Regulation - What is it Good For?

The Power of a Letter of Support

The newly released Virginia proposed BEAD grant rules highlight an issue that was included in the original grant rules. The BEAD grants give significant power to local governments through local letters of support.

ISPs have always asked for letters of support for broadband grants, and most communities have handed them out like Halloween candy. There was no reason not to support anybody who wanted to build better broadband, so a community would reflexively give a letter of support to most ISPs who asked for one.

The BEAD grants are different, and communities need to carefully weigh giving letters of support. The Virginia BEAD grants rules – and I think most other states as well – are going to award a significant amount of grant scoring points for an ISP that gets a local letter of support. In the Virginia grant scoring, a letter of support represents 10% of the total points needed for an ISP trying to win a grant.

Since most BEAD grants are going to be awarded in rural areas, County governments are the local government entities that will matter the most for BEAD. A County needs to carefully think about the ISPs it want to support – if the County provides a local support letter for only one ISP, that ISP has an instant advantage over other ISPs in the grant scoring.

If a County gives every ISP a support letter, it’s the same as if you endorsed nobody because all ISPs will score the same in the BEAD grant scoring.

I’ve been working with counties all over the country, and many of them have a strong preference for who wins the grant funding. For instance, a County might have a strong preference for supporting fiber over wireless technology. A County might prefer to support local ISPs over large ones, or support a large ISP already operating in the County over a newcomer. Counties often have a strong preference, and the letter of support is a way to express these wishes.

The Virginia BEAD grant rules are also interesting because the State gives grant scoring points to ISPs that visit with local governments and explain who they are and their plans. There is no guarantee that other states will have the same requirement, but it’s a good one. If a County is going to decide which ISPs you want to support, you need to meet and hear from them. ISPs pursuing BEAD grants will differ in important ways. Technology differences are one obvious way, but there are many others. Counties care a lot about broadband prices and might strongly prefer an ISP that promises low rates. A County might care about issues like the location of technicians and customer service – will there be jobs created in the County?

If a County government wants to use the letter of credit to its best advantage, the County will have to choose the ISP or ISPs you are willing to support. Even if ISPs are not required to visit you, like in the Virginia rules, you are going to want to talk with them. In the past, I’ve seen ISPs ask for letters of support a week before grants are due – that is not going to cut it if the letter of support means something.

The bottom line is that BEAD grant rules are giving a County a power it never had before – a chance to influence who wins broadband grants. This is the equivalent of a County voting for the ISP it wants to win the grant – the County will be helping to pick winners and losers.

The one downside to the process is that it won’t be particularly comfortable for a County to tell some ISPs they won’t get a support letter. But if a County has a strong preference about who will provide broadband for the next fifty years, it should exercise this power.

Counties need to read the State broadband grant rules when they are published to understand the importance of the letter of support. A County has power if the grant scoring rules award points to an ISP for having a local letter of support.

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