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A US program to pay carriers and ISPs to remove Huawei and ZTE equipment from their networks is stumbling due to a $3 billion funding shortfall.The FCC started work on the “Rip and Replace” program in 2019, with the goal of pushing US wireless providers to remove Huawei and ZTE equipment over spying fears. But over four years later, the program has only secured $1.9 billion in federal funding when an estimated $4.98 billion is needed to help pay for the reimbursements. On Thursday, FCC Chair Jessica Rosenworcel sent a letter to US lawmakers, warning that the funding shortfall risks derailing the program. “In fact, nearly 40% of the participants reported that they cannot complete the work required under the Reimbursement Program without additional government funding,” she wrote to the leaders of several Congressional committees. Rosenworcel has been warning about the funding woes for months. But in her newest letter, she says the funding problems have gotten bad enough that several Rip and Replace program recipients have told the FCC that they may have to “shut down their networks or withdraw from the program” unless further funding is provided. One provider, SI Wireless, has complained to the FCC about waiting months for the commission to clear the reimbursements. “As each day passes, the 4G equipment that SI Wireless needs to purchase becomes harder to obtain because the equipment vendor is producing more 5G equipment and less if any 4G LTE equipment,” the company wrote in January. Due to the funding constraints, the FCC’s Rip and Replace program has prioritized smaller carriers and ISPs “with 2 million or fewer customers,” which are often based in rural areas. But even then, the FCC has been forced to prorate the funds, providing 39.5% of the reasonable costs to replace the affected equipment. “Because Reimbursement Program recipients serve many rural and remote areas of the country where they may be the only mobile broadband service provider, a shutdown of all or part of their networks could eliminate the only provider in some regions,” Rosenworcel further warned. The other issue is that without the funding, wireless carriers may have no choice but to use the installed Huawei or ZTE equipment, which the US alleges poses a spying risk. In total, 64% of the companies in the program have “indicated that the lack of full funding continues to be an obstacle to completing the permanent removal, replacement, and disposal of the covered communications equipment,” she added.
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Rosenworcel said the FCC wants to help Congress secure the additional $3 billion in funding, which would cover the more than 20,000 reimbursement claims received across 122 of the 126 applications approved for funding.US lawmakers appear to be aware of the problems. Senator Maria Cantwell, one of the recipients of Rosenworcel’s letter to Congress, last week introduced the Spectrum and National Security Act, which would provide $3 billion for the Rip and Replace program via spectrum auction proceeds. “States and rural providers are facing financial burdens in the (Rip and Replace) process—some on the verge of bankruptcy,” Cantwell noted when introducing the bill.Her bill would also provide $7 billion for the Affordable Connectivity Program (ACP), which subsidizes internet service for low-income Americans but will run out of money by the end of May unless Congress takes action.
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