Six of the largest regional internet service providers (ISPs) in the US have written to commerce secretary Gina Raimondo this week proposing alternatives to the current letter of credit (L/C) requirement for the Broadband Equity Access and Deployment (BEAD) programme.

The providers' letter highlights industry-wide concerns that the current L/C requirement is overly burdensome and will reduce private investments to expand broadband, particularly in rural areas.

Current L/C arrangements

The current L/C arrangements require BEAD applicants to provide the National Telecommunications and Information Administration (NTIA) with an L/C from a bank as evidence they have at least 25 per cent of the amount the NTIA will provide in grant funding in a cash bank account.

That amount of capital would then need to be set aside for the entire duration of a BEAD-funded project, thus diminishing the NTIA grant recipients' available working capital.

Industry concerns

The broadband companies underscored the ways the current L/C requirement would hold them back from important BEAD deployment goals.

Specifically, the companies say the L/C requirement will force them to "divert funds from ongoing network deployment or not participate in the BEAD programme at all."

Alternative proposals

Understanding the importance of the BEAD programme and the need for guardrails that protect taxpayer funding, the companies propose alternatives that would "both show financial capability and protect taxpayers in the event an ISP defaults, while at the same time allowing the BEAD programme to achieve its goals".

The providers, led by Brightspeed, propose reducing the L/C requirement to 5 per cent of the total grant amount and retiring the L/C upon certification of grant compliance.

They also suggest that ISPs should only be required to obtain the L/C when grant funds are received, not during the application process and the initial construction phase.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.