BEAD Letter of Credit Concerns, $4.3M in ACP Outreach Grants, FCC Waives Rules for Hawaii Wildfires

The letter follows calls to drop the credit rule that it said could shut out smaller ISPs from funding.

BEAD Letter of Credit Concerns, $4.3M in ACP Outreach Grants, FCC Waives Rules for Hawaii Wildfires
Photo of FCC Chair Jessica Rosenworcel in 2015 by New America

August 21, 2023 – More than 50 internet providers, industry associations and digital equity advocates have jointly signed a letter urging alternatives to the letter of credit requirement for the Broadband Equity, Access, and Deployment program.

Addressed to the National Telecommunications and Information Administration and Department of Commerce, the letter claims the requirement that grant recipients provide a letter of credit for 25 percent of the grant amount, coupled with a 25 per cent match in funding, will effectively “shut out a huge number of ISPs.”

This provision will prevent small and community-centered ISPs, nonprofits and municipalities from participating in federal funding opportunities as it requires them to have “vast sums of capital” locked away for the full duration of the build, read the letter.

For example, “a provider seeking a $7.5 million grant for a $10 million project will need at least $4.6 million of their own capital up-front,” it explained.

Instead, the letter proposed alternative mechanisms such as performance bonds or delayed reimbursements to “ensure proposals are viable and that applicants have the capacity to perform.”

Since its circulation last week, the letter has garnered over 50 signatures, with supporters including the American Association for Public Broadband and the digital equity fund Connect Humanity.

This represents the most recent endeavor within the telecommunications industry to push for changes to the letter of credit requirement, building upon previous concerns expressed in July.

FCC announces more ACP grants

The Federal Communications Commission announced Thursday $4.3 million in outreach grants to boost participation in the Affordable Connectivity Program, which offers subsidies for internet services and devices for low-income households.

Distributed under the ACP Outreach Grant Program, the funding opportunity is set to benefit 12 states and territories that were not included in the initial round of funding. These areas include American Samoa, Commonwealth of the Northern Mariana Islands, Delaware, Guam, Idaho, Iowa, New Hampshire, Rhode Island, South Carolina, South Dakota, West Virginia, and Wyoming.

To date, the FCC has reported a commitment of over $72 million through 228 ACP outreach grants, helping more than 20 million, out of the 48.6 million eligible households, to receive benefits from the program.

However, mounting concerns regarding the long-term sustainability of ACP funding, which is projected by some to be depleted in early 2024, have been steadily accumulating. Calls to replenish the funding have come from a wide range of voices within the industry and beyond. So far, these calls have remained unanswered by Congress.

FCC waives broadband rules for Hawaii wildfires

The FCC on Friday waived multiple obligations under the Universal Service Fund and other broadband programs to assist households and providers affected by the Hawaii wildfires.

In consideration of the “catastrophic damage and destruction” and following President Joe Biden’s declaration of a state of emergency, the FCC will temporarily suspend certain rules under the Lifeline, Affordable Connectivity Program, E-Rate, Emergency Connectivity Fund Program, Rural Health Care Program, and High Cost program.

In particular, program subscribers and providers located in the affected disaster areas will be exempted from specific filing and regulatory deadlines as outlined in the agency’s notice.

The announcement comes as part of FCC Chairwoman Jessica Rosenworcel‘s recent pledge to aid in Hawaii wildfire recovery. Her commitment involves mobilizing both FCC personnel and service providers to assist the affected areas in restoring wireless services.