According to a new letter from the head of the FCC, around 66% of the applications the agency has received in its "rip and replace" program have been deemed "initially materially deficient."

FCC Chairwoman Jessica Rosenworcel added in her letter to Congress: "The agency has notified each of these applicants that they will have a 15-day period to amend and cure these defects. The commission will promptly review any amended applications and expects to complete this process by July 15, 2022."

After that, she said, the FCC will give Congress a final price tag for a program that has ballooned from $700 million in 2019 to around $5.3 billion today (down from a high point earlier this year of $5.6 billion).

The development represents yet another stumbling block in an initiative that has been beset by controversy, delay and uncertainty. Indeed, as Light Reading has previously reported, some of the companies hoping to score funding through the program have decided to move on due to delays, while others have contemplated exiting the industry altogether.

Is the price right?

At the heart of the issue is a desire among US lawmakers to finance removal from US telecom networks of equipment deemed insecure (meaning, from Chinese vendors Huawei and ZTE). Although both companies have argued against exclusion, Congress allocated $1.9 billion for the "rip and replace" program at the end of 2020.

Figure 1: People walk past a Huawei store on Wangfujing Street in Beijing, China.
(Source: An Xin/Costfoto/Sipa USA)

The FCC earlier this year published the full list of all the companies asking for money through the program. It found that requests collectively totaled almost $6 billion.

Since then, the agency has been checking each company's application for errors. It found a bunch.

"Of the 181 applications filed with the commission, 122 were found to be initially materially deficient," Rosenworcel told Congress.

If the FCC ultimately throws out a large number of "rip and replace" applications, it could potentially lower the total cost of the program closer to the $1.9 billion that Congress has already allocated, rather than having to ask for more.

The Competitive Carriers Association (CCA), a trade group representing some of the companies participating in the program, declined to comment on the situation. An official from the Rural Wireless Association (RWA), another group representing such companies, did not respond to questions from Light Reading.

A problem with paperwork

A quick check of the FCC's "rip and replace" docket could point to some of the issues. For example, PTA-FLA told the agency earlier this year that it needed to resubmit its application because the company "apparently failed to make sufficiently clear" that it was operating wireless networks under its affiliated businesses and not under the "PTA-FLA" name.

Another filing from Viaero Wireless indicates that the company cannot supply the FCC with a necessary catalog of Chinese-made equipment because the company "did not own or operate an asset tracking or other inventory management system sufficient to catalog all of the information the commission has requested."

The FCC's "rip and replace" program has been buffeted by a wide range of competing goals, players and interests. Some US lawmakers likely want to prevent Chinese espionage via the program, while others hope to score points with constituents by appearing tough on China.

Some network operators may see the "rip and replace" program as a way to upgrade their networks on the taxpayers' dime. Others simply hope to meet Congressional mandates while providing needed mobile services in rural areas.

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— Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano