Concern for Smaller Carriers Grows as Funding Push Falters for Rip and Replace

Many small carriers could be in financial trouble if Congress doesn’t allocate more money to pay for removing unsecure Chinese-made gear from their networks, Summit Ridge Group President Armand Musey said in an interview. Congress has considered, but so far has failed to provide, the $3.08 billion needed to fully fund the Secure and Trusted Communications Networks Reimbursement Program (SCRP).

For many rural companies “the cost is staggering -- it’s not something they can afford to do on their own, they just don’t have that much money,” Musey said in an interview. “It would be impossible -- they’d have to essentially go bankrupt,” he said. Companies must plan months in advance to remove the equipment, he said. They’re required to move forward “and they can’t afford to, but they have to.”

Some smaller carriers must close parts or all of their networks, which the FCC isn’t addressing, Musey said. The commission appears to believe the small firms will borrow the money they need, but that won’t be possible in many cases, he said. Over the next several months, “companies are going to have to make some really hard decisions.” Is the FCC going to allow them to shutter parts of their networks? he asked.

Musey said he’s concerned the FCC doesn’t “fully appreciate” the extent of smaller carriers' problems.

“As we continue to work with Congress to ensure the program has funding necessary to meet the obligations of the statute, we have allowed for a number of extensions of the rip and replace" deadlines, an FCC spokesperson responded in an email.

Rural Wireless Association General Counsel Carri Bennet agreed with Musey about problems facing small carriers. However, she believes the FCC “fully understands and appreciates” the extent of the challenge. “Their hands are just tied.”

The FCC can’t do anything without additional funding and Congress must deliver that (see 2403280001), Bennet told us. “We can scream until we’re blue in the face at the FCC, but if they don’t have the money from Congress … it’s not going to get fixed,” she said. While there’s consensus Congress should fund rip-and-replace costs, the disagreements are about how that will get done, she said. Especially on the Senate side, members have been “very creative in trying to put something together,” but those efforts keep getting scuttled, she said.

Larger companies, with more cellsites to replace, must make decisions about shuttering service, Bennet said. “They’re all working with the limited funds that they have to get a core up and running, but you want to have the cellsites up and running as well,” she said.

“The concerns voiced by Summit Ridge are shared by many other stakeholders and carrier participants,” Tim Donovan, president of the Competitive Carriers Association, wrote in an email. “While time extensions have been necessary and bipartisan support for the program’s goals is appreciated, it takes funding to purchase equipment and have technicians in the field,” Donovan said. As program participants reach or exceed current prorated funding levels, “they are forced to decide where to remove covered equipment but not replace it -- in many parts of our country where no other provider has service -- or may be forced out of business entirely,”

Donovan said with a “narrow build season … decisions are being made now” and CCA urges Congress to act. Last year, CCA ran commercials in the Washington, D.C., media market about the importance of Congress closing the rip-and-replace funding gap (see 2305030047).

Summit Ridge filed a letter at the FCC recently, in docket 18-89, asking questions about what’s next. “What are SCRP participants’ ongoing responsibilities, if any, if they have not completed their [remove replace and dispose] RRD project but have run out of allocated funds?” the letter asks: “Does lack of funding excuse SCRP participants from further RRD obligations, potentially for reasons including the impossibility of performance? If participants are not excused from completely removing equipment and cannot afford to complete the RRD program, what course of action does the Commission advise?”