Initial estimates of how much it’ll actually cost U.S. operators to replace network equipment from Huawei and ZTE appear to have been way off. The Federal Communications Commission’s (FCC) just closed the first application round for its rip and replace reimbursement program and said it received requests totaling nearly three times the amount of money that’s been set aside by Congress to cover such expenses.
Passed in 2019, the Secure and Trusted Communications Networks Act mandated the removal of the Chinese vendors’ kit from American telecom networks. Congress initially wanted to allocate just $1 billion to the FCC’s reimbursement fund, but eventually bumped that up to $1.9 billion in 2021’s Consolidated Appropriations Act after the FCC reported in 2020 that around 50 providers estimated it would cost $1.8 billion to update their networks.
However, the FCC said it received reimbursement requests totaling a whopping $5.6 billion during an initial application period which closed last month. Chairwoman Jessica Rosenworcel said in a statement it was flooded with “over 181 applications from carriers who have developed plans to remove and replace equipment in their networks that pose a national security threat.”
Wireline players Lumen Technologies, Windstream, Mediacom, Hargray Communications (which is owned by Cable One), MetroNet and FirstLight Fiber were among those seeking support.
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Lumen Technologies and Windstream’s requests alone totaled more than a quarter-billion dollars. A tally of results displayed using the Public Search feature on the FCC’s reimbursement filing portal showed Lumen, filing as Level 3 Communications, asked for more than $197 million to replace access layer and core layer equipment, software and services. Windstream sought $118.3 million for the same.
Meanwhile, Mediacom requested $86.2 million, Hargray $42.8 million, MetroNet $7.6 million and FirstLight $3.3 million.
A Lumen representative told Fierce it was seeking reimbursement to replace layer one network equipment and stressed this legacy gear has “limited capabilities.”
“It does not have the capability to route or redirect traffic on the network,” the representative wrote. “We completely severed our relationship with the foreign supplier in question. They have no role in in the operation or maintenance of our network.”
The representative said Lumen is already “actively removing and replacing” the equipment in question but is working with federal policymakers to expedite the process. The company expects the FCC to act on its application sometime in Q2.
Similarly, a Windstream representative told Fierce the Huawei systems that are being replaced make up less than 1% of its network and provide services limited to Layer 1 transport. They do not provide IP routing services. The representative added Windstream is about 80% done with work to replace the aforementioned platform in its network and expects to complete the project by Q3 of this year.
According to the Windstream representative, the total amount it requested "was based on the FCC’s cost catalog" for eligible equipment. The representative noted, though, that "carriers will be reimbursed based on actual expense and we expect our costs to be lower than the amount provided in the catalog."
MetroNet and Mediacom said they were not immediately able to provide additional detail about their applications.
Prioritization
An FCC representative told Fierce that if there’s not enough funding to go around, the agency will follow a funding prioritization scheme laid out by Congress and prorate support accordingly.
Under the law, top priority will be given to advanced communication service providers with 2 million customers or less. Next will come “advanced communications service providers that are accredited public or private non-commercial educational institutions providing their own facilities-based educational broadband service” as well as health care providers and libraries which provide an advanced communications service. Any remaining approved applicants are lumped together as “priority 3”.
All priority 1 requests must be covered before funding is issued in the other two categories. If there’s not enough funding to go around, support will be prorated.
Rosenworcel said she “look[s] forward to working with Congress to ensure that there is enough funding available for this program to advance Congress’s security goals and ensure that the U.S. will continue to lead the way on 5G security.”
This story has been updated to include comments from Windstream.