Association of Regulatory Utility Commissioners on Thursday ratcheted up their call for greater state involvement in disbursement and use of the $7.2 billion broadband stimulus funds with a letter to top Commerce and Agriculture Department officials.

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WASHINGTON, April 2, 2009 – The National Association of Regulatory Utility Commissioners on Thursday ratcheted up their call for greater state involvement in disbursement and use of the $7.2 billion broadband stimulus funds with a letter to top Commerce and Agriculture Department officials.

NARUC’s positions on the way Commerce’s National Telecommunications and Information Administration and USDA’s Rural Utilities Service should approach broadband grants were detailed in the letter, signed by 87 state utility commissioners representing 38 States.

“Both agencies face incredible challenges,” read the letter, which was signed by Frederick Butler, president of NARUC and Commissioner of the New Jersey Board of Public Utilities, and the other commissioners.

“NTIA has limited staff and must focus on the [digital television] transition during the most critical period for disbursements. RUS staff is fully occupied disbursing funds from previously authorized programs. Neither can possibly complete the tasks assigned under [fiscal stimulus legislation] without a very significant staff expansion,” the commissioners wrote.

They continued: “Even then, given the incredibly compressed timeframe, it will be almost impossible to review the anticipated thousands of applications most predict both will receive, much less rank the proposals according to American Recovery and Reinvestment Act-specified criteria, disburse the funds, and monitor grant specific implementations.”

The commissioners said both Congress and the Government Accountability Office (GAO) had in effect recognized the invaluable role of states, because the latter have “an intimate knowledge of their communications environment, geography and demographics along with every incentive to make certain the money is not wasted and is properly targeted.”

“Rather than contracting with Washington, D.C., consultants that lack both the states’ in-depth knowledge about the areas covered and inherent incentive to do the job right, both agencies should structure the program to insure state involvement,” the letter said.

As an incentive for states to participate in the screening process, NARUC said NTIA and RUS should establish, for the first round of funding, a “use or lose” minimum standard allocation for each state.

Under this approach, states would have the opportunity, assuming enough qualified proposals were submitted, to assure up to that allocation is disbursed in-state, in addition to federal agencies making minimal funding available to allow short term hires to assist State experts in screening applications and in monitoring grant implementation.

The commissioners said: “The advantages to this approach are obvious. It saves resources, puts the people with the information needed to make reasonable and rapid decisions in a strong advisory role, provides an additional layer of accountability, and significantly increases the chances that the money will actually get disbursed as States will have proper incentives to both opt-in and complete the task.”

NARUC General Counsel Brad Ramsay acknowledged that the state regulators’ proposals might not be “a perfect solution,” although it was necessary.

“If this money is to be spent wisely, states will have to be involved. Congress has been very specific in making this smart call,” he said.

Ramsey said the fiscal stimulus bill’s legislative history points to a role or states that could be identified as being both “monitoring and evaluation” of grant applications.

No insider Washington experience and any special intelligence would be necessary to grasp that, he said.

“We are talking about an impossible task that must be accomplished in a very short while – 18 months. It is akin to asking the federal government to do in a minute a 48-hour job. I do not see a better way than to involve states. This is extremely good advice,” he said.

Ohio and Kansas have also released letters which endorse key aspects of the NARUC proposals.

Broadband Breakfast Club

Don’t miss the opportunity to register for the April 14, 2009, Broadband Breakfast Club at the Old Ebbitt Grill. The theme of the April meeting will be, “Spending the Stimulus: Can States’ Front-line Experiences Expedite Broadband Deployment?” Register at http://broadbandbreakfast.eventbrite.com.

Confirmed speakers include Karen Jackson, Office of Telework Promotion and Broadband Assistance, Commonwealth of Virginia; Betty Ann Kane, Chairman, D.C. Public Service Commission; and Sue A. Suleski, Technology Investment Specialist and Program Manager for the Pennsylvania Broadband Initiative.

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Broadband's Impact

After BEAD Letter of Credit Changes, Work Still Remains, Advocates Say

Group who pushed for LOC changes are looking to ensure state contracts work well with performance bonds.

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Photo of the webinar Thursday.

WASHINGTON, November 9, 2023 – There is still more work to do on BEAD program financing requirements, advocates and broadband providers said on Thursday.

“Now the work kind of begins again,” said Quinn Jordan, head of the Mississippi Broadband Association.

He and other stakeholders pushed the Commerce Department to change the letter of credit rules for its $42.5 billion Broadband Equity, Access and Deployment program.

Before November 1, BEAD rules required a 25 percent letter of credit, which advocates said would edge out smaller providers. The updated rules allow states to use other means of confirming the financial viability of projects, like performance bonds, which are only paid out if a project fails,  and reimbursements based on deployment milestones.

But going forward, work will center on making sure state contracts are compatible with the other frameworks allowed in the changed rules, those advocates said at a webinar in the broadband community.

“If there’s too much exposure, we could really run up the cost of these performance bonds,” Jordan said.

Phil Macres, a telecom lawyer who organized a coalition of broadband providers to push the letter of credit changes, said he has been meeting with surety companies – institutions that issue performance bonds – to work on how best to structure these contracts.

