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Federal Register / Vol. 86, No. 8 / Wednesday, January 13, 2021 / Rules and Regulations finds, notwithstanding PTAFLs recent filing, that ETCs stand in a different position than non-ETCs, justifying a prioritization in the allocation of reimbursement support. Perhaps most significantly, in this document the Commission requires ETCs receiving universal service support to remove covered equipment and services from their networks. Failure to comply will result in the loss of future universal service funding. ETCs, which often provide service in areas where providers are less likely to be able to recover their costs from subscribers, are more sensitive to the possibility that they could lose universal service funding.
ETCs thus face greater consequences than non-ETC providers if the transition does not occur in a timely manner. The potential for enforcement liability or reduced universal service funding further distinguishes ETCs from the circumstances of other applicants.
Based on these factors, the Commission finds there is a greater urgency to expeditiously accommodate the transition of ETC networks over other applicants. Accordingly, if initial funding is insufficient to satisfy reimbursement requests, the Commission will first prioritize funding to ETCs over non-ETC applicants. By adopting a prioritization scheme, the Commission declines to follow the suggestions of RWA to grant an equitable percentage of funding to all applicants proportionate to need . . . .
if there is an insufficient amount of funds initially appropriated. The Commission will, however, pro rate funding within a prioritization subcategory if insufficient funds remain for all requests in the subcategory.
144. Among non-ETC applicants, the Commission will further prioritize funding, as recently suggested by RWA, to first allocate funding to those nonETCs that voluntarily provided cost estimate data in response to the Supply Chain Security Information Collection over other non-ETC applicants. The estimated cost to remove and replace covered equipment as reported by the Supply Chain Security Information Collection participants with two million or fewer customers totaled $1.62 billion with costs reported by all filers totaling $1.84 billion. This number includes data reported not only by ETCs required to report but also non-ETCs that were encouraged to report on a voluntary basis. The Commission asked Congress to appropriate $2 billion in funding for the Reimbursement Program, taking into account the cost data collected in the Supply Chain Security Information Collection. If Reimbursement Program
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demand were to substantially exceed $2
billion in appropriated funding due to the emergence of providers not participating in the Supply Chain Security Information Collection, then those non-ETCs that participated voluntarily in the collection could go without or with reduced funding simply because the costs of non-participating non-ETCs were not reported, and thus not considered. The Commission finds this result inequitable. Accordingly, the Commission will prioritize funding for participating non-ETCs over other nonETCs.
145. If funding proves insufficient to meet the estimated reimbursement costs reasonably incurred for ETCs or nonETCs, the Commission will further prioritize funding for expenses to transition the core networks of providers over non-core network expenses. To demarcate core network transition and non-core network transition expenses, applicant will need to report estimated costs for such activities separately in their submission.
146. Commenters indicate replacing the core network is the logical first step in a network transition and may have the greatest impact on eliminating a national security risk from the network.
For example, CCA states the core is where the routing functions and intelligence resides in todays networks, so starting with the core is a natural step both in transitioning networks and prioritizing any national security risks. WTA also notes that limiting removal and replacement to core equipment could save the transition time and money as the equipment that is least likely to be a threat is on the edge of the network.
While the Commission believes having covered communications equipment and service in any portion of the network poses a national security risk, it agrees that prioritizing funding for core network transition expenses makes sense logically from a network migration standpoint and will greatly mitigate risks in the network. SNC states that replacing the core without also replacing the radio access network may raise interoperability issues but such concerns do not dissuade the Commission from finding that funding is best prioritized to most efficiently address national security risks by first assisting with the replacement of the core network over a providers radio access network when demand exceeds available funding. Accordingly, the Commission instructs WCB to further prioritize the allocation of funding among applicants.
147. If available funding is insufficient to satisfy all funding
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requests in a prioritization subcategory, the Commission will prorate funding among all requests in the subcategory to ensure that total funding allocated does not exceed the funding available.
Specifically, WCB will reduce each applicants funding allocation request by an equal percentage to bring down the total funding allocation within the available support limit. This process will thus result in the equitable distribution of funding among applicants within the prioritization subcategory, consistent with the statute, while still allocating more funding to those applicants with higher transition costs. WCB will determine a pro-rata factor by dividing the total amount of available funding by the total amount of funding requested. WCB will then multiply the pro-rata factor by the total amount of support requested by each applicant and will allocate funds to each eligible applicant in the prioritization subcategory consistent with this calculation. The net result is each eligible applicant in that subcategory will receive less support than requested by the same pro-rata factor to bring the overall support amount committed within the applicable limit.
148. Following the acceptance of applications submitted during the relevant filing window, WCB will assess the aggregate demand of the applications filed during the applicable filing window to determine whether demand exceeds available funding, thereby triggering the need for funding prioritization. In conducting this assessment, WCB should make a cursory review of the applications to determine if any requests are clearly ineligible for funding, e.g., equipment to be removed is not on the Covered List ineligible or there appears to be a duplicate request from an applicant, and should not be included in the aggregate demand assessment. Per the Secure Networks Act, the Commission must give applicants a 15-day period to cure any material defect in the application before denying the application. This cursory review to eliminate clearly ineligible or erroneous applications will help to ensure a more accurate assessment of aggregate demand to determine whether to apply funding prioritization.
149. WCB will need to account for the administrative cost of operating the reimbursement program when assessing aggregate demand to the extent such costs are funded by a congressional appropriation and do not count towards funding available for reimbursement requests.
150. Following the allocation of funds to eligible providers and after eligible
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