Wireless win in Arkansas offers WISPs hope on federal front

A fixed wireless Internet service provider (WISP) recently won a state-level battle that could help more wireless companies get in on broadband grants.

Aristotle Unified Communications (AUC) – a WISP serving Central Arkansas and the Arkansas Delta – successfully persuaded Arkansas' broadband office to drop a proposed letter of credit requirement from its grant program, allowing providers to instead submit a performance bond.

The proposed rule for the Arkansas Rural Connect (ARC) broadband program would have required providers to maintain a "letter of credit equal to 100% of the grant award amounts disbursed to the Internet service provider."

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Both AUC and the Wireless Internet Service Providers Association (WISPA) persuaded the state to forego that rule, according to documents shared with Light Reading.

"Letters of credit are costly, burdensome, and have several negative financial consequences for providers," wrote AUC CEO Elizabeth Bowles, with support from WISPA, in a letter to ARC Broadband Manager Judge Stephen Porch in August. "These facts ultimately will inhibit deployment of broadband in Arkansas by excluding smaller providers who are otherwise qualified to participate in the program and by chilling participation by even larger providers who do not wish to tie up their assets just to support a letter of credit."

Pointing to grants distributed by the ARC program prior to the proposed rule change, Bowles noted: "Had letters of credit been required during the last round of ARC awards, this would have put between $1.25 million and $6.24 million annually ($3.7 million - $18.3 million over three years) in bank accounts and not in broadband deployment."

Instead, requiring performance bonds "will help providers who may not have liquid assets to meet federal requirements for a letter of credit, thereby smoothing the path for those providers to participate fully in the ARC program," Bowles said.

The Arkansas Broadband Office alerted AUC earlier this week that it was dropping the letter of credit requirement in favor of performance bonds for its next round of grants.

AUC, a winner in the first round of ARC grants, has received nearly $31 million in state broadband grants thus far to build out fixed wireless.

Bigger picture

The state-level win is part of a larger story and bigger fight for wireless companies eager to participate in the NTIA's $42.5 billion Broadband, Equity, Access and Deployment (BEAD) program. As currently written, the funding rules for BEAD require subgrantees to maintain a letter of credit with a minimum value equal to 25% of the grant amount.

Indeed, while Aristotle and wireless reps have won their battle in Arkansas for now, the state will likely have to revisit the rule when it starts distributing BEAD funding, given the federal requirement for a letter of credit – if it's not rolled back.

The letter of credit is just one of several issues wireless companies have with the NTIA's funding rules for the BEAD program, which prioritize fiber builds and omit projects using unlicensed spectrum. NTIA Chief Alan Davidson has repeatedly said that while BEAD prioritizes fiber, it will also fund non-fiber projects.

But letter of credit rules and other barriers may keep smaller providers from even applying. Hence, groups like WISPA are lobbying to relax those rules, while the Fiber Broadband Association is pushing the NTIA and states to hold the line on a fiber-first approach.

"The NTIA has yet to offer clear guidance on whether it will change the Letter of Credit requirements it has set in the BEAD NOFO [notice of funding opportunity]. That said, Assistant Secretary Davidson has, in the past, noted he has heard from several parties how burdensome the Letter of Credit requirements are," said a WISPA spokesperson in an email to Light Reading.

"We remain hopeful, however, that, like Arkansas, those requirements will move to less burdensome performance bonds, opening up the process to more players, especially smaller ones, and thus increasing the odds that the IIJA through BEAD closes the digital divide," the spokesperson added.

WISPA said it is in talks with "other states" on letters of credit and other issues related to broadband funding, and it has urged the FCC to change letter of credit requirements for its broadband programs as well.

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— Nicole Ferraro, editor, Light Reading, and host of "​​The Divide" podcast.