It's Time! ... To File Your Application Request for FCC Rip-and-Replace Funding

On October 29, 2021, the Federal Communications Commission's (FCC) Wireline Competition Bureau (WCB) opened the Filing Window for the rip-and-replace Reimbursement Program created pursuant to the Secure and Trusted Communications Networks Act of 2019 (Secure Networks Act). This Filing Window will remain open through 11:59 PM Eastern Time on January 14, 2022, the current deadline for filing reimbursement applications.

Providers of advanced communications services (ACS Providers) that meet rip-and-replace program eligibility requirements (as previously discussed here and here) and elect to participate in the Reimbursement Program should review the FCC's latest updates and clarifications as they prepare to file FCC Form 5640: Application Request for Funding Allocation.

Important Updates on Rip-and-Replace Application Filings

• On September 30, 2021, the WCB released best practices to guide the safe and secure removal and disposal of covered Huawei Technologies Company (Huawei) and ZTE Corporation (ZTE) equipment. This guidance also includes updates to certifications ACS Providers must make when submitting Form 5640, plus corrections to the Program's Cost Catalog for use in preparing that allocation request.
  
  • The disposal guidelines separate equipment into three risk-based categories: (1) equipment that both processes and retains data, (2) equipment that processes but does not retain data, and (3) equipment that does neither. Among other topics, the guidelines describe sanitization, physical destruction, and recycling expectations.
    
    Following the guidelines is not mandatory; the regulations require only that the manner of disposal involve destruction which renders the equipment and services "inoperable permanently" and prevents them from being used in other advanced communications networks.¹ Whether or not their chosen disposal processes follow the guidelines, ACS Providers must maintain documentation demonstrating compliance with the destruction requirements, including how the items are being destroyed, where the equipment is being shipped, and the means of transportation to the recyclers.
  • In submitting Form 5640, ACS Providers must certify that they are not double-dipping on funding by requesting allocations for costs that have been or will be reimbursed by other federal or state sources, and that they are not receiving kickbacks from vendors or suppliers in connection with the Reimbursement Program.
  • Corrections to the Cost Catalog primarily address editing and typographical errors.
• On October 8, 2021, the WCB released Excel batch upload file templates and a related Tip Sheet to assist ACS Providers in submitting required application details on equipment and services subject to removal and replacement under the program.
• On October 20, 2021, the FCC released a Supply Chain Reimbursement Program User Guide, along with updates to Frequently Asked Questions (FAQs) that it first published on September 27, 2021.
  
  • New and revised entries in the FAQs are indicated by footnotes. Many of the new entries cover questions specific to using the Form 5640 online portal and the confidentiality of submissions.
  • ACS Providers can cover up to 1,000 locations, 1,000 pieces of equipment (both items subject to removal and their replacements), and/or 20,000 cost estimates in a single application. Due to system limitations, any ACS Provider with locations, equipment, or cost estimate quantities exceeding those maximums will need to submit multiple Form 5640 applications.
    
    ACS Providers have options for how to organize their applications, such as by subsidiary or geographically, but need to use a consistent naming convention when establishing the FCC Registration Numbers (FRNs) required to create each application, to indicate that the various applications are related. ACS Providers also need to identify the same Real Party in Interest for each application.
  • Only one user at a time can work on a given application within the online system. However, submitting multiple applications allows for multiple individuals to be working simultaneously on separate applications in the system. The batch upload functionalities enable ACS Providers to create some of the more burdensome application elements, like listing individual pieces of equipment, outside of the system, then upload the spreadsheets to the application when ready.
• On October 22, 2021, the regulatory provisions included in the FCC's Third Report and Order (first published on July 13, 2021, and published in the Federal Register on August 23, 2021) became effective. The new regulations finalized the definition of "eligibility" under the rip-and-replace program and the prioritization schedule for reimbursement allocations (as previously discussed here).
• On October 28, 2021, the FCC released an Order on Clarification (Clarification Order) in response to a petition submitted by Cincinnati Bell, Inc., addressing reimbursable versus non-reimbursable Customer Premises Equipment (CPE) expenses under the program.
  
  • In summary, the Clarification Order states that "Costs associated with the removal, replacement, and disposal of covered Huawei and ZTE CPE, where 'essential to the provision of advanced communications service,' may be eligible for reimbursement. Such Huawei and ZTE CPE could include 'network gateway devices with wireless (Wi-Fi) capabilities to the extent such equipment is 'owned, rented, leased, or otherwise obtained' by the provider of advanced communications service on or before June 30, 2020." (Internal citations omitted.)
  • CPE excluded from reimbursement eligibility includes non-Huawei and non-ZTE equipment, plus Huawei and ZTE CPE that is either not "essential to the provision of advanced communication service," or that was acquired after June 30, 2020.
• Any additional updates relating to the Reimbursement Program will be linked on the home page for the FCC's Supply Chain website. The filing portal for the online Form 5640 is found on the same home page.

Considerations for Applicants

Any prospective applicant who has not already done so should start the application process as soon as possible. Applicants can save changes as they go, up until they submit Form 5640 or the close of the Filing Window. Any application that is merely saved in the system but not submitted as of the close of the Filing Window on January 14, 2022, will not be considered.

ACS Providers who need to submit multiple applications due to the FCC's system limitations will need to coordinate the completion and submission of all applications, taking particular care to avoid duplication or other inclusion errors, and being consistent, including with regard to claims of confidentiality.

DWT will continue to monitor developments with regard to this program. Should you have any questions regarding the points raised above, or any of our previous rip-and-replace discussions, please do not hesitate to contact the authors.

FOOTNOTE

1  47 CFR § 1.50004(j).