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Alternatives to BEAD Letter of Credit Requirement Announced Following Industry Guidance

Nov. 2, 2023
Several alternatives offered to allow providers of all sizes to participate.

The National Telecommunications and Information Administration (NTIA) has released a “programmatic waiver” of the Letter of Credit (LOC) requirement in the BEAD Notice of Funding Opportunity (NOFO). 

The update comes after statements from some in the industry noting that the requirement for a LOC for 25% of the award amount would prevent some smaller providers from being able to participate, despite the aims of the BEAD program to include ISPs “of all types and sizes.” The importance of broad participation is in part because some smaller ISPs may be best equipped to take on local projects that require unique and specific knowledge.

The news was well-received by the Fiber Broadband Association (FBA). In a statement, FBA President and CEO Gary Bolton said:

“The Fiber Broadband Association appreciates the response of NTIA to meet the needs of providers by issuing today a programmatic waiver to its Letter of Credit requirement. This is an important step toward ensuring more midsize and small providers, which have long supported underserved communities, have fair opportunity to participate in the historic BEAD program and connect Americans to high-speed fiber broadband. We look forward to continuing our work with NTIA and addressing any actions needed to make reliable broadband a reality for all Americans.”

Modifications

The changes now offer firms alternative ways of meeting requirements, including:

  • Allowing the use of performance bonds
  • Allowing eligible entities to reduce the obligation upon completion of milestones
  • Allowing for an alternative initial LOC or performance bond percentage
  • Allowing credit unions to issue LOCs. 

You can read the statement posted by the NTIS here for more details on these individual alternatives to the LOC.

For more information about BEAD, visit https://www.isemag.com/bead-funding-best-practices

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