WCB Seeks Comment on Extending CAF II Letter of Credit Waiver

On August 22, 2022, the Wireline Competition Bureau (“WCB”) released a Public Notice seeking comment on extending the waiver of the letter of credit rules for the Connect America Fund Phase II Auction (“Auction 903”).   You may recall that in 2020, as a result of COVID-19, the WCB waived the letter of credit rules for Auction 903 and Rural Broadband Experiments (“RBE”) support recipients, which permitted parties to comply with the less extensive letter of credit rules established in the Rural Digital Opportunity Fund (“RDOF”) proceeding.  In 2021, the WCB extended the waiver through the end of 2022.

In the Notice, the WCB seeks comment on extending the waiver beyond December 31, 2022 only for Auction 903 support recipients that meet the first mandatory build out deadline as demonstrated by reporting in the HUBB by March 1, 2023, of deployment to at least 40% of their locations as of December 31, 2022.  Those that do not meet the 40% milestone or that fail to timely file their required location reports would be required to file a letter of credit meeting the original Auction 903 requirements by April 1, 2023.  In addition, providers that do not pass a USAC verification and have a reduced letter of credit in accordance with the RDOF rules will be required to increase the letter of credit’s value to comply with the Auction 903 rules.

The WCB also seeks comment on whether, and to what extent, the ongoing nature of the pandemic has affected operations of telecommunications service providers and the condition of financial markets and supply chains.  The WCB recognizes that pandemic-related economic disruptions have significantly decreased and financial conditions have improved, however, the WCB seeks comment on whether there are unique financial challenges providers are facing that interfere with their ability to obtain the letters of credit required under the Auction 903 rules, and whether there are new dynamics that may not have been present when the waiver was first granted.

Comments are due on or before September 21, 2022.

Reply comments are due on or before October 6, 2022.

Please Contact Us if you have any questions.

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