The second biggest focus will be ensuring state broadband offices know how to navigate the updated financing rules, said Calum Cameron, a communications manager at Connect Humanity. Cameron drafted a 300-signatory open letter advocating changes to the old letter of credit rules. 

“This group will continue to work on both of these fronts,” he said. 

Working for letter of credit changes

The rule change took months of advocacy work behind the scenes, said Gigi Sohn, the longtime broadband advocate and one-time FCC nominee who now heads the American Association for Public Broadband.

“If anybody tells you this is an issue that was just brought to the attention of the NTIA,” she said, “it’s been much longer than that.”

Panelists credited Sohn’s involvement with some of the effort’s success.

“As soon as Gigi Sohn got involved, that’s when the issue really started to take hold.” said John Windhausen, director of the School, Health, and Libraries Broadband Coalition.

That, Mindhausen said, made it easier to set up meetings in August with White House officials and express concerns that the original letter of credit requirements were too restrictive.

Charles Thomas, director of operations at two small ISPs, said he reached out to Macres and Elizabeth Bowles, another panelist who serves as CEO of the ISP Aristotle Unified Communications, after hearing them speak about the BEAD letter of credit at a webinar.

He eventually sat down with them and NTIA Director Alan Davidson to explain how the old rules would have left him and other small ISPs on the sidelines.

“You got to get involved,” he said.

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Funding

NTIA Will Allow Alternatives to Letter of Credit for BEAD Funding in New Guidance

The new guidance allows performance bonds and takes other measures to include smaller providers.

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WASHINGTON, November 1, 2023 – The National Telecommunications and Information Administration released on Wednesday alternatives to the letter of credit requirement for its main broadband program.

The $42.5 billion Broadband Equity, Access and Deployment program rules require grant recipients to produce a letter of credit from a bank for 25 percent of the amount they are awarded. That involves putting the cash up as collateral, which critics have said could prevent small broadband providers from participating.

With the NTIA’s new ‘conditional programmatic waiver,’ states and territories will have other options to ensure the financial reliability of BEAD grants. Those include requiring a performance bond for the full award, which the awardee only pays out if they fail to meet their build out requirements. 

The waiver allows states and territories to use completion milestones to lower LOC amounts over time, meaning the LOC could decrease from 25 percent of the grant as infrastructure is deployed, freeing up money for grant recipients to use in their BEAD projects. That option can also apply to performance bonds.

The agency is also doing away with the 25 percent starting point, allowing the LOC to be as low as 10 percent under certain circumstances, as well as accepting letters of credit from credit unions.

In a blog post announcing the waiver, the NTIA said it may provide additional guidance on the matter in the future and emphasized that broadband offices can work with the agency to deviate from the standard rules.

“States and territories are also free to request waivers for additional circumstances not covered by this programmatic waiver,” it said. 

States will outline the letter of credit rules for their BEAD grant processes in volume two of their initial proposals, due to the NTIA by December 27.

The move comes after months of pressure from the broadband industry and lawmakers to change the BEAD letter of credit requirements. Small providers argued they would be edged out of the program because they have less cash on hand, hindering efforts to close the digital divide in remote and hard-to-serve areas.

BEAD director Evan Feinman first hinted the agency was working on an update to the requirement at the BEAD Implementation Summit on September 22.

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Broadband's Impact

Commerce Subcommittee Advances Bills on NTIA Spectrum, AI Oversight Reauthorization

The bills go to the full committee for votes.

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Screenshot of Rep. Cathy McMorris Rodgers, R-WA, at the markup Wednesday

WASHINGTON, July 12, 2023 – The Subcommittee on Communications and Technology on Wednesday advanced several pieces of legislation to reauthorize the National Telecommunications and Information Administration’s oversight on matters including spectrum management and artificial intelligence after it was last reviewed in 1992.

The Spectrum Relocation Enhancement Act proposed in May by Rep. Doris Matsui, D-CA, revises the Spectrum Relocation Fund, which compensates federal agencies to open spectrum bands for commercial use. The legislation would provide federal entities more flexibility in their evaluation of spectrum for sharing or relocation, especially in light of recent worries about the difficulties of obtaining spectrum licenses for commercial needs due to limited supply.

Another bill to pass the markup was the AI Accountability Act, introduced in May by Reps. Josh Harder, D-CA, and Robin Kelly, D-IL, which would require the NTIA to examine accountability standards for AI systems used in communications networks. The bill is part of a wider push to enhance the transparency of government’s use of AI to communicate with the public.

 The subcommittee also approved the Diaspora Link Act to assess the feasibility of a trans-Atlantic fiber cable connection between the United States, the U.S. Virgin Islands, Ghana, and Nigeria as well as other key recommendations to consolidate broadband funding programs, develop a national strategy for closing the digital divide and educate the public on cybersecurity issues.

“A lot has changed in the last 31 years, both in the technology sector and at the NTIA,” said Rep. Cathy McMorris Rodgers, R-WA. These legislations would further enforce the NTIA as the “representative of the US in the international telecommunication forum,” she added.

These pieces of legislation are pending full committee votes before proceeding to the floor.

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