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Just five US telcos have ripped out Chinese kit

Five US telecoms operators have completed the state-backed programme to replace Chinese-made equipment in their networks, the FCC has reported.

Mary Lennighan

January 10, 2024

3 Min Read

While the regulator is doing its best to put a positive spin on its latest Rip and Replace update, it cannot disguise the fact that that is a pretty poor showing when you consider that funding has been approved for 112 applicants.

"The Bureau is pleased to report that Reimbursement Program recipients continue to progress with their plans to permanently remove, replace, and dispose of covered communications equipment and services," the FCC wrote in a report submitted to Congress earlier this month.

The report is the third compiled by the regulator as it tracks progress in the Secure and Trusted Communications Networks Reimbursement Program – known informally as Rip and Replace – which was conceived to help telecoms operator replace equipment in their networks that had been supplied by Huawei and ZTE after the pair were officially named as threats to national security back in 2020.

The scheme, which invited telcos to apply for grants to cover the cost of replacing their Chinese equipment in late-2021, was beset with issues from the get-go. The biggest problem has been an excess of demand; the FCC earmarked $1.9 billion to fund the programme, but received applications worth almost three times that sum. To date it has been unable to extract the extra cash needed from government coffers, therefore it can come as no surprise that companies are not able to push on with network replacement projects.

The FCC granted deadline extensions to a number of companies partaking in the programme late last year due to the lack of funding. And as Light Reading reported recently, detailing the experience of SI Wireless in particular, the lack of funding, short deadlines, and lack of availability of equipment mean that the scheme is in some trouble.

The FCC can be as "pleased" as it likes with progress – publicly, at least – but that doesn't alter the fact that it is actually glacial.

The regulator did not name the five companies that have jumped through the required hoops and have had the sign-off to say they have "permanently removed, replaced and disposed of" all the equipment and services indicated in their application. As such, we have no idea of the scale of those five undertakings, nor how much funding would have been required.

The latest figures show that funding recipients have reported spending close to $205 million under the scheme as of the end of June last year. Their next spending reports are due to be filed in mid-February and will cover the period up to the end of 2023. Incidentally, the programme is open to operators with 10 million or fewer customers, therefore we're not talking about any of the big guns here.

It's also difficult to quantify progress, thanks to the lack of data.

"The Bureau estimates that approximately 90% of recipients have made some progress in their overall removal, replacement, and disposal plan but have not completed this work," the FCC said. This time last year that figure was at 83%, which does indeed indicate advancement. But without knowing exactly what stage those companies are at, it's impossible to determine how much progress is actually being made.

In its update last January, the FCC noted that 2% of participants had completed all required works. To date, the FCC has approved funding for 112 applicants, but that number was lower a year ago. Essentially, that 2% equates to two companies, at the most.

Five is, of course, more than double that number, but that's really nothing to crow about.

Nonetheless, the regulator remains upbeat. But it's certainly not making any rash predictions.

"The Bureau expects this number to increase by the time it submits the next report," it said.

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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