News
A new proposed rulemaking notice from the Federal Communications Commission (FCC) aims to update letter of credit standards for broadband providers seeking access to public money.
By: Brad Randall, Broadband Communities
The FCC is seeking input as the agency prepares to loosen standards for letters of credit requirements.
Letters of credit for broadband providers seeking to utilize public money have been a hurdle for some providers. The letters, which must be from qualifying banks, are required for all providers seeking to access Universal Service Fund dollars.
“In the last two years, a significant number of banks have lost their eligibility to issue letters of credit for high-cost support recipients as their safety ratings have fallen below the standard established,” a June 6 release from the FCC Office of Media Relations read. “Carriers are then burdened by the possibility of needing to obtain a new letter of credit from a qualifying bank.”
The FCC’s official Notice of Proposed Rulemaking also seeks comment to reduce the value of letters of credit in regard to the Rural District Opportunity Fund and the burden of obtaining letters of credit for providers participating in Connect America Fund Phase II.
The proposed rules would reduce the value of letters of credit for Rural District Oppertuinity Fund recipients “that have demonstrated sufficient broadband deployment using program funds,” according to the FCC’s June 6 release.
Additionally, with Connect America Fund Phase II, the FCC’s proposed rules would reduce the burden of obtaining a letter of credit for “providers that have met deployment and reporting obligations.”
The FCC’s statement expressed fears among commissioners that current standards for letters of credit are producing negative effects.
“Amid concerns that the burden from those requirements can impact deployment, the commission seeks comment on changing its existing bank rating standards and allowing certain providers to reduce the value of their letter of credit sooner, freeing more capital for deployment.”
The action to move forward with the proposed rulemaking notice was unanimous, according to the FCC Office of Media Relations.
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