Industry Urges FCC Modifying Letter of Credit Rules for USF Recipients
Telecom and banking groups urged that the FCC adopt proposed modifications to its letter of credit (LOC) rules for Universal Service Fund support recipients. Comments were posted Tuesday in docket 10-90 (see 2407030062). The commission proposed modifying LOC rules for its high-cost programs and Connect America Fund (CAF) Phase II and Rural Digital Opportunity Fund (RDOF) support recipients.
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The FCC should "abandon its reliance on Weiss bank safety ratings as the standard to determine bank eligibility," the Wireless ISP Association said, noting the "dramatic downward fluctuations in ratings" that have caused more than 1,600 banks to lose their eligibility to provide USF recipients with an LOC. WISPA suggested that the FCC let recipients rely on performance bonds, aligning it with NTIA's programmatic waiver for the broadband, equity, access and deployment program. GeoLinks "endorses the comments of WISPA on this subject," it said. A coalition of RDOF winners also backed performance bonds as an alternative.
Expand the pool of qualified banks that can support recipients, NCTA suggested. The cabler sought modifications of deployment milestones that providers must reach to reduce their LOC value and other "innovative approaches to further reduce unnecessary burdens on providers." ACA Connects urged consideration of reducing the minimum Weiss rating from B- to C-, which would "substantially expand the number of eligible banks" that could issue LOCs. The National Tribal Telecom Association agreed, adding that the FCC should take additional steps that would "ensure tribally-owned carriers are not further disadvantaged by LOC requirements."
The proposed modifications "will ease burdens on both the commission and USF support recipients," USTelecom said. The modifications would also help facilitate next-generation network deployment. Weiss ratings "are also not long-term debt ratings," USTelecom said, "which experts believe are the most relevant rating for LOCs." It suggested defining a "widely recognized" credit rating agency as "one of the three dominant credit ratings agencies," such as S&P, Moody's Investor Services and Fitch Group. It also backed reducing the required LOC amount.
Small providers "face distinct hurdles in obtaining LOCs," NTCA said. The group noted that the cost of an LOC is a "potential barrier to entry to the RDOF program" and supported amendments that decrease LOC costs "as long as those reductions are counter-balanced by adequate incentives ... to ensure performance obligations of program recipients." NTCA backed a permanent amendment of the rules for the CAF II and RDOF programs.
The Independent Community Bankers of America (ICBA) raised "serious concerns" about the transparency and rigorousness" of the Weiss bank ratings. "We strongly urge the FCC to abandon them as a method for determining whether a bank can support participants in FCC programs," ICBA said: "We do not believe that Weiss bank safety ratings are sufficiently transparent, rigorous, or unbiased to serve as the basis for eligibility in a federal government program." The Bank Policy Institute agreed, saying the Weiss rating system "lacks the demonstrated expertise, transparency, integrity, and independence to determine if a banking organization can support participants in commission programs."