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

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.