Letter of Credit Concerns Delay FCC Rural Broadband Experiments

Sixteen months after initial funding recipients were announced in the Federal Communications Commission Rural Broadband Experiments program, some awardees have been unable to proceed with their projects because funds have not yet been released to them. At issue is a requirement that awardees obtain a letter of credit from one of the nation’s Top 100 banks: Small rural telecommunication companies and utility companies that represent a substantial percentage of awardees typically do not borrow from those banks. The issue is also of concern because the same requirement is included in the rules for the upcoming Connect America Fund reverse auction that will award funding to build broadband to areas of price cap carrier territories where the incumbent carrier rejected funding, noted Doug Jarrett, a partner with Keller & Heckman LLP who specializes in telecom law.