Congress Approves $1 Billion For Rural Telecoms To \"Rip And Replace\" Huawei, ZTE Equipment

Congress Approves $1 Billion For Rural Telecoms To \"Rip And Replace\" Huawei, ZTE Equipment

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In a unanimous vote on Tuesday, the Federal Communications Commission finalized a $1.9 billion program to rip and replace equipment from Chinese telecom companies considered national security risks by the U.S. government.

Last year, the Federal Communications Commission voted to cut off subsidies to rural wireless carriers that used equipment from suppliers the agency says may pose a national security risk. Congress followed with bi-partisan legislation to fund the replacement of equipment from companies deemed a security risk.

The legislation would ban the use of federal funds to buy equipment from companies that pose a national security threat, such as Huawei or ZTE. It would also create a $1 billion fund to help telecom providers, most of whom are in rural areas, rip out gear from these Chinese firms and replace it with equipment from "trusted providers."

The Supply Chain Reimbursement Program is a $1.9 billion program created by the FCC at the direction of Congress to reimburse providers of advanced communications services with ten million or fewer customers for reasonable expenses incurred in the removal, replacement, and disposal of communications equipment and services produced or provided by Huawei Technologies Company (Huawei) or ZTE Corporation (ZTE) that was obtained on or before June 30, 2020 from their networks. To participate, providers must complete and submit a FCC Form 5640 Application Request for Funding Allocation during the designated filing window. The filing window opened on Friday, October 29, 2021 at 12:00 AM ET and closed on Friday, January 28, 2022 at 11:59 PM ET.

Earlier this year, Congress passed and Trump signed into law the Secure and Trusted Communications Act. This legislation bans the use of federal funds to buy equipment from companies that pose a national security threat, such as Huawei or ZTE. The law also creates a fund to help telecom providers, most of whom are in rural areas, rip out gear from these Chinese firms and replace it with equipment from "trusted providers."

Steven Berry, president and CEO of the Competitive Carriers Association, an industry group representing rural carriers, has testified before Congress about the difficulty of mounting such an extensive project to replace Huawei and ZTE equipment. In March, he told the Senate Commerce committee that ripping out and replacing equipment in rural networks would be like "attempting to rebuild the airplane in mid-flight."

The $900 billion coronavirus relief package announced late Sunday contains $7 billion for broadband, including funding for those struggling to afford internet access and for service providers to remove and replace telecommunications equipment manufactured by Chinese companies labeled national security threats.

The relief package also includes nearly $2 billion to help small and rural internet service providers comply with a recent FCC order requiring them to remove and replace equipment made by the Chinese firms Huawei and ZTE. The FCC estimates the process would cost at least $1.6 billion, though outgoing Chairman Ajit Pai has said greater costs are likely.

The Secure and Trusted Communications Network Act of 2019 allocated $1.9 billion for the FCC to reimburse providers to replace equipment that it deemed insecure or problematic to national security, including Chinese technology from Huawei and ZTE. 2b1af7f3a8