FCC Answers FCBA-NY Chapter’s Questions on Rip and Replace Reimbursement

By Rebecca Hanson | October 6, 2021

Yesterday, Armand Musey and I hosted a webinar on behalf of the NY Chapter of the FCBA, which featured Justin Faulb and Callie Coker of the FCC’s Wireline Competition Bureau presenting an overview of the Secure and Trusted Communications Networks Reimbursement Program.  It covered a lot of familiar ground that you may have heard in their formal webinars last week (which can be viewed here: https://www.fcc.gov/news-events/events/2021/09/secure-and-trusted-communications-networks-reimbursement-program-webinar). However, it also contained a few clarifications for network operators who remain confused about some of the application requirements and/or are concerned about the burden that applying will place on their internal staffs.  The FCC emphasized that the webinar was not official policy, but rather informal guidance to help hone approaches to application preparation.   While the FCC’s orders and public notices remain the last word on reimbursement parameters, we found a number of explanatory insights helpful.  Here are our takeaways:

  1. There is no advantage to filing your application “first”. Many operators might plan to be first to file their applications when the window opens on October 29th.  The FCC is going to be treating all applications as though they were filed simultaneously (provided they are filed before the window closes on January 14th). That means there isn’t any benefit to filing early.  Justin and Callie explained that the FCC does not want to spend time and effort on applications that operators might subsequently modify while the window is open.  Rather, they want to give all operators the full 75 days to submit complete and accurate applications, as that will allow for more efficient FCC review beginning on January 17th.
  2. Access to the online portal. We were hoping to hear that applicants could get early access to the portal, or at least the Excel template to be used for batch uploading, so that applicants could prepare for the shotgun start on October 29th.  Unfortunately, there is still no plan to open the portal early, but Callie did say that they are working with their IT teams to possibly provide early access to the Excel template, which will be especially useful for operators with large numbers of sites. If this happens, it will be publicized on the FCC’s one-stop-shop for reimbursement resources, www.fcc.gov/supplychain. We also hope that the portal will eventually be accessible by multiple users at a time for each operator, given the high volume of activity and document uploads that many operators will have during the window, especially those with hundreds of sites. But for now, one way to get multiple users into an operator’s application is to have multiple subsidiary companies file, which would break up an operator’s sites into subgroups that could be accessed simultaneously.  They also suggested creating multiple FRNs for groups of sites as another way to provide access for multiple administrators at the same time.
  3. Clarity on vendor quotes. Many operators have asked why quotes are necessary if the operator has already paid an actual invoices for equipment delivered or services rendered, for which quotes may have been discarded or never received in writing.  Justin explained that all estimates in the initial application will need to be supported by some kind of documentation (if the operator is not relying on the Cost Catalog) and that, in general, a paid invoice should be sufficient documentation.  However, to the extent an operator is seeking partial reimbursement for equipment that is considered an upgrade, then a quote for the non-upgraded equivalent will be necessary for the cost estimate (as only that portion is reimbursable).  Similarly, if the invoice is vague, a quote could be required to clarify what that invoice is for.
  4. Clarity on serial numbers. Another cause for confusion among operators has been whether serial numbers from Huawei and ZTE equipment will be required to qualify them for replacement reimbursement. Justin explained that applicants must provide some documentation that associates the removed equipment with the equipment replacing it, and that serial numbers are a good data point for doing so.  But he also cited other possible sources for such identification, such as photos, purchase orders, invoices that include equipment specifications, or similar documentation.  To the extent applicants can supply this documentation, serial numbers may not be necessary.
  5. Replacement and disposal of equipment “provided by” Huawei or ZTE. The Covered List requires all equipment not only manufactured by Huawei or ZTE, but also “provided by” those companies, to be removed, disposed of and replaced. We asked where the line was with respect to generic, even American-made, cables, connectors, and other off-the-shelf gear (screws and metal cabinets) that aren’t made by those companies, but that might have been packaged along with their branded equipment.  On this front, the FCC advised that operators use their best judgement.  Specifically, items that are not manufactured or labeled Huawei or ZTE, and that don’t process, store, or transport data (i.e., that don’t have any “intelligence” component) probably don’t need to be discarded and replaced.  That said, to be safe, the FCC advised that anything branded Huawei or ZTE, including “dumb” cables, is better off being replaced. And of course, anything manufactured by Huawei or ZTE, including equipment that is white-labeled with a third-party brand, must be removed and replaced.  Regarding disposal, Justin referenced the FCC’s recent guidance (available here: https://www.fcc.gov/document/wcb-announces-best-practices-supply-chain-equipment-disposal), which follows a corresponding logic, i.e., the higher the data processing capability, the more care needs to be taken during disposal to ensure that the equipment will be permanently inoperable and unable to be used in other communications networks.
  6. Reporting on microwave links. Microwave links involve two locations, but it hasn’t been clear how to document their locations in the application. Callie said that operators should include both locations in an operator’s application, and to add an attachment to explain that the site is part of a two-location microwave link. This attachment can also explain that the reimbursement request is not duplicative.
  7. Questions about consumer premise equipment (“CPE”). The FCC’s orders and public notices have repeatedly stated that certain consumer premise equipment is categorically not reimbursable.  However, operators don’t see the issue as being that clear cut, as reflected by recent filings in the docket (WC 18-89, available here: https://ecfsapi.fcc.gov/file/1092947196757/Cincinnati%20Bell%20-%20Application%20for%20Review%20(Dkt%20No.%2018-89).pdf).  Justin acknowledged that CPE eligibility is individually fact-specific, and he therefore was not able to offer guidance of general applicability.  But he did say that the helpdesk was standing by to assist with those inquiries (SCRPFundAdmin@fcc.gov).

It is important to remember that these take-aways are only informal guidance to help operators make progress in preparing for the October 29th window opening.  The FCC may formally clarify these and other issues in further orders or public notices, but in the meantime this might help in planning your application process.