FCC Opens $2bn Fund For Rural Carriers Replacing Huawei Kit

The United States continues to push forward with the removal of Chinese telecoms equipment from its nationwide communications networks.

The US Federal Communications Commission (FCC) on Monday announced that on 29 October, it will open 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 June voted unanimously to approve a plan that will ban any approvals for equipment from Huawei, ZTE and other companies deemed to be a national security threat.

National security

The FCC fund, called the ‘Secure and Trusted Communications Networks Reimbursement Program’ will be open for applications from carriers until January next year.

It comes after the FCC this time last year 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 US Congress had authorised reimbursements to rural telecoms firms, but had yet to appropriate funds for the purpose, meaning rural carriers may be obliged to foot large bills in the near term.

“As directed by the Secure and Trusted Communications Networks Act of 2019 (Secure Networks Act), as amended, the Commission established the $1.9 billion Reimbursement Program to reimburse providers of advanced communications services with ten million or fewer customers for costs incurred in the removal, replacement, and disposal of covered communications equipment or services from their networks that pose a national security risk,” said the FCC on Monday.

“Covered communication equipment or services eligible for Reimbursement Program support is limited to the communications equipment or services produced or provided by Huawei Technologies Company (Huawei) or ZTE Corporation (ZTE), that were obtained by providers on or before 30 June 2020,” it said.

China clampdown

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

In December last year, the FCC 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.

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.

The FCC also began a proceeding aimed at removing China Telecom’s permit to operate in the United States.

The fund will be welcome news for rural carriers in the United States, which is reportedly finding it difficult to find the engineers, and deal with the high costs, associated with ripping and replacing the Chinese equipment.

For its part Huawei has always denied it poses a national security threat.

It derives a relatively small income from the US, and the FCC move is part of a broader campaign against the company by the US administration that has included moves aimed at cutting off its access to computer chips and microprocessor manufacturing technologies.

This has had a severe effect on Huawei’s smartphone handset business, leading Huawei to spin off its Honor budget smartphone brand.

Last month, Huawei reported its largest-ever drop in revenues in the first half of 2021, in part due to the sale of its Honor smartphone brand.

Huawei meanwhile  has vowed to return to the smartphone ‘throne’, despite no change in sanctions against the firm from the United States.