FCC Releases Information On Applications For Secure and Trusted Communications Networks Reimbursement Program – 161 Applications Accepted – Roughly $5.6 Billion In Funding Requested

February 9, 2022 – The FCC’s Wireline Competition Bureau has released further details on the applications filed to participate in the Secure and Trusted Communications Networks Reimbursement Program.[1]

181 Applications Were Filed – 162 Initially Found Eligible & Acceptable

A total of 181 applications were filed to participate in the program, and of those, 162 have been initially found eligible and acceptable. Applicants whose applications are found materially deficient will have a 15-day opportunity to cure the deficiency before their application is denied.

Gross Cost Estimate Demand For Reimbursement Program Support Is Approximately $5.6 Billion – Application Review Period Extended By 45 Days

Of the 162 acceptable filings, the gross cost estimate demand for support for the removal, replacement, and disposal of Huawei and ZTE equipment is approximately $5.6 billion. Based on the Bureau’s initial review of the applications, the requested reimbursement support “would go towards…removing, replacing, and disposing of approximately 24,000 units of covered communications equipment and services across approximately 8,400 number of locations throughout the United States and its territories.”[2]

However, this does not mean that all cost estimates have been found reasonable and approved by the FCC. The Wireline Competition Bureau and Reimbursement Program Fund Administrator will conduct a thorough review of the applications before making a final determination.

Because of the amount and complexity of filed applications, the Wireline Competition Bureau has announced it will extend the application review period by an additional 45 days, moving the deadline to approve or deny submitted applications from May 1, 2022, to Wednesday, June 15, 2022.

$5.6 Billion In Requested Funding Exceeds The $1.9 Billion Appropriated For The Reimbursement Program – Implementation Of Funding Prioritization Scheme

The Secure and Trusted Communications Networks Reimbursement Program will reimburse providers of advanced communications services with ten million or fewer customers for reasonable costs incurred in the removal, replacement, and disposal of covered communications equipment or services from their networks that pose a national security risk. Applications to participate in the Program were due January 28, 2022.

In the Consolidated Appropriations Act, 2021 (CAA), Congress appropriated $1.9 billion to the FCC to implement the Secure Networks Act, of which $1.895 billion must be used for the Reimbursement Program.[3]

The gross demand for requested funding in the submitted applications exceeds the $1.9 billion appropriated for the program. Also, the Bureau has determined that “the cost estimates submitted with applications appear to be significantly higher than the estimated amounts reported to the Commission in the 2019 data collection.”[4]

During the review process, the Wireline Competition Bureau and Reimbursement Program Fund Administrator will carefully evaluate all cost estimates and “closely scrutinize Reimbursement Claim Requests to ensure that reimbursement is limited to reasonable expenses that are actually incurred.”[5]

Nevertheless, if available Reimbursement Program funding is insufficient to issue funding allocations in full to all approved applicants, then the FCC will apply the prioritization scheme directed by Congress and specified in Section 1.50004(f) of the FCC’s rules.[6] The Wireline Competition Bureau has provided the following summary of the prioritization scheme:

The Commission will allocate available funding “first, to approved applications that have 2,000,000 or fewer customers . . . , [then] to approved applicants that are accredited public or private non-commercial educational institutions providing their own facilities-based educational broadband services . . . [and] health care providers and libraries providing advanced communications service, [then] to any remaining approved applicants determined to be eligible for reimbursement under the [Reimbursement] Program.” If available funding is insufficient to satisfy all funding requests in a prioritization category, the Bureau will prorate the available funding equally across all requests in the relevant prioritization category to ensure that total funding allocated does not exceed the funding available.[7] If the Bureau must prorate, the Bureau will determine a pro-rata factor by dividing the total amount of available funding by the total amount of funding requested. The Bureau will then multiply the pro-rata factor by the total amount of support requested by each applicant in the prioritization category and then the Bureau will allocate funds to each eligible applicant in the prioritization category consistent with this calculation.[8]

The following entities have submitted the 162 applications that the Bureau has deemed initially eligible and acceptable:

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[1] Wireline Competition Bureau Announces Applications Filed For The Secure And Trusted Communications Networks Reimbursement Program, WC Docket No. 18-89, Public Notice, DA 22-131 (Feb. 9, 2022), https://docs.fcc.gov/public/attachments/DA-22-131A1.pdf.

[2] Public Notice at p. 2.

[3] Consolidated Appropriations Act, 2021, Pub. L. No. 116–260, Title IX—Broadband Internet Access Service, § 906(2), 134 Stat. 1182 (2020); Protecting Against National Security Threats to the Communications Supply Chain Through FCC Programs, WC Docket No. 18-89, Third Further Notice Of Proposed Rulemaking, FCC 21-26 (Feb. 22, 2021), https://docs.fcc.gov/public/attachments/FCC-21-26A1.pdf.

[4] Public Notice at p. 3.

[5] Public Notice at p. 4.

[6] 47 CFR § 1.50004(f). See also CAA § 901(1)(C); Protecting Against National Security Threats to the Communications Supply Chain Through FCC Programs, WC Docket No. 18-89, Declaratory Ruling And Second Further Notice Of Proposed Rulemaking, FCC 20-99, ¶¶ 53-59 (July 17, 2020), https://docs.fcc.gov/public/attachments/FCC-20-99A1.pdf.

[7] Public Notice at p. 3.

[8] Public Notice at footnote 19. See also 47 CFR § 1.50004(f)(1).