FCC’s Reimbursement Program shows progress in removing national security risks from communication networks

The Wireline Competition Bureau, in its submission to the Senate Committee on Commerce, Science, and Transportation of the House of Representatives Committee on Energy and Commerce, revealed that five recipients of the Reimbursement Program have submitted final certifications. These certifications confirm that they have removed, replaced, and disposed of covered communications equipment and services from their networks since the date of their application to the program. The Bureau anticipates that this number will grow further in the next report.

“The Bureau now submits this Third Report to Congress to explain the additional steps the Commission has taken since July 2023 to implement the Reimbursement Program and to provide an update on recipient progress toward removal, replacement, and disposal of covered communications equipment and services in the intervening months,” according to last week’s submission. “The Bureau is pleased to report that Reimbursement Program recipients continue to progress with their plans to permanently remove, replace, and dispose of covered communications equipment and services.”

The Secure and Trusted Communications Networks Act of 2019 mandated the Federal Communications Commission (FCC) to create the Reimbursement Program. The program aims to reimburse eligible providers of advanced communications services for the expenses incurred in removing, replacing, and disposing of communications equipment and services in their networks that pose national security risks.

Last January, the Wireline Competition Bureau submitted the First Report to Congress. In the First Report to Congress, the Bureau identified the steps the Commission had already taken to implement the Reimbursement Program, including establishing an application process and issuing funding allocation approvals; reviewing Reimbursement Claims submitted by Reimbursement Program recipients; guarding the Reimbursement Program from waste, fraud, and abuse; and providing education and outreach about the Reimbursement Program to providers of advanced communications services.

In July, the Bureau submitted the Second Report to Congress, which described the Bureau’s ongoing review of Reimbursement Claims and noted that recipients continued to identify challenges that hindered their ability to complete the work, including lack of funding,12 supply chain delays,13 labor shortages, and weather-related issues.

The Bureau now submits this Third Report to Congress to explain the additional steps the FCC has taken since July to implement the Reimbursement Program and to provide an update on recipient progress toward removal, replacement, and disposal of covered communications equipment and services in the intervening months. The Bureau is pleased to report that Reimbursement Program recipients continue to progress with their plans to permanently remove, replace, and dispose of covered communications equipment and services.

Over the past six months, the FCC has continued to implement the Reimbursement Program as required by Congress and the Commission’s rules. On Oct. 10, 2023, the Chairwoman wrote to Congress to provide an update on this work and upcoming deadlines under the Secure and Trusted Communications Networks Act and the Commission’s rules.16 In that letter, she explained that the Secure and Trusted Communications Networks Act “requires that Reimbursement Program recipients complete the permanent removal, replacement, and disposal of Huawei and ZTE communications equipment and services in their networks within one year of the first distribution of reimbursement funds to the recipient.” 

The Chairwoman explained that, as of Oct. 2, 2023, “reimbursement claim requests have been submitted for 122 of the 126 applications approved for the Reimbursement Program and the Commission has approved disbursements of reimbursement funds for 112 of those applications, which now have deadlines to remove all Huawei and ZTE communications equipment and services ranging from October 8, 2023 to September 23, 2024 . . . .”

The Bureau has continued to review Reimbursement Claims submitted by recipients and disburse funds within the approved funding allocations for costs reasonably incurred to remove, replace, and dispose of covered communications equipment and services. “We have also received and reviewed the fourth and fifth rounds of status updates submitted by Reimbursement Program recipients on July 10, 2023, and October 9, 2023, to monitor progress made on the recipients’ projects, as well as the second round of spending reports submitted by recipients on July 10, 2023,” it added.

 Additionally, “as permitted by the Act, we have granted eleven recipients’ requests for an extension of the one-year deadline to complete the permanent removal, replacement, and disposal of Huawei and ZTE communications equipment and services. The deadlines now range from October 10, 2023, to November 16, 2024,” the submission added.

As of December 29, 2023, the Fund Administrator and Bureau have received 12,983 Reimbursement Claims across 122 of the 126 applications approved for a funding allocation. The Bureau and the Commission’s Office of the Managing Director (OMD) have approved about $396.5 million in Reimbursement Claims for which funds have been fully disbursed to recipients or are in the process of being disbursed through the U.S. Treasury.

The Bureau submission further added that “as of December 29, 2023, five recipients have submitted a final certification indicating that each recipient has ‘permanently removed from its communications network, replaced, and disposed of (or is in the process of permanently removing, replacing, and disposing of) all covered communications equipment or services that were in [its] network . . . as of the date of the submission of [its] application.’ From the end of a recipient’s removal, replacement, and disposal term, it has 120 days to submit all remaining invoices.”

Through June 30, 2023, recipients have reported nearly $205 million in reimbursement funds spent since their initial drawdown of reimbursement funds. The next round of spending reports is due on February 12, 2024, and will cover a reporting period from July 1, 2023 through December 31, 2023. The Bureau has made and will continue to make information from the filed spending reports publicly available on the Commission’s website, consistent with confidentiality concerns. 

As the Bureau indicated in the First and Second Reports to Congress, Reimbursement Program recipients continue to report that they are experiencing four main challenges in their efforts to permanently remove, replace, and dispose of covered communications equipment and services in their networks. These include a lack of funding; supply chain delays; labor shortages; and weather-related challenges. 

In addition, some of the most recent status updates state that extended review times in the processing of claims for reimbursement present an additional challenge to recipients’ efforts to complete the work required by the Reimbursement Program. 

Furthermore, recipients are required to address in their status reports whether they have fully complied with the timelines submitted with their applications for the permanent removal, replacement, and disposal of the covered communications equipment and services in their networks.

In its conclusion, the Bureau statement assessed that the Commission has worked diligently to implement the Reimbursement Program in compliance with the Secure and Trusted Communications Networks Act and to protect the Reimbursement Program from waste, fraud, and abuse. When recipients submit their next status updates on January 8, 2024, and April 8, 2024, and their third spending reports on February 12, 2024, the Bureau anticipates it will have additional insight into how much progress recipients have made on their removal, replacement, and disposal plans and the overall status of the Reimbursement Program.” 

The Bureau will update Congress on these points and any new efforts by the Commission to implement the Reimbursement Program in its next report due July 8, 2024. 

Last July, bipartisan members of the House Energy and Commerce Committee urged the U.S. Congress to fund the FCC’s Rip and Replace program to secure the nation’s communications networks from China. The move follows the deadline for carriers to choose to participate in the program, which provides funds to American communications providers to remove equipment that poses a national security threat.

Anna Ribeiro

Industrial Cyber News Editor. Anna Ribeiro is a freelance journalist with over 14 years of experience in the areas of security, data storage, virtualization and IoT.