Coalition forms against BEAD letter of credit requirement

A small coalition of internet service providers (ISP), broadband associations, and digital equity advocates is emerging to warn that a requirement for service providers to provide a letter of credit in order to participate in the federal government's Broadband Equity Access and Deployment (BEAD) program will "shut out a huge number of ISPs." The $42 billion BEAD program requires grant recipients to provide a letter of credit for 25% of the award, in addition to a 25% match requirement. One member of the coalition, Connect Humanity – a nonprofit working with communities to advance digital equity – argued that this requirement creates "enormous barriers to all but the best funded providers" and will shut out the types of ISPs that the Biden administration has prioritized as participants in the program. The issue, according to Connect Humanity, is the collateral required to receive a letter of credit. Providing an example, the group said that an ISP aiming to build a $10 million broadband network would need to raise over $2 million in collateral (with interest and fees), in addition to supplying matching funds, to be eligible for a $7.5 million BEAD grant. "Many simply won't apply," wrote Connect Humanity. 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 (SHLB); and the American Association for Public Broadband, led by Gigi Sohn.