On the left, cell phone towers. On the right, fiber optic cable plugged in. In the middle, an image of Earth and communications.

Telecommunication Bonds

In the ever-evolving landscape of global communication, telecommunications play a pivotal role in building, maintaining, and upgrading the infrastructure that facilitates our interconnected world. From laying the groundwork for fiber optic networks to ensuring the smooth operation of communication systems, these professionals contribute significantly to the seamless flow of informtion and entertainment.Telecom Companies often need surety bonds and solutions to guarantee obligations and free up collateral to fund growth. Common Telecom Bonds include:

Telecom Performance Bonds

Telecommunications companies often need performance bonds to guarantee contract obligations. The performance bond guarantees the performance of the contract. Telecom performance bonds are common for projects involving government funds but can be required in private contracts as well. Common examples of performance bonds in telecom include guaranteeing that fiber optic cable will be laid, towers built and/or that service will be run to contracted locations. 

Certain challenges may arise when providing telecom performance bonds. These include long term obligations and performance guarantees. 

Long Term Obligations

Surety Bond companies prefer to write performance bonds on short term contracts of two years of less. Much can change over time and long-term obligations create more risk for both the telecom company, and bond company. Strong, established companies may be able to qualify for long term performance bonds easily, while smaller companies may need to provide languages in their contracts that provide for renewal on an annual basis. 

Performance Guarantees

Performance Guarantees can be another challenge for telecom companies needing performance bonds. Performance guarantees are contract provisions that require telecom companies and internet services providers (ISPs) to hit a certain level of output. For example, a contract may require an ISP to hit download speeds of at least 1GB for certain areas. Most bond companies do not want to be responsible for performance. They prefer that the telecom company address these needs elsewhere such as through an insurance policy.

 

Broadband Equity, Access, and Deployment (BEAD) Program

As part of the Infrastructure Investment and Jobs Act, Congress included funds available to expand broadband access across the country though the Broadband Equity, Access and Deployment Program (BEAD). Under this program, the government will require fund recipients to guarantee their obligations with a performance bonds. Axcess Surety specializes in helping Internet Service Providers, and their contractors obtain these bonds. 

The following government entities may receive BEAD funds and bonds may be required to run to any of these entities:

  • Any U.S. State
  • Washington, D.C.
  • Puerto Rico
  • U.S. Virgin Islands
  • Guam
  • American Samoa
  • The Commonwealth of the Northern Mariana Islands

Surety Backed Letters of Credit

Surety Backed Letters of Credit or Surety Fronted Letters of Credit are Irrevocable Letters of Credit backed by a surety company instead of through a traditional financial institution. Surety backed LOCs are a popular way for telecom companies to free up cash and collateral and create additional liquidity. These surety backed LOCs can be used to replace bank letters of credit that are often required to guarantee obligations for telecom companies and ISPs. 

Qualification

Not all telecom companies, contractors and ISPs will be able to qualify for a surety backed LOC. The product is generally limited to those with very strong liquidity, profitability and quality balance sheets. 

Rural Digital Opportunity Fund (RDOF)

The Rural Digital Opportunity Fund (RDOF) is another government program that was launched to establish high speed internet services in underserved areas. Under the program, the U.S. Government awarded grants to ISPs and contractors for running internet services to different areas of the country. ISPs had to bid on the contracts that were issued through auctions. In order to be awarded a grant, the ISP had to post a letter of credit for percentage of the award. 

RDOF created significant challenges for ISPs and contractors. Many have had a difficult time gaining the necessary letters of credit from financial institutions. Those that did may have had to post significant cash and collateral to do so. Axcess Surety has been successful replacing the letters of credit with surety backed letters of credit to free up cash and collateral. Contact us today to discuss this option. 

Who We Serve

Internet Service Suppliers (ISPs), Wireless Services, Fiber Contractors, Suppliers and others. We have options for all primary and supporting telecom businesses. 
A woman on the phone in front of internet cables.
A telecom tower with two people looking up at it.
A contractor standing in front of fiber optic cable spools.
An image of a supplier on the phone in front of fiber optic cables.

Many telecoms, ISPs, contractors and suppliers need surety bond and credit solutions. Axcess Surety has the expertise products and services to help contractors obtain new contracts, free up collateral and reduce overall risk. Contact our telecommunication surety bond experts today. 

Contact Us

Axcess Surety is the premier provider of surety bonds nationally. We work individuals and businesses across the country to provide the best surety bond programs at the best price.

Headquarters:
5440 W 110th St Suite 300-2
Overland Park, KS 66211
12288 S. Mullen Rd.
Olathe, KS 66062
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