32.010: Supply Chain Reimbursement Program

32.010

Inactive

Federal Communications Commission (FCC)

Sept. 2, 2021

Sept. 2, 2021

On March 12, 2020, the Secure and Trusted Communications Networks Act of 2019 (Secure Networks Act), Pub. L. No. 116-124, was signed into law. Section 4 of the Secure Networks Act, 47 U.S.C. § 1603, directed the Federal Communications Commission (Commission) to establish the Secure and Trusted Communications Networks Reimbursement Program (Reimbursement Program) to reimburse providers of advanced communications services with two million or fewer customers for the removal, replacement, and disposal of covered communications equipment and services from their networks. On December 11, 2020, the Commission released a rulemaking order establishing the Reimbursement Program. The Commission tasked the Wireline Competition Bureau with implementing the Reimbursement Program. See Protecting Against National Security Threats to the Communications Supply Chain Through FCC Programs, WC Docket No. 18-89, Second Report and Order, 35 FCC Rcd 14284 (2020) (Second Report and Order). On December 27, 2020, the Consolidated Appropriations Act, 2021 (CAA), Pub. L. 116-260, became law, appropriating $1.9 billion for the Commission to “carry out” the Reimbursement Program and amending the Reimbursement Program to, among other things, increase eligibility to those providers of advanced communications services with ten million or fewer customers. The Commission adopted a rulemaking order on July 13, 2021, to implement the amendments contained in the CAA, FCC 21-86. Consistent with the CAA, the Commission expanded Reimbursement Program eligibility to providers with ten million or fewer customers and limited the use of Reimbursement Program funds to the removal, replacement, and disposal of covered communications equipment or services produced or provided by Huawei Technologies Company (Huawei) or ZTE Corporation (ZTE), including their subsidiaries and affiliates, that was obtained on or before June 30, 2020. See Protecting Against National Security Threats to the Communications Supply Chain Through FCC Programs, WC Docket No. 18-89, Third Report and Order, FCC 21-86 (rel. July 14, 2021) (Third Report and Order).

C - Direct Payments for Specified Use

Providers of advanced communications service with ten million or fewer customers are eligible to participate in the Reimbursement Program to reimburse such providers for costs reasonably incurred for the replacement, removal, and disposal of Huawei and ZTE communications equipment and service obtained on or before June 30, 2020. The Commission has interpreted the term “provider of advanced communications service” to mean “facilities-based providers, whether fixed or mobile, with a broadband connection to end users with at least 200 kbps in one direction.” Second Report and Order, 35 FCC Rcd at 14332, para. 111. The Commission has interpreted the statutory language “customers of such provider” and “customers of any affiliate” to mean those customers taking advanced communications service from the provider and its affiliates. Id. at 14333, paras. 113-115. A provider seeking to participate in the Reimbursement Program must have ten million or fewer customers, as of the date its application is filed. To be eligible, the Secure Networks Act and the Commission’s rules require participating providers to certify: (i) as of the date of the submission of the application, that the provider has developed: a plan for the permanent removal and replacement of any covered communications equipment or service that is in the communications network of the provider as of such date; and the disposal of the equipment or services removed; and a specific timeline for the permanent removal, replacement, and disposal of the covered communications equipment or service, which timeline shall be submitted to the Commission as part of the application; and beginning on the date of the approval of the application, the provider: will not purchase, rent, lease, or otherwise obtain covered communications equipment or service, using reimbursement funds or any other funds (including funds derived from private sources); and in developing and tailoring the risk management practices of the applicant, will consult and consider the standards, guidelines, and best practices set forth in the cybersecurity framework developed by the National Institute of Standards and Technology. Separately, for purposes of the Reimbursement Program, a school, library, or health care provider, or consortium thereof, may also qualify as a provider of advanced communications service, and therefore be eligible to participate in the Reimbursement Program, if it provides facilities-based broadband connections of at least 200 kbps in one direction to end users, which could include students, patrons, patients, or member institutions in the context of cooperative infrastructure sharing arrangements.

Not Applicable

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