With New Letter of Credit Rules in Place, FCC Rural Broadband Experiment Funding Moves Ahead
In what could signal the beginning of the end of the Federal Communications Commission Rural Broadband Experiment (RBE) funding logjam, the commission said it was ready to authorize RBE support for six RBE projects in two states. The funding, which totals over $4 million, will go to Northeast Rural Services for five projects in Oklahoma and to Lake County for a project in Minnesota. The RBE program made a total of $100 million available to traditional and non-traditional network operators to cover some of the costs of deploying broadband to rural areas where broadband was not previously available.
Awards in the FCC Rural Broadband Experiment program were made over a year ago, but the FCC was slow in releasing funding to some awardees – in part because some small telecommunication companies and electric utilities that were awarded funding had difficulty meeting a requirement that they obtain a letter of credit (LOC) from one of the nation’s 100 largest banks. Those companies typically do not borrow from those banks, and awardees found that many of the large banks were unwilling to provide LOCs to them. Initially the FCC anticipated imposing the same LOC requirement for winners in the Connect America Fund reverse auction. But when the commission in May adopted a framework for the CAF auction, it expanded the pool of banks from which the FCC would accept LOCs. In announcing that change, the FCC did not specify whether the change would also apply to the RBE program. But as Doug Jarrett, a partner specializing in telecom law with law firm Keller & Heckman LLP, said, the RBE awardees “get the same relief on the LOCs as the CAF II bidders.”