President Joe Biden’s broadband program, aimed at closing the digital divide and boosting internet infrastructure, is facing criticism from smaller internet service providers (ISPs) and community programs. These critics argue that certain provisions in the program’s fine print will disproportionately benefit larger ISPs, hindering the smaller players from receiving a fair share of the $42 billion allocated for the program.
Over 300 small ISPs, policy experts, and consumer advocates have collectively written a letter expressing their concerns about the program to Secretary of Commerce Gina Raimondo and other officials in the U.S. Commerce Department. The letter highlights the potential implications of a financial requirement that poses a significant obstacle for smaller ISPs, while larger broadband providers can meet it more easily. Critics fear that this requirement will result in the dominant players receiving most of the funding, even though they have historically been less effective at connecting unserved communities.
The requirement in question is related to obtaining a Letter of Credit (LOC) for 25% of the grant amount when applying for the Broadband Equity Access and Deployment (BEAD) program. However, the letter argues that this necessitates borrowers to set aside significant capital as collateral, undermining their ability to invest in network expansion. The coalition estimates that a provider seeking a $7.5 million grant for a $10 million project would require at least $4.6 million of their own capital upfront, making it an insurmountable burden for most ISPs.
The letter posits that the LOC requirement may exclude the majority of broadband programs intended to prioritize the very communities the program aims to serve, including smaller ISPs, women- or minority-led ISPs, nonprofit organizations, and municipal broadband programs.
In response, the National Telecommunications and Information Administration (NTIA), which will administer the program, reassured that it would work with smaller programs and states to ensure equitable distribution of funds. The agency emphasized its commitment to connecting all Americans with affordable and reliable high-speed internet while working within the program’s rules and collaborating with states and territories to achieve the objectives.
The letter also proposed potential solutions, such as alternative approaches like performance bonds and delayed reimbursement, to address the challenges posed by the LOC requirement and foster progress in network expansion. The coalition underscored the transformative potential of the BEAD program but stressed the urgency of creating a level playing field for all providers to ensure equal opportunities for participation.
