UPDATE The Summit Ridge Group, a financial and industry consulting firm with telecom, media, and satellite clients, told the FCC the lack of funding in the agency’s Rip & Replace program is forcing some reimbursement participants to wind down their work to remove, replace and dispose of untrusted network gear from Huawei and ZTE.
The Commission knows the program has a more than $3 billion shortfall. FCC Chairwoman Jessica Rosenworcel recently made one of several pitches to Congress to fill the gap, Inside Towers reported. So have NATE, WIA and Competitive Carriers Association President Tim Donovan. CCA’s Donovan recently called the state of the program’s small, rural recipients “dire,” Inside Towers reported.
The agency has only been able to pay participants about 40 cents on the dollar to complete the work. Given this funding allocation, “the requirement to complete the program is an impossibility for many participants. They simply don’t have the resources to spend this money without reimbursement. Another solution is required,” Summit told the Commission in a filing.
“In the event additional funding is not soon forthcoming, not planning for this contingency would be irresponsible” says Summit to providers’ customers, employees, and investors. Summit Ridge Group told the agency that FCC guidance is very limited in addressing the funding issue and asked the agency a series of tax and accounting questions to support wind-down planning.
Commitments must be made several months in advance to secure equipment and teams, particularly in areas with short construction seasons. Work on cell sites takes weeks or months, as does final approval. When invoices finally arrive, they typically differ from the 2021-2022 application and require modifications before submitting, Summit explains.
Because of this timeline, many Rip & Replace participants “have incurred significantly greater costs than reflected in FCC reporting,” says Summit. Summit understands “significant legislative outreach” has occurred to secure more funding and encourages those efforts to continue.
Rip & Replace Reimbursement Program participants serve many remote areas of the country, where they are often the only mobile broadband provider. “A rapid, unplanned shutdown of their networks would not only cause disruption for customers, employees, and investors, but it may cut off the only communications service in some regions, creating significant public safety risks and increasing the digital divide,” notes the consulting group.
“As summer recess approaches, followed by the fall election campaigning, it may become less likely Congress will address the lack of funding this year,” said Summit. “If there is a change in administration or control of one of the houses of Congress, it could take even longer before Congress’s attention returns to the [program].”
Summit asks the FCC to answer several questions, including, what are Rip & Replace participants’ ongoing responsibilities, if any, if they have not completed their project but have run out of allocated funds. Does the Commission prefer participants to use their remaining allocations in any particular order? What are the FCC’s information and process requirements for participants before they shut down their RRD programs due to lack of funding?
By Leslie Stimson, Inside Towers Washington Bureau Chief
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