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Telecom Networks Seek $5 Billion-Plus to Rip and Replace

A stack of money
(Image credit: ATU Images/Getty Images)

Communications providers who must rip and replace untrusted technology from their networks, per Congress' directive, have applied for about $5.6 billion from the Federal Communications Commission to compensate them. That’s a lot more than the regulator had estimated and multiples of what Congress allocated for the purpose.

That is according to FCC chairwoman Jessica Rosenworcel in a letter responding to a query from Sen. Gary Peters (D-Mich.).

Also: ZTE Challenges Suspect Tech Label

Congress only appropriated $1.9 billion in the 2021 Consolidated Appropriations Act for the Secure and Trusted Communications Networks Reimbursement Program, which compensates smaller providers -- 10 million and fewer customers -- for removing and replacing network tech the FCC has concluded is a potential national security threat, a list that started with ZTE and Huawei.

The FCC is still reviewing the applications but has a deadline of June 15 to approve or deny them.

Rosenworcel told Sen. Peters the FCC should have a better sense of why the demand exceeded expectations after that, but in the meantime said there were three primary reasons:

1) The FCC's cost estimate was based on swapping out ZTE and Huawei tech and a data collection from 50 companies that said it would cost about $1.83 billion to do that. That was part of an FCC program that predated Congress' mandate in the Secure and Trusted Communications Networks Act. The FCC wound up getting applications from 96 applicants.

2) The FCC's estimate did not include all the companies that became eligible under Congress' mandate when it expanded that eligibility from companies with 2 million or fewer subs to ones with 10 million or fewer. That added $1.5 billion to the application pot, Rosenworcel said.

3) Inflation, supply chain issues, and Congress' tight (one-year) turnaround have added about $2 billion in increased costs.

If, as it would appear, there will be more demand than there are dollars to meet them, the FCC will have to prioritize the outlay per Congress' directive, she told Peters, which means the money goes first to systems with 2 million customers or fewer, followed by those that are “ ‘accredited public or private non-commercial educational institutions providing their own facilities-based educational broadband service and health care providers and libraries providing advanced communications service,’ followed by everyone else.”

She also points out that the FCC will look at the funding requests and only cover reasonable costs. ■

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.