The National Telecommunications and Information Administration (NTIA) recently announced it has created a “programmatic waiver” that offers alternatives to the much-criticized letter-of-credit (LOC) requirement buried in the BEAD program.

The announcement comes after hearing from a coalition of public interest groups and a chorus of broadband experts that the LOC requirement would effectively shut out smaller ISPs from participating in the national effort to expand high-speed Internet access.

When the bipartisan infrastructure law was passed in 2021, establishing the $42.5 billion BEAD program, the NTIA issued a Notice of Funding Opportunity (NOFO) that detailed the spending rules for BEAD grants. Designed to ensure Internet service providers (ISPs) did not take federal grant dollars and leave a project incomplete, the LOC requires BEAD grant applicants to provide a letter-of-credit from a bank that verifies the applicant has at least 25% of the grant dollar amount in cash reserves held in a bank account for the entire time it takes to complete a network build.

A massive coalition of more than 300 broadband policy experts and organizations have written a letter to the U.S. government, warning that smaller broadband providers, nonprofits, and municipalities will be elbowed out of an historic $42.45 billion broadband grant program without some notable changes to program rules.

At the heart of their concerns sits the Broadband Equity Access and Deployment (BEAD) program, made possible by the recently passed infrastructure bill, and administered by the National Telecommunications and Information Administration (NTIA). The grant program is a once-in-a-lifetime opportunity to put a significant dent in America’s longstanding digital divide.

But BEAD program rules currently require grant recipients to obtain a letter of credit (LOC) from a bank, collateralized by cash or cash-equivalent. They also require grant winners to provide "matching funds of not less than 25 percent of project costs," though the latter restriction can be waived in some high deployment cost areas.

While the restrictions were intended to reduce the risk of project failure (a touchy subject for the government in the wake of problems with the FCC’s RDOF program), they require grant recipients to lock away vast and untouchable sums of capital for the duration of any broadband build, most of which last several years.