Big ISPs will dominate $42B grant fund if rules aren’t changed, advocates say

Upfront grant costs are "too steep for all butThe biggest Internet service providers will dominate a $42.45 billion broadband grant program unless the Biden administration changes a rule requiring grant recipients to obtain a letter of credit from a bank, according to a joint statement from consumer advocacy groups, local government officials, and advocates for small ISPs.

The letter sent today to US government officials argues that "by establishing capital barriers too steep for all but the best-funded ISPs, the LOC [letter-of-credit requirement] shuts out the vast majority of entities the program claims to prioritize: small and community-centered ISPs, minority and women-owned ISPs, nonprofits, and municipalities."

The rule is part of the Broadband Equity Access and Deployment (BEAD) program that's being administered by the National Telecommunications and Information Administration (NTIA).

"Rather than demonstrating a provider's ability to construct a broadband network and provide high-speed broadband services to unserved and underserved Americans, the LOC is a measure of whether they can lock up valuable working capital over multiple years," the letter said. "While large incumbents may be able to bear this financial burden, most others can not. And, due to various state and local rules, municipalities are often not allowed to obtain LOCs. Therefore, alternatives to the LOC are critical to ensure these providers can participate in the BEAD program." the best-funded ISPs," groups claim.