The saga of the US government’s plan to rip and replace China-made communications kit from the country’s networks has a new twist: following reports that applications for funding far outstripped the cash set aside, it appears two-thirds of such applications lack adequate cost estimates or sufficient supporting evidence.
The US Federal Communications Commission (FCC) informed Congress that it had found deficiencies in 122 of the 181 of the applications filed with it by US carriers for funding to reimburse them for replacing telecoms equipment sourced from Chinese companies.
The FCC voted nearly a year ago to reimburse medium and small carriers in the US for removing and replacing all network equipment provided by companies such as Huawei and ZTE. The telecoms operators were required to do this in the interests of national security under the terms of the Secure and Trusted Communications Networks Act.
In the Consolidated Appropriations Act 2021, Congress set aside $1.9 billion in funding to cover the costs of reimbursement, and began accepting requests from US telecoms operators towards the end of last year.
However, it emerged earlier this year that the amount that companies had applied for added up to a total of $5.6 billion in funds, almost triple the amount that Congress had earmarked.
Now, FCC Chair Jessica Rosenworcel disclosed [PDF] that 122 of the 181 applications filed were found to be “initially materially deficient.”
It had been noted in an initial review of the filings that many applications appeared to have material deficiencies, including a lack of adequate cost estimates or sufficient supporting materials to justify the amount of funding being requested.
The FCC has notified all of the applicants that they have 15 days in which to amend their applications and address the defects, after which it review any amended applications, with the whole process expected to be completed by July 15. The FCC will then proceed to deliver Congress an updated cost estimate for the Reimbursement Program.
Previously, Rosenworcel said that the $3.7 billion gap between the allocated funding and the amount requested by the carriers is a problem, and advised she would work with Congress to ensure there is enough funding available for the success of the program.
In the latest report, Rosenworcel said she believes that the total demand will still exceed the amount appropriated for the Reimbursement Program, and in the absence of any additional funding to cover the gap, the FCC will have to apply a prioritization scheme Congress specified in the Consolidated Appropriations Act.
Under this scheme, the FCC will allocate funding first to approved applications from companies with 2 million or fewer customers. After these, funding will then go to accredited public or private non-commercial educational institutions, then to health care providers and libraries providing advanced communications services, with any remaining approved applications after that.
However, Rosenworcel noted that “all but one of the eligible applicants falls within the first prioritization group, and the collective demand of these applicants exceeds available funds for the Program.”
In this case, it appears that the FCC will be required to divide reimbursement funds equally between all eligible applicants in the first prioritization group, as required by the Consolidated Appropriations Act.
The US is not the only nation that is seeking to remove equipment from so-called “high risk” vendors from telecoms networks. Last year, the British Parliament passed the UK Telecommunications (Security) Act, giving the government more control over the devices used by telcos and the ability to fine companies that do not comply. ®