Given the shortage of chips, U.S. telecom operators’ campaign to eliminate Huawei and ZTE seems unwilling and unwilling.
Huawei and ZTE’s telecom equipment keeps U.S. telecom operators afloat around the world, but in the next few months, much of that hardware will begin to be wiped out.
On Friday, the Federal Communications Commission (FCC) officially launched a compensation program for replacing equipment from two Chinese companies. Prior to that, both companies were seen as a “threat to U.S. national security.” This means telecom operators can apply for subsidies to replace hardware in their networks.
In recent years, we have seen too much news about Huawei, ZTE, and the “entity list” of the US Department of Commerce. The ban affects the companies involved and our mobile phones. For communication operators, equipment such as operating base stations is also real. Maintaining and changing these infrastructures is a complex project. It was only last weekend that telcos were officially allowed to count the cost of removing equipment.
John Nettles, president of Alabama-based regional operator Pine Belt Communications, said when the funds are approved for dispatch, “the action will begin. The work is expected to be completed within a year of receiving the first reimbursement.”
The program’s target recipients, typically U.S. “rural carriers” with 10 million or fewer customers, mean 2022 will be an extraordinarily busy year. These telcos have repeatedly said that without adequate subsidies they cannot afford to comply with government mandates to replace communications equipment on time, but now with federal compensation, they will soon be under compulsion to find labor and bid for qualified replacement equipment, to meet FCC deadlines. Nettles estimates that each of his 67 cell towers will likely require a four-person team for a week-long overhaul.
“It’s a tough job, and I have perhaps the smallest communications network out there,” says John Nettles.
To make things even more difficult, the law also requires telcos to destroy Huawei and the center’s telecommunications equipment, which isn’t routine dismantling and recycling. “There are going to be suppliers that come out with industrial-strength shredders. We need to put the equipment in there and watch them get destroyed,” Nettles said.
But none of that can start until people have equipment from Ericsson, Nokia and others installed, or large numbers of U.S. consumers will be cut off from the internet. “You don’t have to wait until you have a service gap,” Nettles said. “We call this behavior ‘tear and switch,’ but all we really need to do is ‘switch and then tear down.’”
When it comes to replacing electronics, now is not an ideal time. With chip shortages disrupting supply chains, Nettles worries about whether he and his counterparts in rural America can seamlessly deploy (or redeploy) the necessary equipment and within budget. At present, communication operators are only under the direction of the FCC to start applying for reimbursement before mid-January next year, accepting review and financial allocation procedures. According to the current progress, the review will not be completed until next spring.
If operators don’t get adequate subsidies, they will face tough choices. Nettles estimates that it could cost around $25 million to fund his specific retrofit, and if his Pine Belt doesn’t get that much, then, “I can just turn off a fifth of the communications network, or go to something else. Locally seek subsidies.”
At present, the communication operators in the United States are scrambling to read a lot of documents about the FCC application process, which will consume a lot of energy for the foreseeable future. “I forwarded the files to my team and said, ‘They’re making me dizzy, and you’re probably going to be all in for the next three to six weeks,’” Nettles said. “It looks like it’s going to be a tough job.”
On October 28, local time, the U.S. Senate passed the “Secure Equipment Act of 2021,” which, in the name of “national security,” requires the Federal Communications Commission to stop targeting companies that have been included in the “threat to national security” list. Issue new equipment licenses to prevent communications equipment from Chinese companies such as Huawei and ZTE from entering U.S. telecommunications networks.
Reuters said the passage of the “Security Equipment Act” was the latest move by the U.S. government to clamp down on Chinese telecom and technology companies. The bill was voted on in the U.S. House of Representatives last week and is now pending before U.S. President Joe Biden for signature.
In order to block Chinese communication equipment companies, on June 30, 2020, the FCC issued a statement officially listing Huawei and ZTE as companies that “pose a national security threat”, prohibiting US telecom operators from using government subsidy funds to purchase any equipment from Huawei and ZTE . In March 2021, the FCC announced to blacklist five Chinese companies, Huawei, ZTE, Hytera, Hikvision and Zhejiang Dahua, in accordance with the “Secure and Trusted Communications Network Act of 2019”. However, the above provisions only apply to equipment purchased with federal funds, and equipment from “blacklisted” companies purchased with private or non-federal funds can still be used.
In September, the FCC announced it would set up a $1.9 billion program to compensate telecom operators serving rural America to help them dismantle network equipment from companies like Huawei and ZTE.
On October 26, the FCC also revoked the operating license of China Telecom Americas in the United States on the grounds that it “failed to address the US’s national security concerns”, and closed its business within 60 days. China Telecom has been operating in North America for 20 years.