Vermont Community Broadband Board (VCBB) has joined a coalition of almost 300 broadband experts, internet service providers (ISPs), community leaders, nonprofits, consumer advocates, and business groups that have joined forces to highlight concerns about the National Telecommunications and Information Administration's (NTIA) Broadband Equity, Access, and Deployment (BEAD) program.
In a letter today to NTIA head Alan Davidson and Secretary of Commerce Gina Raimondo, the group warns that the program’s letter of credit requirement could block the vast majority of smaller operators, community-centered ISPs, and publicly owned networks, such as Vermont’s Communications Union Districts (CUDs), from securing grants. The result is that these ISPs, which are willing to serve small and rural communities, will be largely unable to secure funds.
By requiring awardees post an irrevocable letter of credit equal to 25% of their grant award — which banks typically insist be collateralized with cash — recipients will “have to lock away vast sums of capital for the full duration of the build, likely several years,” reads the letter. In addition to a separate minimum 25% match requirement, the letter of credit “establishes capital barriers too steep for all but the best-funded ISPs.” This would result in more expensive access for Vermont’s rural residents.
The Communications Workers of America, American Association for Public Broadband, the American Library Association, Consumer Reports, Public Knowledge, the SHLB Coalition, and Connect Humanity have signed the letter, alongside a broad coalition of ISPs, local government officials, state broadband offices, rural associations, funders, and digital equity advocates.
Together, they argue that “rather than demonstrating a provider’s ability to construct a broadband network and provide high-speed broadband services,” the letter of credit is a “measure of whether they can lock up valuable working capital."
The group urges the NTIA to drop the letter of credit entirely. Short of that, the letter suggests alternatives that provide additional protection for taxpayer dollars while ensuring BEAD funding can go to the providers best able to deliver for American families. Alternatives include performance bonds — a tool regularly used in infrastructure construction projects — and delayed reimbursements to “ensure proposals are viable and that applicants have the capacity to perform.”
Read full press release.