US telcos ask for $5.6 billion to replace Huawei, ZTE kit

Telecoms operators in the US have submitted applications for funding to replace network equipment from Chinese vendors to the tune of US$5.6 billion.

Mary Lennighan

February 7, 2022

3 Min Read
telecoms radio towers

Telecoms operators in the US have submitted applications for funding to replace network equipment from Chinese vendors to the tune of $5.6 billion.

The Federal Communications Commission (FCC), whose Secure and Trusted Communications Networks Reimbursement Program (SCRP) was open for applications between late October and 28 January, revealed it has received a total of 181 submissions. The scheme, known more informally as the ‘Rip and Replace’ programme, was set up after Huawei and ZTE were officially designated as threats to national security in mid-2020. It was designed to help operators with the cost of ripping out Chinese equipment and replacing it with something more palatable to the government.

The FCC set aside $1.9 billion for the programme, but has received applications worth almost three times that sum.

It’s not clear at this stage whether two-thirds of the applications will therefore be unsuccessful, or whether the state will look to stretch the rip and replace budget, but a statement from FCC chairwoman Jessica Rosenworcel hints at the latter.

“We’ve received over 181 applications from carriers who have developed plans to remove and replace equipment in their networks that pose a national security threat,” Rosenworcel said. “While we have more work to do to review these applications, I look forward to working with Congress to ensure that there is enough funding available for this program to advance Congress’s security goals and ensure that the U.S. will continue to lead the way on 5G security.”

Specifically, Rosenworcel has notified Congress that “providers have initially requested approximately $5.6 billion from the Secure and Trusted Communications Networks Reimbursement Program to cover the costs of removing, replacing, and disposing of insecure equipment and services in U.S. networks.” Taken with the rest of the chairwoman’s statement, we can perhaps surmise that while the budget will expand, operators initial – to use the FCC’s own word – submissions will also be subject to examination with a fine-tooth comb.

Indeed, the regulator’s T&Cs, updated late last week, note that companies can apply for “costs reasonably incurred for the removal, replacement, and disposal of covered communications equipment or services that pose a national security risk.” The phrase ‘reasonably incurred’ could be well used in Washington in the coming weeks and months.

The scheme also covers only equipment procured from either Huawei or ZTE on or before 30 June 2020.

Naturally, the FCC has not disclosed details of which companies have applied for funding. However, we do know that the scheme is open to telcos – or providers of advanced communications services, to be more accurate – with 10 million or fewer customers. Advanced comms are described as high-speed switched, broadband telecommunications capability that enables users to originate and receive high-quality voice, data, graphics, and video telecommunications using any technology with connection speeds of at least 200 kbps in either direction. And providers thereof are not limited to telcos, but could also include schools, libraries and healthcare providers.

All of which explains why the FCC has received so many applications…and as a result will have a fair task ahead of it to identify to eligible applicants. And then, probably, someone needs to find the cash…

About the Author(s)

Mary Lennighan

Mary has been following developments in the telecoms industry for more than 20 years. She is currently a freelance journalist, having stepped down as editor of Total Telecom in late 2017; her career history also includes three years at CIT Publications (now part of Telegeography) and a stint at Reuters. Mary's key area of focus is on the business of telecoms, looking at operator strategy and financial performance, as well as regulatory developments, spectrum allocation and the like. She holds a Bachelor's degree in modern languages and an MA in Italian language and literature.

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