Thursday, 14 November 2019

US outlines $1bn fund so rural telcos can rip out Huawei, ZTE kit

By Mary Lennighan, for Total Telecom
Wednesday 25 September 19

Figure is in line with cost estimates provided by RWA, CoBank; latter notes non-Huawei kit is often 30%-40% more expensive

A US government committee has proposed the creation of a US$1 billion fund to help smaller mobile operators bear the cost of ripping out Huawei equipment. The cross-party House Committee on Energy and Commerce shared details of the bill on Tuesday. It will be considered alongside others at the Communications and Technology Subcommittee hearing on supply chain security and spectrum legislation on Friday…

A US government committee has proposed the creation of a US$1 billion fund to help smaller mobile operators bear the cost of ripping out Huawei equipment.

The cross-party House Committee on Energy and Commerce shared details of the bill on Tuesday. It will be considered alongside others at the Communications and Technology Subcommittee hearing on supply chain security and spectrum legislation on Friday.

"America’s wireless future depends on our networks being secure from malicious foreign interference. Our telecommunications companies rely heavily on equipment manufactured and provided by foreign companies that, in some cases, as with companies such as Huawei and its affiliates, can pose a significant threat to America's commercial and security interests," the four committee leaders said, in a statement.

"This bipartisan legislation will protect our nation's communications networks from foreign adversaries by helping small and rural wireless providers root-out suspect network equipment and replace it with more secure equipment," they added.

The bill specifically mentions Huawei, ZTE and their affiliates.

There has been some concern over the cost of replacing network equipment for smaller players.

The Rural Wireless Association (RWA), a trade association representing rural mobile operators with fewer than 100,000 subscribers, has repeatedly put the cost of replacement at around the $1 billion mark, or possibly more, dependng how quickly telcos are required to make the transition.

Earlier this year the RWA hit out at proposed legislation – which is still at the committee stage – that would provide for a similar $700 million fund. That figure is insufficient, it insisted.

The RWA is using a recent report by CoBank, a cooperative bank serving rural America, to back up its position.

"Our analysis shows it's conceivable that the cost to rip and replace banned equipment in rural networks [is] likely to top $1 billion," CoBank said. "Beyond the initial rip and replace, US rural operators would be forced to pay western suppliers' higher software upgrade/licensing fees."

CoBank insists that many rural telcos had little option but to use Huawei's RF and core equipment in their networks. "In some cases, competing vendors would not respond to network equipment requests for proposals, or the prices quoted were 30% to 40% higher than what Huawei was offering," it said.

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