US Estimates £1.4bn Bill To Remove Huawei, ZTE Gear

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US telecoms regulator the FCC estimates rural US carriers will face a bill of at least £1.4bn to remove Chinese equipment as trade war intensifies

US rural telecommunications companies that rely on federal subsidies would have to spend at least $1.837 billion ($1.4bn) to remove and replace equipment from Huawei and ZTE, the country’s telecoms regulator has estimated.

Most of that sum, more than $1.6bn, may be eligible for reimbursement, the FCC added.

The US Congress has authorised reimbursements to rural telecoms firms, but has yet to appropriate funds for the purpose, meaning companies may be obliged to foot large bills in the near term.

The FCC’s remarks come amidst a long-running trade war between the US and China that has involved key Chinese companies, such as ZTE and Huawei, being targeted by US authorities.

Huawei CeBIT 2017Universal service

Amongst other restrictions, the FCC in June declared ZTE and Huawei to pose a threat to US national security, and has blocking carriers from using monies from the Universal Service Fund to purchase or maintain equipment from the two Chinese companies.

The fund backs the provision of telecoms services in rural areas.

In February the FCC began collecting data on carriers’ usage of Huawei and ZTE equipment, with more than 50 carriers saying they or their subsidiaries use such equipment.

The figures underscore the significant expense involved in removing the Huawei and ZTE gear, initially purchased by smaller telecoms firms for its high quality and low cost.

In June, for instance, a small carrier in Oregon told The Verge that it could cost $1.5m to replace Huawei equipment initially purchased for only $500,000.

The Secure and Trusted Communications Act, signed into law in March, establishes a federal process for reimbursing carriers for removing and replacing Huawei and ZTE equipment, but Congress has yet to appropriate the required funds.

‘Top priority’

FCC Chairman Ajit Pai said it was a “top priority” for the agency to “promote the security of our country’s communications networks”.

“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,” he said.

In May US president Trump extended an executive order that bans US companies from buying and using equipment from Huawei and ZTE.

The US government has also implemented trade restrictions designed to prevent Huawei from manufacturing or buying chips made using American technology.

UK operator Vodafone has said it expects the mandatory removal of Huawei equipment to cost “hundreds of millions” of pounds.

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