Congress, the FCC, and the Fund Administrator continue to drag their feet with respect to the Secure Networks Act Reimbursement Program (aka the Rip and Replace of Huawei and ZTE equipment) as demonstrated by the FCC’s biannual Report submitted yesterday to Congress.  The failure by Congress to fully fund the Reimbursement Program has stymied efforts by rural carriers to remove and replace Huawei and ZTE equipment embedded in rural U.S. networks which exchanges traffic with other U.S. networks and abroad.  The national security issues associated with the program have not been prioritized by Congress.  After, nearly two years, Congress has still failed to fully fund the program which in turn has slowed the pace that the FCC and its Fund Administrator are able to effectuate the replacement of the unsecure Chinese equipment.

Numerous calls by industry continue to go unsatisfied as the Reimbursement Program remains vastly underfunded.  While the FCC’s Report mentions the funding gap in passing, to RWA’s dismay, the Commission fails to adequately convey to Congress the importance of fully funding the Reimbursement Program despite numerous status reports submitted at 90-day intervals by the program participants demonstrating that they cannot replace the network equipment and provide the same coverage on only 40 percent of the funding they requested and were approved to receive.

As noted in the Report, roughly 40 percent of recipients are struggling with the lack of funding, an increase from 31 percent, as of January 2023.  RWA expects this percentage to rise as this Program continues to go underfunded.  In addition, after one year, the FCC has only approved approximately $190 million of the $1.895 billion budget, equaling approximately 10 percent of the overall underfunded amount currently available.  Six months ago, the FCC had only approved about $41 million in reimbursement claims.  This alarmingly slow progress in approving reimbursement claims continues to frustrate program participants including RWA members.

Of note, the current modification process freezes all pending invoice submissions, even invoices unrelated to the modification, which is drastically slowing the processing of invoices.  Participants need these invoices quickly processed so that they can pay their vendors and continue the work.  If this technical issue is not resolved by the FCC and Fund Administrator, the Reimbursement Program will take more time, which will harm taxpayers by further increasing the cost of the Reimbursement Program.

Fully funding the Reimbursement Program and faster processing of submitted invoices and modification requests must be encouraged and stepped up or the FCC is going to have to grant extensions of time to complete the work.  RWA estimates that at the pace the FCC is going, program participants will need 3-5 additional years to complete the work, provided, of course, that Congress fills the funding gap, which is roughly $3.05 billion.  Communications services are already being lost in rural America as carriers are forced to shut down portions of their networks that are not funded for replacement.  This means no 911 services or other access to communications in some areas.  RWA remains at a loss of how Congress and the FCC are making demands on small rural carriers without sufficient funding.  RWA implores Congress to quickly enact the bipartisan Defend Our Networks Act, introduced by Senators Hickenlooper and Fischer, which would fully fund the Reimbursement Program using unallocated COVID-19 emergency relief funds, so that rural carriers can continue to serve their rural communities.