Letter of Credit Coalition, FCC Proposes Higher Speed Threshold, Domestic Semiconductor Bill

The NTIA’s BEAD program requires grant recipients to provide a letter of credit.

Letter of Credit Coalition, FCC Proposes Higher Speed Threshold, Domestic Semiconductor Bill
Photo of Rep. Anna G. Eshoo, D-Calif., from her House website

July 27, 2023 – Since last Wednesday, some internet service providers, broadband associations, and digital equity advocates have been raising concerns about a requirement that applicants for federal broadband funding provide a letter of credit to receive money.

The coalition is warning that such a requirement for funding from the $42.5-billion Broadband Equity, Access and Deployment program will “shut out a huge number of ISPs.”

Some won’t even apply, they say.

The National Telecommunications and Information Administration’s BEAD program requires grant recipients to provide a letter of credit for 25 percent of the award, with a 25 percent match requirement.

The coalition, including Connect Humanity, argues this requirement disproportionately favors well-funded providers, shutting out smaller ISPs and minority-owned businesses targeted by the program.

“Many of the small ISPs, minority and women-owned businesses, nonprofits, and municipalities that the program claims to be targeting have little hope of meeting these requirements,” said Connect Humanity in a statement.

“The result is a herculean thumb on the scales for the large, well-funded incumbent providers that have historically failed to serve all Americans, even when subsidized to do so. It locks out smaller, efficient, local ISPs that are typically faster, more affordable, and more willing to connect America’s least served communities — the kind of providers President Biden talked about,” it added.

The organization highlights that an ISP planning to construct a $10 million broadband network must secure over $2 million in collateral (including interest and fees) and provide matching funds to be eligible for a $7.5 million BEAD grant.

Other members of the coalition pushing back against the letter of credit mandate include small ISPs like Arkansas-based Aristotle Unified Communications; organizations like Broadband.Money; the Schools, Health, and Libraries Broadband Coalition; and the American Association for Public Broadband.

FCC chair proposes upping federal speed standard

Federal Communications Commission Chairwoman Jessica Rosenworcel proposed Tuesday that the federal broadband speed standard be upgraded to 100 Mbps download and 20 Mbps upload.

The existing federal broadband access standard is 25 Mbps download and 3 Mbps upload.

The proposal was part of a notice of inquiry that is an exercise that the FCC periodically performs as required by Section 706 of the Telecommunications Act.

“The needs of internet users long ago surpassed the FCC’s 25/3 speed metric, especially during a global health pandemic that moved so much of life online,” said Chairwoman Rosenworcel.  “The 25/3 metric isn’t just behind the times, it’s a harmful one because it masks the extent to which low-income neighborhoods and rural communities are being left behind and left offline.  That’s why we need to raise the standard for minimum broadband speeds now and while also aiming even higher for the future, because we need to set big goals if we want everyone everywhere to have a fair shot at 21st century success.”

All BEAD-funded broadband projects must reach a minimum of 100 Mbps download/20 Mbps upload with a latency of less than or equal to 100 milliseconds according to requirements set by the National Telecommunications and Information Administration for the $42.5b of BEAD funding.

Almost every cable and fiber provider should be able to exceed the 100Mbps download-speed threshold. But the asymmetric nature of cable connectivity may leave many cable operators that brag about their fast download speeds struggling to hit 20Mbps on their uploads according to journalist Rob Pegoraro.

House passes foreign investing bill for domestic semiconductor manufacturing

The House of Representatives passed a bill Tuesday that will require the Commerce Department to coordinate with state-level economic development organizations to increase foreign direct investment in semiconductor-related manufacturing and production.

The Securing Semiconductor Supply Chains Act tasks Commerce’s SelectUSA business investment program to review various aspects related to investment from foreign countries into the American semiconductor industry.

SelectUSA will seek to identify the measures the federal government can adopt to support and encourage increased foreign direct investment in any segment of semiconductor-related production, according to the legislation.

SelectUSA will further review and analyze any existing barriers that may hinder such investments and propose strategies to enhance state-level efforts in attracting foreign direct investment in the semiconductor sector, the legislation adds.

The legislation introduced by Reps. Anna Eshoo, D-CA, and Greg Pence, R-IN, would assist federal efforts to expand domestic manufacturing of semiconductor chips.

“Thirty years ago, the United States manufactured nearly 40% of all semiconductors, but today we produce only 12%,” said Eshoo in a release. “This lack of domestic semiconductor manufacturing poses a significant risk to our economy and our national security. I’m proud the House passed my bipartisan legislation today, the Securing Semiconductor Supply Chains Act, which bolsters domestic semiconductor production and reduces reliance on foreign suppliers.

“This bill, along with the investments in the CHIPS and Science Act, will bring the U.S. back to be number one in the world in semiconductor manufacturing and maintain our leadership in technological innovation,” she added.

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