WBA Advocacy Efforts Assist in Receiving Temporary FCC Waiver for Banks
Under Federal Communication Commission (FCC) rules, recipients of either the CAF Phase II Auction or the Rural Digital Opportunity Fund Auction (collectively, auction support recipients) had to obtain an irrevocable standby letter of credit (LOC) issued by a qualified bank. To be considered a “qualified bank,” FCC has several eligibility rules, including that the issuing bank must maintain a Weiss Safety Rating of at least a B-.
According to the Weiss Rating website, its Bank Safety Rating is “based on a complex analysis of hundreds of factors that are synthesized into five indexes: capitalization, asset quality, profitability, liquidity, and stability.”
After obtaining LOCs from qualified banks, several auction support recipients have had their respective bank’s Weiss safety ratings fall below B-. In such situation, FCC rules require that the carrier obtain a new LOC from a different bank with a sufficient Weiss safety rating. Until the carrier obtains a new LOC, its support is withheld.
Last month, WBA submitted a letter requesting FCC eliminate its “safety rating” requirement due to the unreliability of the Weiss rating. In response to letters from WBA, Bank of America, and others, FCC has granted individual waivers of the relevant LOC rules. The temporary waiver extends only to auction support recipients that wish to retain, renew, or reestablish their LOCs with banks that previously had Weiss ratings at or above a B- but have since seen that rating fall below B-. The waiver does not allow an auction support recipient to obtain an LOC from a new bank that did not previously provide it with an LOC if that bank has a Weiss safety rating below a B-.
The waiver will also allow auction support recipients whose support was suspended solely because their bank’s Weiss safety rating fell below a B-, and who have not yet obtained a new LOC from a bank with a sufficient Weiss safety rating, to resume receiving support. The waiver expires in one year, on March 12, 2025.
During the temporary waiver period, FCC stated it anticipates an evaluation of potential long-term solutions to the bank eligibility issue. WBA will continue to advocate for a more reliable safety rating system than the current Weiss rating system.