It will cost $1.8 billion to pull Huawei and ZTE out of US networks, FCC says

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Removing Chinese equipment will cost small carriers as much as $1.8 billion, according to a new report from the Federal Communications Commission. The report estimates that as much as $1.6 billion of the cost would be eligible for federal reimbursement — but Congress has yet to appropriate the necessary funds.

Significant national security concerns have been raised about the use of Huawei and ZTE equipment in US networks — but many small carriers are still struggling with the cost of replacing it. In one instance, Eastern Oregon Telecom told The Verge that replacing the $500,000 of Huawei equipment was likely to cost as much as $1.5 million — a cost too high for the small carrier to shoulder on its own. Today’s report makes clear that story is all too common among US providers.

The FCC report looks specifically at carriers who receive support from the Universal Service Fund, meant to subsidize coverage of underserved areas. It does not cover all carriers in the US using Huawei or ZTE equipment, and there may also be eligible carriers who have yet to report their equipment. As a result, the total cost of replacing Chinese equipment is likely even higher than the reported $1.8 billion.

In June, the FCC officially designated Huawei and ZTE as risks to national security, forbidding telecoms from using federal subsidies to purchase their equipment going forward. But little has been done to remove the Huawei and ZTE equipment that is already in use, primarily because carriers can’t afford to do so without federal assistance.

Congress has yet to appropriate the money to pay for the replacement work, although it established a process for reimbursing carriers as part of the Secure and Trusted Communications Networks Act in March.

In a statement alongside the report, FCC Chairman Ajit Pai urged Congress to take action and allocate the necessary funds.

“By identifying the presence of insecure equipment and services in our networks, we can now work to ensure that these networks—especially those of small and rural carriers—rely on infrastructure from trusted vendors,” Pai said in a statement. “I once again strongly urge Congress to appropriate funding to reimburse carriers for replacing any equipment or services determined to be a national security threat.”

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