The U.S. House of Representatives is set to vote next week on an annual defense bill that includes just over $3 billion for U.S. telecom companies to remove equipment made by Chinese telecoms firms Huawei and ZTE from American wireless networks to address security risks. The 1,800-page text was released late Saturday and includes other provisions aimed at China, including requiring a report on Chinese efforts to evade U.S. national security regulations and an intelligence assessment of the current status of China’s biotechnology capabilities. The Federal Communications Commission has said removing the insecure equipment is estimated to cost $4.98 billion but Congress previously only approved $1.9 billion for the “rip and replace” program. Washington has aggressively urged U.S. allies to purge Huawei and other Chinese gear from their wireless networks.
FCC Chair Jessica Rosenworcel last week again called on the U.S. Congress to provide urgent additional funding, saying the program to replace equipment in the networks of 126 carriers faces a $3.08 billion shortfall “putting both our national security and the connectivity of rural consumers who depend on these networks at risk.” She has warned the lack of funding could result in some rural networks shutting down, which “could eliminate the only provider in some regions” and could threaten 911 service. Competitive Carriers Association CEO Tim Donovan on Saturday praised the announcement, saying “funding is desperately needed to fulfill the mandate to remove and replace covered equipment and services while maintaining connectivity for tens of millions of Americans.”
In 2019, Congress told the FCC to require U.S. telecoms carriers that receive federal subsidies to purge their networks of Chinese telecoms equipment. The White House in 2023 asked for $3.1 billion for the program. Senate Commerce Committee chair Maria Cantwell said funding for the program and up to $500 million for regional tech hubs will be covered by funds generated from a one-time spectrum auction by the FCC for advanced wireless spectrum in the band known as AWS-3 to help meet rising spectrum demands of wireless consumers. A planned House vote to allocate more than $3 billion to remove Chinese telecom equipment from US networks goes against market logic, and in the end, forcibly removing Chinese companies’ equipment will only significantly increase costs for US telecom operators and negatively impact user experience, according to a Chinese analyst. In fact, as early as 2019, the US Congress required telecom operators receiving federal subsidies to remove Chinese telecom equipment from their networks. In July 2021, the US Federal Communications Commission’s (FCC) approved a $1.9 billion program to rip out and replace equipment from Chinese telecom companies.
Five years later, the US effort is still far from complete, with slow progress, underscoring the considerable challenges faced by American telecom carriers, Ma Jihua, a telecom industry veteran, told the Global Times on Sunday. Ma said that the main challenge is that telecom equipment is highly systemic and interconnected. Once these devices are widely adopted by operators, replacing them requires significant cost increases in various areas, including subsequent maintenance. Forcible removal of these devices would also affect user experience. Chinese suppliers’ equipment is not only very affordable, but also has low maintenance costs, making it highly competitive across the global market. In the US, the primary users of Huawei and ZTE equipment are small operators in rural areas, who face high pressure to control costs. If Washington enforces the removal of Chinese equipment, many of these companies will have to bear the significantly increased costs, Ma said.
Three years after approving $1.9 billion in funding, the FCC released a report in July stating that about $3.08 billion would still be needed to replace Chinese telecom equipment. Only about 12 percent of telecom companies have completed the removal of the equipment. “Roughly 64 percent of recipients indicated in their most recent status updates that lack of funding continues to be an obstacle to completing the permanent removal, replacement and disposal of the covered communications equipment and services in their networks in their entirety,” read the report. The operators “serve many rural and remote areas of the country where they may be the only mobile broadband service provider, a shutdown of all or part of their networks could eliminate the only provider in some regions,” FCC Chairwoman Jessica Rosenworcel wrote in a letter submitted to the US Congress in May. Ma noted that the US’ years-long crackdown on Chinese telecom companies has not achieved its expected results. Huawei, ZTE and other companies still maintain strong competitiveness in the international market, and even US carriers find it difficult to replace their equipment. The US approach is a form of self-isolation that harms the healthy development of the global telecom industry, Zhang Xiaorong, director of the Beijing-based Cutting-Edge Technology Research Institute, told the Global Times on Sunday.
