Telcos need another $3B in Uncle Sam's cash to remove Chinese network kit, says FCC

FCC chair Jessica Rosenworcel has warned US Congress that telco networks and service providers are not going to start projects to rip and replace kit made by ZTE and Huawei unless they are assured of federal reimbursement.

The funding gap is significant, she told Senate Commerce Committee chair Maria Cantwell in a letter this week. She said that were the FCC to fund all "reasonable and supported cost estimates in the approved applications, the Reimbursement Program would require approximately $4.98 billion, reflecting a $3.08 billion shortfall from the current appropriation of $1.9 billion."

Because the demand for support exceeds the money the FCC has been asked to allocate under the Secure and Trusted Communications Networks Act, the body has ended up mostly funding applicants with "two million or fewer" customers. This isn't a good look when there's a looming deadline for telcos to apply for funding or miss out, she said.

The US has claimed for years that Chinese network kit is a security risk, refusing to detail exactly how and why. Huawei and ZTE have always denied this. America, meanwhile, has placed significant pressure on trading partners and political allies to follow its lead, with long-term holdout the UK caving in 2020 by issuing a total ban on Huawei, requiring operators to remove its technology from the country's 5G networks by the end of 2027.

Germany, which was reportedly threatened by the US with a reduction in intelligence sharing if it allowed Huawei equipment to be installed on its 5G networks, said last month it would examine China-made kit in its 5G networks over security concerns after years of publicly scorning US efforts and saying it would buy what it pleased.

All three nations have Chinese telco kit – particularly Huawei – all over their networking landscape, with programs to remove it appearing to need years and billions of dollars. Network infrastructure operators are loath to take on the financial risk. According to a recent report from Strand Consult, around 41 percent of the UK's 4G network equipment comes from Huawei. Strand also said its data reflected that the "large European countries – Germany, Italy, Poland, Portugal, Austria, and Spain – purchase significant amounts of 5G equipment from Chinese vendors."

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In the US, the Senate passed the bill to rip and replace network kit used in buildouts in rural areas and elsewhere back in 2020.

It's not just telcos not getting rid of Chinese tech implementations that's an issue. The US government itself is still buying the ostensibly prohibited technology, despite the very same legislation permitting the FCC to restrict the purchase of certain ICTS using federal funds. According to a Georgetown University think tank paper published last year, "thousands" of public officials are still purchasing prohibited tech from "Huawei, ZTE, and other Chinese companies" and that most state and local governments simply haven't bought into existing federal actions by making any changes to their procurement policies.

The Competitive Carriers Association, one of the main US groups for wireless providers and "stakeholders" said of Rosenworcel's letter yesterday that it highlighted the "urgency and difficulties" faced by program participants.

It added: "Many CCA members participating in the Program are the only providers in the rural areas they serve, and cannot successfully 'rip and replace' untrusted equipment and continue to provide service for their subscribers, as well as roaming customers from other carriers, with less than 40 percent of their approved costs funded. Congress created the program as a national security mandate, and Congress can ensure its success by acting to fully fund the Secure and Trusted Communications Networks Reimbursement Program." ®