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WHAT YOU NEED TO KNOW ABOUT The U.S. Ditching Equipment

BY JOHN HENDEL AND PATTERSON CLARK | 04/01/2021 05:00:17 AM EDT

PRO POINTS

The U.S. government has slated $1.9 billion to help rural telecom carriers rip out and replace Huawei and ZTE communications gear embedded in their cell towers and networks.

The effort comes amid sharpening concerns that Chinese telecom companies are unduly beholden to the Beijing government and the U.S. is falling behind on rolling out next-generation mobile networks.

Although this scrutiny began during the Trump era, Biden administration officials and Democrats leading the FCC haven’t let up on these pressures.

The federal government is embarking on a massive “rip-and-replace” of Huawei equipment — subsidizing companies for changing out the Chinese gear.

HOW WE GOT HERE

Several dozen U.S. rural telecom companies decided many years ago (more than a decade ago for some) to install gear from Chinese telecom giants Huawei and ZTE, citing its affordability and reliability. Many say they were unaware of security concerns around these Chinese companies, which gained national attention in 2012 following a bipartisan House Intelligence Committee report about potential vulnerabilities.

U.S. security officials have now spent years accusing these companies of ties to Beijing’s communist government and say they endanger national security if they remain part of U.S. telecom networks. Among the concerns raised are and theft of intellectual property. The companies themselves deny any such dangers.

Former President put the potential threat of Huawei and ZTE equipment center stage during his presidency, attempting crackdowns that often coincided with the administration pressuring China to reach a wide-ranging trade deal. The Republican FCC majority found consensus with Democratic commissioners over these issues and took several steps to curb these companies’ influence domestically.

The U.S. Ditching Huawei Equipment Among the FCC actions: It barred U.S. companies from using federal subsidies to buy Huawei and ZTE equipment or services; designated both Huawei and ZTE national security threats; and then, in 2020 and 2021, formally began to set up the subsidy program that will help these small carriers rip out and replace the Huawei and ZTE equipment.

The prospect of needing to tear out such “insecure” gear had lurked for years, particularly after the Commerce Department put Huawei on a trade blacklist in 2019.

Congress has wrestled over how much cash may be necessary for that task, kicking around different figures and trying to assess the scope of the need amid meetings with these U.S. carriers. Lawmakers passed a bipartisan law in early 2020 authorizing up to $1 billion, then last December formally appropriated the higher figure of $1.9 billion for rip- and-replace subsidies.

WHAT'S NEXT

FCC commissioners are now setting up the program, which has included debate over what technologies should replace the Huawei and ZTE equipment.

Traditional telecom vendors like and began talks with providers to offer their equipment. Others see the rip-and-replace program as an opportunity for installing so-called open RAN equipment,

The U.S. Ditching Huawei Equipment which allows telecom companies to partner with a broader range of companies to handle the network and even build virtual, cloud- based networks.

Cultivating this marketplace is seen as a long-term U.S. strategy for challenging the 5G equipment dominance of Huawei, ZTE and the European hardware companies. The U.S. lacks any homegrown equivalent traditional vendor.

FCC commissioners in December named 5G Open RAN technology as a potential replacement in a proposal on the rip-and-replace program. Democratic members, now empowered by President ’s election victory, have said they welcome even more aggressive steps to promote this technology. The commission is now seeking input on who can participate and what equipment and services are eligible for subsidies, with comments due at the end of April.

Although the Biden administration is still forming its broader stances toward China, agency nominees and officials are often employing the same tough rhetoric seen under Trump. During her nomination process, Commerce Secretary told GOP senators she saw no reason to take Huawei off the trade blacklist.

The U.S. Ditching Huawei Equipment The U.S. Ditching Huawei Equipment The U.S. Ditching Huawei Equipment The U.S. Ditching Huawei Equipment POWER PLAYERS

Jessica Rosenworcel: Biden’s acting chief of the FCC has already held several votes this year showing she intends to be aggressive toward China. She’s leading agency efforts on how to ditch the Huawei and ZTE gear.

Steven Berry: The veteran telecom official heads the Competitive Carriers Association, which represents many of the small wireless companies that need to get rid of Huawei and ZTE gear. The trade group has been a central player in legislative and regulatory talks about setting up subsidies, lobbying hard last year to make sure Congress provided funding for the program.

Andy Purdy: As the chief security officer for Huawei Technologies USA, he’s sought to dispel fears around the company in regular media interviews and called for broader cybersecurity standards to mitigate risks.

Gina Raimondo: The new Commerce secretary will shape broader trade policies with China, including whether to maintain restrictions on these Chinese telecom giants. Senate Republicans grilled her over their concerns during her nomination process, seeking explicit commitments that she not walk back Trump-era stances toward these companies

The U.S. Ditching Huawei Equipment