US Carriers Ask FCC for $5.6bn For Chinese Kit Replacement

The taxpayer in the United States is potentially facing a bigger bill, after it emerged US mobile operators are seeking billions more dollars to rip and replace networking equipment from Chinese firms such as Huawei.

Last year the US Federal Communications Commission (FCC) had opened a $1.9 billion program to reimburse mostly rural US telecom carriers for removing network equipment made by Chinese firms.

It comes after the FCC in December 2020 ordered US domestic telecommunications providers to remove equipment made by China’s Huawei, after it designated Huawei and ZTE as national security threats to communications networks.

Rip and replace

That declaration barred US carriers from accessing an $8.3 billion government fund (the Universal Service Fund ) to purchase or maintain equipment from the two Chinese companies.

Then in June 2021 the FCC voted unanimously to approve a plan that would ban any approvals for equipment from Huawei, ZTE and other companies deemed to be a national security threat.

The FCC had previously estimated that US rural telecommunications companies that rely on federal subsidies would need to spend at least $1.837 billion ($1.4bn) to remove and replace equipment from Huawei and ZTE.

The compensation fund, called the ‘Secure and Trusted Communications Networks Reimbursement Program’ was opened for applications from US carriers from October to January this year.

Additional cost

Now it is being reported that the price of removing Chinese equipment from US mobile networks is likely to cost more than the $1.8 billion FCC had originally anticipated.

According to Federal Communications Commission Chairwoman Jessica Rosenworcel, US carriers have requested approximately $5.6 billion in reimbursements to “rip and replace” their existing Huawei and ZTE infrastructure.

The US communications regulator has received 181 applications for funding support, before applications closed on 28 January.

As things stand, the US regulator only has enough money to grant about a third of all the requests it has received.

Chairwoman Jessica Rosenworcel notified Congress that providers have initially requested approximately $5.6 billion from the Secure and Trusted Communications Networks Reimbursement Program to cover the costs of removing, replacing, and disposing of insecure equipment and services in US networks.

“Last year Congress created a first-of-its kind program for the FCC to reimburse service providers for their efforts to increase the security of our nations communications networks,” said Chairwoman Rosenworcel. “We’ve received over 181 applications from carriers who have developed plans to remove and replace equipment in their networks that pose a national security threat.”

“While we have more work to do to review these applications, I look forward to working with Congress to ensure that there is enough funding available for this program to advance Congress’s security goals and ensure that the US will continue to lead the way on 5G security,” she said.

The funding is used to help carriers remove, replace and dispose of communications equipment from the likes of Huawei and ZTE.

China clampdown

The fund to remove the Chinese kit should come as no surprise.

The US administration has undertaken a broad campaign against Chinese companies that has included moves aimed at cutting off access to US computer chips and microprocessor manufacturing technologies.

In November last year President Joe Biden signed new legislation to prevent Huawei Technologies or ZTE Corp from receiving new equipment licenses from US regulators. That move came after the Secure Equipment Act was approved unanimously by the US Senate on 28 October

As part of the US clampdown on Chinese firms, the FCC has been revoking licences that gave Chinese firms the ability to operate in US markets.

In April 2020 the FCC began the process to revoke China Telecom’s permit to operate in the United States.

It finally revoked the China Telecom licence last October.

Last month the FCC also ended “the ability of China Unicom (Americas) Operations Limited to provide domestic interstate and international telecommunications services within the United States.”