High-speed internet money under scrutiny

• State governments and internet service providers are now relying on the National Telecommunications and Information Administration to effectively deploy those dollars.

State of play: NTIA in June announced how much grant money each state and territory will get from the Broadband Equity, Access and Deployment Program.

• The agency is now reviewing initial proposals and 5-year action plans for how states plan to use the grant money.
• States that have been approved will have access to at least 20 percent of their allocated funds to start. The rest of the money will be released after initial proposals are executed.

Driving the news: A broad swath of stakeholders — lawmakers, companies, state broadband offices, advocacy groups, industry coalitions, unions and banks — are sounding the alarm over a letter of credit requirement they say would shut out thousands of internet service providers from getting grant money.

• NTIA is requiring awardees to provide a letter of credit from a bank equal to 25% of their grant award, which would lock up large sums of capital for the full duration of construction time, which is likely several years.
• Connect Humanity, an organization that provides grants to propel digital equity, estimates a provider seeking a $7.5 million grant for a $10 million project would need to provide at least $4.6 million of their own capital up-front.
• The requirement would be the most burdensome for the types of non-traditional operators Congress and the administration say they want to participate, including community-centered and city-owned ISPs and women and minority-owned small businesses.

What they're saying: "Smaller providers will probably participate but at a much smaller scale than they would be able to," said Kansas Office of Broadband Development director Jade Piros de Carvalho.

• "That's really not fair because a lot of these smaller providers have been the ones going into really remote areas for a long time with their own capital."

The other side: "Our goal is to connect everyone in America with affordable, reliable high-speed Internet service while being good stewards of taxpayer dollars," said Charlie Meisch, NTIA's director of public affairs.

• "We want to encourage robust participation from service providers of all types, and we require states to ensure that grant recipients can build a high-quality network and operate it for years to come."

Meanwhile, during a House Energy and Commerce subcommittee hearing on Thursday, Communications and Technology Chair Bob Latta noted there are over 130 broadband programs across 15 federal government agencies and said he's concerned they're being administered ineffectively.

• USTelecom president Jonathan Spalter said Congress needs to ensure effective implementation of BEAD, including "streamlining permitting, minimizing burdensome rules to maximize provider participation and prioritizing experienced providers."

• "Unlike government owned networks, private sector providers have a proven track record of successfully building and operating networks to bridge the digital divide. Experience matters," Spalter said.

Instead of the letter of credit, advocacy groups are suggesting using performance bonds to mitigate risk or delayed reimbursement which releases funding in tranches as milestones are hit.

Separately, Connect Humanity co-founder & CEO Jochai Ben-Avie told Axios another major issue is NTIA's requirement that ISPs know all of their contractors and subcontractors before they apply for an award because it's too far out from when construction would begin a year or two down the line.

• Senate Commerce Committee ranking member Ted Cruz on Monday released a report outlining concerns that the agency's allocation of funds per state is duplicating efforts.

What we're watching: The FCC's Affordable Connectivity Program, which nearly 21 million low-income households rely on, is set to expire next year.

• Broadband infrastructure through BEAD is pointless if families can't afford their internet bills, ACP proponents say.
• Color of Change deputy senior director of policy and government affairs Michael Huggins said his group is working at the state and local level to ensure BEAD funds "are giving the funding to all communities and making sure that Black families are not being left out in the dark."
• "Black communities aren't just in urban areas, they're in rural areas too. And some of those spaces often aren't given the the funds to make sure they have access to internet," Huggins said.