The Federal Communications Commission has set timelines for rip and replace reimbursement, where broadband providers can apply to participate in the $1.9 billion program that covers costs for swapping out existing Huawei and ZTE network equipment and services deemed national security risks.
The application filing window opens October 29, 2021 and closes January 14, 2022. During that time service providers can submit cost estimates for the removal, replacement and disposal of equipment covered by the program.
In early Q1 2022 the FCC will release a public notice announcing accepted applications, with the regulator issuing funding allocation decisions in early Q2. In the second quarter of 2022, participants can start submitting invoices for the actual costs they incurred and will receive reimbursement payments.
Any advanced communications provider with 10 million or fewer customers, including schools, libraries and healthcare providers are eligible to apply. Huawei and ZTE equipment covered by the program had to have been purchased on or before June 30, 2020.
The program applies to both wired and wireless networks.
Some technology upgrades are eligible for reimbursement – for example, replacing older mobile wireless networks with 4G LTE equipment that is 5G-ready is considered a comparable replacement.
The program won’t cover upgrades such as replacing microwave backhaul with fiber or last-mile fixed wireless with fiber-to-the-premises. Providers also can’t be reimbursed for replacing fixed wireless links with fiber.
Reimbursements don’t include end-user devices, such as replacing non-Huawei or ZTE mobile handsets, IoT devices, or customer premise equipment like routers.
Funds can reimburse new tower construction, if for example existing towers can’t be reinforced to support new pieces of equipment. Those instances will be decided on a case-by-case basis.
The effort to remove Huawei and ZTE gear from existing networks has already been a multi-year endeavor. In late December 2020, around $1.9 billion was appropriated to carry out the Secure and Trusted Communications Networks Act of 2019. The FCC finalized reimbursement program rules this summer.
The Competitive Carriers Association (CCA) has said at least 15 members identified covered equipment in their networks and are expected to participate in the program. The Rural Wireless Association (RWA), which represents wireless carriers with less than 100,000 subscribers, has been active in the proceeding.
In a petition filed last week, RWA again urged the FCC to reconsider part of its Third Report and Order (PDF) on the matter.
The group wants a general extension to the one-year timeline to remove and replace existing network gear, saying the FCC didn’t address commenters’ concerns about supply chain and labor shortages.
The Secure Networks Act authorizes the FCC to grant a six-month extension, but the regulator had determined it was premature to extend before an actual deadline was set, saying it would go against Congress’ intent of a one-year rip and replace term. The FCC will consider extensions on a case-by-case basis.
However, RWA said shortage issues have only worsened since the group and others last requested an extension. (Nokia and CCA were among those calling for a blanket six-month extension).
“Multiple applicants will receive funding apportionment contemporaneously, and to comply with the one year removal, replacement, and disposal term applicants will be in a race with each other to purchase and install already limited approved equipment and hire installers from a limited pool, creating a further squeeze on supply and labor as well as an increase in costs due to supply shortages,” wrote RWA in the September 22 filing (PDF). “These current and ongoing compliance shortages necessitate an immediate general extension.”
An ad-hoc method, the group argued, would put further strain on limited resources and deplete funds paid for extension applications and associated costs that could instead have gone to equipment.
Smaller and rural carriers that can’t afford added expenses for extensions, or costs of penalties from not complying with the rip and replace mandate – including lost revenue and inability to participate in the Universal Service Fund – would likely feel the impacts, according to RWA.