FCC: US ​​needs $3 billion more to remove Huawei, ZTE equipment from nationwide networks

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You may recall that about a year ago the FCC voted to spend $1.9 billion to “rip and replace” Huawei and ZTE network equipment from nationwide carrier networks in the US. Both Chinese telephone manufacturers and network equipment suppliers are considered national. security threats and with carriers nationwide looking to build out some 5G coverage, now would be the time to make sure there are no remnants of the pair’s network equipment still in use in the states.

The FCC Needs More Than $3 Billion to Help Rural Wireless Companies Rip and Replace Huawei and ZTE Equipment

Reuters reports that the FCC has yet to find an additional $3.08 billion to fund the complete removal of Huawei and ZTE mobile network equipment from rural markets. In a letter to Senator Maria Cantwell, head of the committee on commerce, science and transportation, Rosenworcell said the regulatory agency has a $3.08 billion deficit. The letter states, “To fund all reasonable and supported cost estimates… the Repayment Program will require $4.98 billion, which equates to a current deficit of $3.08 billion.”
Finding out the reason behind the shortage is a piece of cake. In July 2021, the FCC voted unanimously to spend $1.9 billion to dismantle and replace ZTE and Huawei’s networks in rural US. Since Congress appropriated just $1.9 billion to do the job, the nationwide airlines should get back only 40% of the money they planned to spend getting rid of the offending network equipment.

US says Huawei and ZTE are both too close to Chinese communist government

The US is concerned that both Huawei and ZTE are too close to the communist Chinese government. Meanwhile, nationwide airlines receive federal grants from the Universal Service Fund administered by the FCC. The money from the fund comes from ratings of telecom providers based on their interstate and international revenues.

In 2019, Congress passed a law requiring telecom companies receiving federal subsidies to purge their networks of equipment supplied by companies considered threats to U.S. security.

The nationwide carriers, now forced to “tear and remove” Huawei and ZTE’s network equipment, are legally allowed to wait to complete the work until they receive compensation from the FCC. Without new credits from Congress, there could be a major delay before the nationwide airlines can be reimbursed, allowing them to remove all the network equipment they bought from Huawei and ZTE.

In her letter to Senator Cantwell, FCC Chairman Rosenworcel wrote, “In the absence of additional credit, the Commission will apply the priority schedule specified by Congress.” The chairman said the Commission will begin processing refund applications “as the allocations are issued in the coming days”.

In November 2019, the FCC banned the Universal Services Fund (USF) from spending money on Huawei and ZTE equipment. The USF spends a whopping $8.5 billion a year on rural telecom equipment. The goal is to make sure everyone in the US can make and receive calls. The funds will also be used to ensure that Americans living in rural areas have access to the Internet.

Huawei is the world’s largest supplier of network equipment, while ZTE is number four. The US still has some rules that make it difficult for Huawei to access its US supply chain and do business in the states.

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