FCC Chair Floats Deadline Extension for Rip and Replace Applicants In Light of Funding Shortfall

WASHINGTON, May 9, 2023 – The head of the Federal Communications Commission told members of Congress this month that the regulator has the authority to extend the time for carriers to replace problematic Chinese equipment from their networks in light of a lack of additional funding from the legislature.

For a while now, the commission has complained of a $3-billion shortfall in the Secure and Trusted Communications Networks Reimbursement Program, which seeks to reimburse carriers forced by the government to remove equipment deemed a national security threat. Requests from applicants, which were approved last July, far exceed what’s available from the $1.9-billion fund, the FCC has said.

In a letter to members of Congress dated May 3, FCC Chairwoman Jessica Rosenworcel said approved applicants are up against a tight Congress-imposed timeline to remove the equipment despite the funding shortfall and must file their first reimbursement applications this July. Carriers have one year from the initial reimbursement to complete removal work.

“With July 15, 2023 now less than three months away, the lack of an additional appropriation means that the Commission will need to plan to proceed with the…funding process,” Rosenworcel said in the letter. “However, the Act does permit the Commission to grant a six-month extension of the removal, replacement, and disposal deadline for all recipients if the agency determines that the supply of needed equipment and services is inadequate to accomplish the Reimbursement Program’s goals.

“The Commission also has authority under the Act to grant individual extensions to qualified recipients that fail to meet the deadline ‘due to no fault of such recipient,’” she added.

Rosenworcel said 52 of the 126 reimbursement requests have been filed of the approved applications, with 38 of those being approved for reimbursement. Those approved applications have between late September 2023 and April 2024 to remove the equipment from Huawei and ZTE.

Last month, wireless service provider SI Wireless complained that reimbursement payments were coming too slow for it to complete its replacement work.

“Deadlines to complete removal and replacement will continue to be set on an application-specific basis as additional reimbursement requests are submitted and approved,” Rosenworcel said.

“Some recipients may not begin actually removing this equipment until additional funding is appropriated,” Rosenworcel said. “In light of this, and the need to ensure that our Nation’s communications networks are free of this vulnerable and insecure equipment, the Commission stands ready to assist Congress in any efforts to fully fund the Reimbursement Program.”

The letter was addressed to Sens. Maria Cantwell, D-Washington, Ted Cruz, R-Texas, Chris Van Hollen, D-Maryland, Senator Bill Hagerty, R-Tennessee, and Reps. Cathy McMorris Rodgers, R-Washington, Steve Womack, R-Arkansas, Steny Hoyer, D-Maryland, and Rep. Frank Pallone, D-New Jersey.

The three priority tiers include applicants who serve two million and fewer customers, which makes up the bulk of funding requests; public or private non-commercial educational institutions, of which there are no approved applicants; and one applicant serving between two and 10 million customers, the chairwoman said. Rosenworcel added the latter will not receive funding support because of the money constraints.

Senators last month introduced a bill, called the Defend Our Networks Act, to top up the “rip and replace” fund. That came after Senator Mark Warner, D-Virginia, said he would push Congress to make the funding shortfall a priority.

In January, the FCC said in a report that nearly half of respondents required to submit status reports on their replacement efforts complained about a lack of funding.

Industry associations, including the Competitive Carriers Association and the Rural Wireless Association, have raised the issue to the FCC for months. The fact that the omnibus spending bill didn’t include rip and replace funding apparently “stunned” the Telecommunications Industry Association.