FCC says Treasury loan and upcoming spectrum auction will cover most rip-and-replace costs; one provider remains short

WASHINGTON — The Federal Communications Commission has borrowed money from the U.S. Treasury to finish the Secure and Trusted Communications Reimbursement Program — commonly called the “rip and replace” program — and plans to repay the loan using proceeds from an upcoming AWS‑3 spectrum auction, FCC Chairman Brendan Carr told the House Appropriations subcommittee.

The program, created to remove Chinese‑made Huawei, ZTE and other equipment considered national‑security risks from U.S. networks, had an earlier appropriation and later a funding shortfall. "Congress initially appropriated initial sum of roughly $3,000,000,000... We've now borrowed funding from the treasury to to complete that process. We will repay, treasury with proceeds from that AWS 3 spectrum auction," Carr said.

Why it matters: Carr said completing rip and replace is a national‑security priority and that most providers in the program are now fully funded. Lawmakers pressed Carr on loan terms, interest costs and whether Treasury interest payments would create funding gaps.

What the FCC told lawmakers: Carr said Congress had appropriated about $1.9 billion initially for the program and later authorized the FCC to borrow additional funds to cover higher‑than‑expected costs. At the end of last year the agency was about 28% complete on replacements, he said, and "we expect to be either complete or essentially fully complete, by about a year from now." He added that "for everybody except for that 1 entity, they are now fully provided for by the legislation from congress. We just have a shortfall now with direct to 1 particular provider." Carr also told members that Treasury’s interpretation of the borrowing authorization required using a portion of the borrowed funds to pay interest, creating the remaining shortfall for the single provider.

Lawmakers’ questions and follow‑up: Representative Hinson (during questioning) told Carr, "this is really, really important for national security," and asked whether providers face practical implementation barriers now that funding is authorized. Carr said the primary barrier had been the funding shortfall, and that once Congress closed it the FCC moved quickly to allocate funds and expects the work to be finished within about a year.

Remaining uncertainty: Carr said the loan carries an interest obligation that has created a small shortfall affecting one provider; he did not provide the provider’s name or the exact dollar amount of that remaining gap during the hearing. He also said the agency will continue to work with the provider and that "we'll continue to work on this effort." The FCC expects to use auction proceeds to repay Treasury but did not provide a repayment schedule in the hearing record.

Background: Members and Carr referenced prior congressional actions and the FCC’s authorizations; Carr said the agency will rely on auction proceeds, including from an AWS‑3 auction, to cover Treasury repayment obligations.

What’s next: Carr told the subcommittee the FCC has allocated funding and will continue implementation, and he said he will follow up with members on the outstanding provider issue and the repayment plan.

Ending note: Lawmakers indicated they may press for additional details and documentation in follow‑up questions for the record.