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Federal Register / Vol. 86, No. 160 / Monday, August 23, 2021 / Rules and Regulations
Nevertheless, the Commission will amend its definition to explicitly include these providers.
72. The Secure Networks Act further limited eligibility in the Reimbursement Program to providers of advanced communications service . . . with . . .
customers. The word customers is defined as either customers of the provider of advanced communications services or the customers of any affiliate of a providers of advanced communications service. LATAM
claims that Congress, by expanding the definition of provider of advanced communications service in the CAA, intended to better capture all the networks that may be used for the provision of advanced communications services to consumers, including intermediate providers, who carry traffic for other carriers only, and neither originate nor terminate that traffic. It also argues that, from a policy perspective, it does not make sense to exclude intermediate providers from participation in the Reimbursement Program since the security concerns would be similar to providers of advanced communications services.
73. The Commission agrees, but do not think its existing rules prohibit such intermediate providers from participation in the Reimbursement Program. Its existing definition did not limit eligibility to providers who offer service to end users. Rather, it extended eligibility to providers of high-speed, switched, broadband telecommunications capability that enables users to originate and receive high-quality voice, data, graphics, and video telecommunications using any technology with connection speeds of at least 200 kbps in either direction.
Intermediate providers, such as LATAM, likely provide such a service to their customers, notwithstanding whether those customers are carrier customers or end-user customers. The Commission intends to include intermediate providers in the Reimbursement Program because, by doing so, the Commission can secure against potential vulnerabilities to the broader network. Its goal is to ensure the safety and security of the entire network, not only to those portions that provide service to end users. Thus, the Commission clarifies that intermediate providers are eligible for participation in the Reimbursement Program.
74. Finally, the Commission reiterates that the adopted changes to the definition of provider of advanced communication services apply only to the Reimbursement Program. The Commission does not amend the term as
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it is defined in any other section of its rules.
F. Reimbursement Program Clarifications 75. The Commission next clarifies various other aspects of the Reimbursement Program adopted in the 2020 Supply Chain Order. Specifically, the Commission clarifies: 1 The costs reasonably incurred standard adopted for determining eligible reimbursement expenses with technology upgrades; 2
the initial application filing window; 3
the consideration of requests for individual extensions of the removal, replacement, and disposal term; 4
additional expectations for and obligations of Reimbursement Program participants regarding reimbursement claim requests and the filing of final spending reports and final certification updates; 5 the process by which to account for removal, replacement, and disposal of covered equipment and services; 6 parameters when accounting for reimbursement funds;
and 7 delegation of financial oversight to the Office of the Managing Director OMD.
76. Costs Reasonably Incurred StandardTechnology Upgrades. The Commission clarifies the costs reasonably incurred standard adopted in the 2020 Supply Chain Order and provide additional guidance as to the types of replacement options that would be considered comparable facilities and technology upgrades. As adopted in the 2020 Supply Chain Order, the Reimbursement Program will reimburse costs reasonably incurred for the removal, replacement, and disposal of covered communications equipment and services in accordance with the Secure Networks Act. In the 2020
Supply Chain Order, the Commission considered as reasonable replacement facilities comparable to the facilities in use by the provider prior to the removal, replacement, and disposal of covered communications equipment or service.
The Commission further acknowledged, however, that replacing older technology inevitably involves a certain amount of technology upgrade and as a result expressly allowed for the replacement of older mobile wireless networks with 4G LTE equipment or service that is 5G ready. The Commission cautioned, however, that providers electing to purchase optional equipment capability or make other upgrades . . . must do so using their own funds.
77. Providers considering replacement options have expressed interest in changing their technology path and have asked for clarification regarding
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what is considered comparable and eligible for reimbursement and what is considered a technology upgrade and ineligible for reimbursement. For example, providers may want to transition from older mobile wireless technologies to 5G or move from fixed wireless to fiber. The Commission therefore provides additional guidance on what is considered a technology upgrade, how to estimate cost for the Reimbursement Program for a technology upgrade, and how the Commission will allocate funding for such requests.
78. As a policy matter, the Commission encourages providers to upgrade their networks and to transition to efficient, scalable, and secure technology, thereby providing more choices and capabilities to end users.
The Reimbursement Program is, however, limited in funding and focused on assisting small communications providers with the costs of removing prohibited equipment and services from their networks and replacing prohibited equipment with more secure communications equipment and services. Additionally, Congress specifically stated that the Commission is expected to preclude network upgrades that go beyond the replacement of covered communications equipment or services from eligibility.
The Commission thus interprets the costs reasonably incurred standard to make providers responsible for the additional incremental cost of funding upgrades that exceed what is reasonably necessary to transition to a comparable replacement. That said, and as the Commission previously acknowledged, replacing older technology inevitably involves a certain level of upgrade as the equipment and services currently available in the marketplace typically contain features and capabilities not present in the legacy equipment and services no longer offered. Accordingly, a certain degree of upgrade may be entirely reasonable, and eligible for reimbursement, depending on the comparable replacements available in the marketplace. In particular, the Commission reiterates, as previously stated in the 2020 Supply Chain Order, that 4G Long Term Evolution LTE
network equipment or service, which would include VoLTE technology, would be treated as a comparable replacement for an older mobile wireless network for purposes of the Reimbursement Program.
79. Whether an upgrade is treated as a reasonable, comparable replacement necessary for the transition, and thus acceptable, or a technology upgrade ineligible for reimbursement will likely
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