Industry Experts Raise Concerns About Rip and Replace Program

Industry experts raised concerns Wednesday about the future of the FCC’s Secure and Trusted Communications Networks Reimbursement Program. Panelists during a Broadband Breakfast webinar urged quicker action from Congress on additional funding (see 2307180079).

"A race to the bottom in reverse auctions is not a good way to build out communications networks in the U.S.," said Rural Wireless Association General Counsel Carri Bennet. “Time is ticking where we don't have any indication from the FCC that there's going to be an extension” to file for reimbursement, Bennet said, noting she's preparing to file a request for an extension on behalf of a client.

Companies are “stuck,” said Competitive Carriers Association CEO Tim Donovan. “It’s going to get worse” if the program continues to operate in its current form, Donovan said. One major concern is that some companies may have enough funding only to “rip and not replace,” he said: “It’s not sustainable to keep moving forward without the funding.” Such an approach would affect subscribers from small carriers and “everybody who’s traveling through these networks,” Donovan said.

Providers should be “very detailed about all the problems” they're facing when they file their next status report with the FCC because the commission has the authority to grant a blanket six-month extension, Bennet said: “I don’t think the FCC has a really good grasp of how the Fund Administrator,” Ernst & Young, “is going through this process.”

The reimbursement process has been “rather problematic,” said Summit Ridge Group President Armand Musey, citing understaffing and overregulation. There’s a “litany of so many problems with the Fund Administrator and how they process things,” Bennet said, saying more oversight from the FCC may improve the process: “We’ve got to do better.” Bennet noted companies have only one year to complete their project after being paid on their first invoice, “so they were trying to buy themselves more time by holding back on the invoices.”

It’s “super disappointing” that Congress hasn't provided additional funding “and we can’t wait any longer,” Bennet said. “We’re already seeing that the cellsites are not being rebuilt and the towers are staying up in hopes of the money coming,” she said. Donovan agreed, saying "there aren’t many bipartisan things in Congress right now and this is one of them.”

Musey said an argument can be made for more than $3 billion in funding. The cost estimates in applications written two years ago have changed due to inflation and supply chain issues, he said, and “the longer that draws out, the more important I think that becomes.” Donovan agreed, saying companies are facing a challenge in executing business plans “without being able to have full confidence right now” that they can order all the equipment needed.

“There are some things that are worth spending money on and national security is something that’s worth spending money on,” Donovan said. One potential mechanism is using spectrum auction proceeds, he said, adding that alone could bring in at least $3 billion to cover the current shortfall. Donovan also cited unspent COVID-19 funds and the National Defense Authorization Act.