ISP and Banking Groups Urge Updating USF High-Cost Credit Rules

The "lack of transparency and volatility with Weiss [bank safety] ratings strongly favors a new system that is more sustainable," the Wireless ISP Association said. High-cost program recipients "should have the flexibility to obtain performance bonds in lieu of LOCs," WISPA said. Performance bonds are "subject to extensive prequalification before the bonding company agrees to issue the bond," WISPA argued, noting there was no opposition to this proposal in the record.

WISPA also urged the FCC to let Rural Digital Opportunity Fund recipients reduce their LOCs to one year of support if they deploy service to 10% of locations within two years. Reducing the deployment milestone from 20% to 10% would allow recipients to "proportionally reduce the collateral they must post in order to obtain LOCs."

Extend the eligibility of financial institutions to credit unions, America's Credit Unions said. This would "instantly expand the pool of safe and secure financial institutions," the group said, and align commission rules with NTIA's programmatic waiver allowing credit unions with a Weiss rating of B- or better and National Credit Union Administration-insured to provide LOCs to broadband, equity, access and deployment program recipients. Credit unions "are uniquely situated to provide financial services in the rural areas where broadband deployment is sorely needed," the group argued. Weiss "applies the same strict rules to credit unions that they do to banks," it said, suggesting the FCC reduce the necessary rating for recipients from B- to C- should it continue to rely on Weiss ratings.

ACA Connects agreed, noting the number of banks would increase "substantially" if a C- rating were allowed "without significantly imperiling the commission's security interests." Lowering the rating would also capture "the vast majority of banks that are FDIC insured" while "screening out a subset of banks that present higher risks of default," the ACA Connects said. It also backed NCTA's proposal of letting providers have the option of using a bank with a B- Weiss rating even if the FCC abandons using Weiss ratings for bank eligibility.

Weiss noted in his letter to the FCC that the GAO used his company's ratings scale as its standard when it found that various ratings agencies' scales "differed significantly" and made it "difficult to compare the ratings of competing agencies side by side." Weiss said the company has "no reason to disagree with" the FCC's decision to lower its minimum standard to B-, echoing suggestions to further lower the minimum to a C- rating. It would not only broaden the field of eligible institutions but also "satisfy the primary concerns of the banking industry" and "help retain an important screening process grounded in third-party analysis of the latest FDIC data."

WTA raised concerns about the "severe limitations imposed by LOC requirements" for tribal governments and tribally-owned carriers to obtain funding for broadband deployment. A "high cost or impossibility of obtaining LOCs is increasingly likely to discourage" these governments and carriers from participating in broadband programs that require LOCs, WTA said. The group backed the National Tribal Telecom Association's proposal that "specific alternatives to LOC requirements be employed with respect to the relatively small and limited number" of such governments and carriers, as well as the proposal that tribal alternatives be used in "any and all present and future auction and non-auction USF broadband support."