US telecoms would spend $1.8 billion to replace ZTE, Huawei network equipment

The FCC formally designated Huawei and ZTE as national security threats back in June, meaning that telecoms could no longer use the FCC's Universal Service Fund to purchase equipment or services from the Chinese firms.

The US Federal Communications Commission said on Friday that it would cost $1.837 billion to replace Huawei and ZTE networking equipment from more than 50 rural telecommunications networks. 

The FCC formally designated Huawei and ZTE as national security threats back in June. The ruling meant that telecoms could no longer use the FCC's Universal Service Fund to purchase equipment or services from the Chinese firms. The USF provides over $8.5 billion a year in subsidies to help telcos provide broadband to rural areas that typically lack access.  

However, the cost and logistics of implementing such a ban has been the looming challenge for the FCC. Friday's announcement makes clear that removing and replacing networking gear that's currently in use will cost telecoms a lot of money. Now, FCC chairman Ajit Pai is asking Congress to appropriate federal funds to reimburse rural carriers.

"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 so that we can protect our networks and the myriad parts of our economy and society that rely upon them." 

Last year, as the Trump administration ramped up its posture against China, the US Commerce Department added Huawei to its "Entity List," barring US companies from transferring technology to Huawei without a special license from the US government. 

Then in March of this year, Trump signed legislation barring US companies from using federal funds to purchase equipment from companies that have been deemed as national security threats. The law also established a $1 billion reimbursement program to help smaller providers with the cost of ripping out and replacing the prohibited equipment from Huawei and ZTE. Other countries including Australia, New Zealand, Japan, and Taiwan have also effectively banned Huawei. 

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