Secure and Trusted Communications Networks Reimbursement Program: Frequently Asked Questions

INSIGHTi

Secure and Trusted Communications
Networks Reimbursement Program:
Frequently Asked Questions
Updated July 24, 2023
What Is the Secure and Trusted Communications
Networks Reimbursement Program?
On March 12, 2020, the Secure and Trusted Communications Networks Act of 2019 (P.L. 116-124)
(Secure Networks Act) became law. The act addresses congressional concerns with telecommunications
equipment that may pose a national security threat to the United States. Section 2 requires the Federal
Communications Commission (FCC) to create a list of “covered” telecommunications equipment posing
such a threat. Section 4 requires the FCC to create the Secure and Trusted Communications Networks
Reimbursement Program (Reimbursement Program) to fund replacement of covered equipment.
How Much Funding Is Available?
The Consolidated Appropriations Act (CAA), 2021 (P.L. 116-260, Title IX, §906), enacted December 27,
2020, provided $1.9 billion for the Secure Networks Act, $1.895 billion of which is for the
Reimbursement Program.
Who Is Eligible for Reimbursement Funding?
Under the Secure Networks Act, entities eligible to receive reimbursement funds include small
telecommunication providers—those with 2 million or fewer customers—that offer “advanced
communications services” (i.e., high-speed broadband).
In the CAA, 2021 (Title IX, §901), Congress extended eligibility to include providers with fewer than 10
million customers, and schools, libraries, and health care providers, or consortium thereof, that provide
facilities-based broadband services to end-users. Congress prioritized reimbursements
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• first, to small providers;
• next, to educational, health care, and library applicants; and
• last, to any remaining eligible applicants.
What Are “Covered” Equipment and Services?
“Covered” telecommunications equipment and services are those that pose a national security threat to the
United States, as defined in P.L. 115-232. Section 889 defines “covered equipment” as
telecommunications equipment produced by Huawei Technologies Company, ZTE Corporation, and three
other Chinese firms.
In its 2019 Supply Chain Order, the FCC prohibited providers from using Universal Service Fund
subsidies to purchase equipment or services produced by a covered company. On June 30, 2020, the FCC
issued Designation Orders for Huawei and ZTE, designating them as covered companies.
In March 2020, the Secure Networks Act required the FCC to publish, within one year, a list of covered
equipment and services. On December 27, 2020, the CAA, 2021 (§901) amended the Secure Networks
Act, limiting use of reimbursement funds for equipment identified in the 2019 Order and Designation
Orders, meaning Huawei and ZTE equipment.
In March 2021, the FCC released a list of covered equipment and services including products of Huawei,
ZTE, and three other Chinese firms; however, the Reimbursement Program covers only Huawei and ZTE
equipment.
When Could Entities Apply?
The application period opened on October 29, 2021, and was to close on January 14, 2022. On December
21, 2021, industry associations filed a Motion for Extension of Time, seeking a one-month extension. The
group cited challenges in completing forms and workforce challenges due to the holidays and
Coronavirus Disease 2019 (COVID-19). The FCC granted an extension through January 28, 2022.
When Was Application Approval Announced?
The FCC was required to act on applications within 90 days; it extended the review deadline by 45 days,
as permitted. On July 18, 2022, the FCC announced 126 approved applications from 85 entities.
What If Requests Exceed Appropriated Amounts?
The FCC is required to notify Congress if appropriations are not sufficient to fund approved applications.
On February 4, 2022, the FCC notified Congress it received 181 applications totaling $5.6 billion. On
June 1, 2022, the FCC notified Congress that demand for funding exceeded the $1.895 appropriated. In a
July 15, 2022, letter to congressional leaders, the FCC Chairwoman reported that the FCC-approved
applications from small providers would require $4.70 billion (a $2.80 billion shortfall) and that $4.98
billion would be needed for all eligible applications (a $3.08 billion shortfall). The FCC announced it
would distribute the appropriated $1.895 billion equally among small providers, awarding 39.5% of their
approved costs.
In the 117th Congress, the House passed H.R. 7624 that would have provided an additional $3.08 billion
to the Reimbursement Program using revenues from spectrum auctions. The measure was not enacted.
S.Amdt. 6585, a floor amendment submitted in the Senate to H.R. 2617, would have provided $3.08

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billion from spectrum auctions to the Reimbursement Program, but the amendment was not considered on
the Senate floor. In the 118th Congress, H.R. 3565, introduced on May 22, 2023, would allow the FCC to
borrow up to $3.08 billion from the Treasury for the Reimbursement Program, with repayment from
spectrum auction revenues. S. 1245, introduced April 20, 2023, would transfer unobligated balances from
COVID-19 relief bills to fund the Reimbursement Program.
How Do Recipients Apply for Reimbursement?
The FCC can reclaim funds if an approved applicant did not file at least one reimbursement within one
year of the announcement (July 17, 2023). As of June 30, 2023, the FCC reported it received claims from
86 of 126 approved applications, and allocated $190,353,334 in initial reimbursements. Deadlines to
complete equipment removal range from September 29, 2023, to June 30, 2024, based on initial
distribution dates.
What Are the Reporting Requirements?
By law, recipients must file updates every 90 days, spending reports twice a year, and an annual report to
the FCC. Entities must certify they have a plan and timeline for removal, will remove and not purchase
“covered” equipment, and will consult the National Institute of Standards and Technology Cybersecurity
Framework. The FCC is required to report to Congress every 180 days.
What Factors May Affect Implementation?
Entities initially expressed concern about the one-year timeline; computer chip shortages; leasing
agreements they may need to modify; coordination with tower owners; worker shortages; and weather. In
2023, industry associations report the main challenge is funding, and warned that networks could “go
dark” if full funding is not provided. By law, the FCC can grant a general extension for all entities or an
individual extension for delays caused by circumstances beyond the applicant’s control (e.g., weather).

Author Information

Jill C. Gallagher

Analyst in Telecommunications Policy




Disclaimer
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IN11663 · VERSION 8 · UPDATED

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