FCC moves to kill off all exposure to Huawei in rural networks

FCC Commissioner Geoffrey Starks has stuck the knife into Huawei at an industry conference, suggesting rural telcos will be given financial assistance to cleanse their networks of the vendor.

Speaking at the Competitive Carriers Association annual conference, Starks targeted the Chinese telecommunications industry on the whole, and Huawei in particular. Not only is the FCC exploring ideas on how to ban the purchase of Huawei equipment entirely, but also the introduction of an initiative which would offer federal dollars to search for, and remove, legacy Huawei equipment which might be in the network.

“Huawei is one of the biggest telecom equipment manufacturers in the world, and although its share of the U.S. telecom market is relatively small, some wireless carriers have purchased Huawei equipment for their networks,” Starks said.

“These carriers bought this equipment, often a decade or more ago, because it was far less expensive than other options, and because Huawei was willing to work with them to create customized networks.

“The Commission is currently examining whether to ban the use of federal support dollars for the purchase of such equipment, but we can’t ignore the problem of the equipment that’s already here.”

Starks is the FCC frontman for a new programme which has been known as ‘Find it, Fix it, Fund it’. The initiative will provide funding to telcos to self-assess networks and identify what would be deemed as ‘suspect equipment’. Currently it is voluntarily, though it does appear there are regulatory changes on the horizon to make the initiative a compliance issue.

In the short-term, the equipment might be allowed to stay in the network, though it would be quarantined. Long-term, Starks is suggesting every piece of equipment would have to be ripped and replaced.

The financial support from the FCC is an interesting element, and it does seem to have been working with the private sector to advance its ambitions.

“Nokia and Ericsson have said that they are willing to create products and financing options geared toward smaller carriers that need to replace Chinese equipment,” Starks said. “They also claim that they have had handled similar replacement efforts with minimal customer disruption.”

The challenge which many of these rural telcos are facing. Financially these companies are under strain. Connectivity is an expensive business and the rural players cannot experience the same economy of scale benefits the national players can. Ripping and replacing prior investments would be a kick in the teeth for already financially tense environments.

This is the reason Huawei has been successful in engaging rural and regional connectivity providers in the US. Not only does it offer a broader range of products, some of which are much more financially attractive, but it has been much more open to customisable deployments than rivals. The US is an incredibly varied geography, there is not a one-size-fits-all opportunity here.

A lack of competition and the removal of the cheapest network infrastructure provider is a massive concern for the rural and regional telcos. However, with the help of federal funding and new business offerings from Ericsson and Nokia, the financial burden of rip and replace regulations might be lessened. This does not mean networks will be better or cheaper in the long-term, but it is a nod from the FCC to the immediate concerns.

Aside from this conference speech from Starks, further evidence of Chinese aggression has emerged from the US.

Senators Chuck Schumer and Tom Cotton have called for a ban for China Telecom and China Unicom to use US networks. China Mobile has already been facing difficulties in obtaining a licence to operate in the US, though this further expands the scrutiny which is being placed on Chinese companies.

In a letter to the FCC, Schumer and Cotton have suggested the two telcos, both of which have direct links to the Chinese Government, could use networks to target US communications. They have also suggested the pair could use the licenses and exposure to US networks to reroute traffic through China.

Perhaps this is an incident which many should have expected, but it does demonstrate the US Government is taking a more comprehensive approach to tackling China, bringing more companies into the fray.

Last month, it was suggested the Department of Justice is attempting to put the brakes on a subsea cable which is being funded by Facebook and Google, as well as a Chinese partner. Dr Peng Telecommunication and Media Group does have ownership ties to the Chinese Government, though two US firms could get hit by collateral damage through this DoJ investigation.

All of these incidents indicate the aggression from the US Government is widening and becoming increasingly complex. The likes of ZTE, Alibaba, OnePlus and Xiaomi should perhaps be wondering when they will be dragging into the conflict.