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Congress earmarks $1.9 billion to remove Huawei and ZTE gear from American networks

The US lawmakers have included in the coronavirus relief package up to $1.9 billion as reimbursement for American CSPs to remove Huawei and ZTE equipment from their networks.

European readers woke up this morning to the breaking news alerts on their smartphone screens that the US Congress has agreed to a $900 billion package of COVID-19 pandemic aid. More details of what are included in the package, especially details related to the telecoms industry, have just been disclosed.

Reuters learned from its sources that $1.9 billion has been set aside to finance American broadband operators to remove and replace equipment from Huawei and ZTE that is operating on the systems. Back in June the FCC formally designated Huawei and ZTE as national security threats. Such designations excluded the vendors from the shopping list of any operators wishing to access the Universal Service Fund (USF), worth $8.3 billion. Earlier this month the FCC shared more details on its mandate to operators which have equipment from these vendors to “rip and replace” with equipment from vendors deemed safe. The $1.9 billion is to compensate the cost to implement the rip-and-replace policy. The priority of the reimbursement is with small operators, especially those with two million subscribers or less, Reuters reported.

The decision would be welcome news to those more cash-constrained local and rural CSPs in the US that have been attracted to Huawei and ZTE. Back in 2018 when the FCC was asking for comments on its “Protecting Against National Security Threats to the Communications Supply Chain Through FCC Programs”, many of these operators expressed their disagreement. One of the most vocal opponents to the programme, which was seeking to ban Huawei and ZTE from networks financed by USF, was Rural Broadband Alliance (RBA) and its members. “The practical effect of enforcing such a rule is that RBA carriers would need to tear out roughly $1 billion worth of gear currently used to provide mobile voice and broadband in America’s rural areas well before the gear reaches its useful life span and can be depreciated,” the association said at that time.

How much it would cost operators to replace Huawei and ZTE, or how much compensation would be demanded by them, is yet to be seen. There is often plenty of ambiguity when calculating how expense it is to replace on-network equipment. One of the most famous recent disputes was on the projected cost of excluding Huawei from Europe’s 5G markets. While the GSMA estimated the additional cost could run as high as $62 billion, independent research firm Strand Consult estimated the net increase of cost would only be about $3.5 billion. The primary reason for the over than 90% discrepancy, Strand Consult argued, lies in the fact that operators would need to replace most of the equipment in question regardless the ban, as they would be coming to the end of their lifecycle.

The $1.9 billion rip-and-replace provision is part of an overall $7 billion investment plan to increase broadband access, which also includes different types of subsidies for under-served Americans. “The agreement invests $7 billion to increase access to broadband, including a new Emergency Broadband Benefit to help millions of students, families and unemployed workers afford the broadband they need during the pandemic,” House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer said in a joint statement.

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10 comments

  1. Avatar Bradley Barakat 21/12/2020 @ 1:47 pm

    When did technology ever start to be a hatred tool toward other countries. That’s pity.

  2. Avatar Alvaro 21/12/2020 @ 2:50 pm

    not a pity. excluding countries and technologies from untrust economy will only be beneficial on long run

  3. Avatar Alvaro 21/12/2020 @ 2:54 pm

    network equipment reaches end-of-life and they MUST be replaced. It is the right points in time to get european vendors with strong records and trust as suppliers

  4. Avatar Seggy 21/12/2020 @ 7:45 pm

    I am sure the Chinese have the capacity to respond at the appropriate time. Fingers crossed.

  5. Avatar happiman 21/12/2020 @ 8:57 pm

    Don’t forget the Evil Chinese Community party is openly violating the international law.

    They put a backdoor on SuperMicro Servers and Apple and many other companies were among victims.
    https://www.bloomberg.com/news/features/2018-10-04/the-big-hack-how-china-used-a-tiny-chip-to-infiltrate-america-s-top-companies

    “The attack by Chinese spies reached almost 30 U.S. companies, including Amazon and Apple, by compromising America’s technology supply chain, according to extensive interviews with government and corporate sources.

    By nature, Chinese business steals, bribes and cheat on IPP. It’s in their culture and history.

    “There are no exact statistics on trade secret theft ranked by nation, but China remains the world’s principal IP infringer across all types of IP theft, according to a spokesman for the IP Commission, which estimates up $600 billion annually in cost”
    https://www.cnbc.com/2019/02/28/1-in-5-companies-say-china-stole-their-ip-within-the-last-year-cnbc.html#:~:text=There%20are%20no%20exact%20statistics,U.S.%20economy%20from%20these%20actions.

  6. Avatar mr h sun 22/12/2020 @ 12:07 am

    Remember the Trade War? Well US has been buying tons of Chinese products for Xmas.
    I fear a similar story will happen with Huawei ZTE . China’s quality, efficiency and price is hard to beat.

  7. Avatar Jerome 22/12/2020 @ 4:42 pm

    The author ( Wei Shi is a typical Chinese style name) is like a banana with a yellow skin but a white hatred Herat toword his people , which his article is obvious try to sobatage China by magnifying something pushed by trump regime, shame on him. Also every time I found happyman so happy there as long as there is someone attacking China, believe me, he is just a bot.

    • Wei Shi Wei Shi 23/12/2020 @ 8:05 am

      Thanks for reading Telecoms.com and for the comment, Jerome. I’m surprised by how long it has taken racial slurs to surface. So, well done!
      You may want to update your vocabulary though. “Banana” is such a jaded term. According to Sasha Baron Cohen, I’m a Minion. The more sophisticated nowadays call criminals like me “white adjacent”.

      • Avatar Jerome 23/12/2020 @ 10:13 am

        Sorry I am a old Chinese America, English is my second language.

        If this is your only article I will be lazy to write any comments on you. I will not critisize you if you blame China, attacking China for their wrong doing, however, you wrote lots of articles their purpose are mainly to sobatage, demonize China by using misleading or twisted info but in a graceful language. As a matter of fact I was against China regime for their authoritarian, for that I will blame them but I will not sobatage them for their achievements. If you are not what I described, then you are just a chess be played by those anti-china White like Trump. I certainly know the majority of Whites are good people. By the way my son is a white adjacent too.

        Just let you know that last name ‘Shi’ is a sound last name in Chinese history. As a white adjacent, you do not need to care about China, but to have a fair justify white heart is good enough.

  8. Avatar Justice 22/12/2020 @ 6:45 pm

    The world most untrusted network is the network from USA. Everyone should see the fact instead of listening all the fake news from any US media nor authority

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