FCC Pegs “Rip & Replace” Costs at $1.8B+

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Telecoms have told the FCC where they have Huawei and ZTE gear in their wireless networks. Now, the agency has put a figure on how much money is needed to help rural telecoms remove the untrusted equipment and re-build their networks.

The Commission is zeroing in on telecoms that receive Universal Service Fund (USF) support, figuring that smaller, rural carriers will need the most monetary help to carry out the so-called “rip and replace” actions. Based on data Commission staff collected, telecoms reported it could cost an estimated $1.837 billion.

Of that total $1.837 billion, filers that appear to initially qualify for reimbursement under the Secure and Trusted Communications Network Act of 2019 report it could require approximately $1.618 billion to remove and replace such equipment. However more carriers may qualify, potentially bumping up the total figure to about $1.8 billion. These additional carriers that have not yet provided information to the agency may still be eligible for reimbursement under the terms of that Act, according to the FCC. Here’s a list of eligible carriers

The Commission began collecting such information after the agency barred the use of USF money for the purchase of equipment and services from Chinese telecoms Huawei and ZTE. The U.S. government says equipment from those companies poses a national security threat, allegations they’ve repeatedly denied.

FCC Chairman Ajit Pai and associations that represent rural carriers such as the Competitive Carriers Association and NTCA – The Rural Broadband Association, have urged Congress to provide “rip and replace” funds. Pai called arriving at a cost replacement estimate a “milestone” in the agency’s commitment to secure U.S. wireless networks. “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,” said Pai. “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.”

Commenting on the report, CCA President/CEO Steve Berry said the association “strongly supports efforts to protect and secure our nation’s communications networks.” Berry too, urged lawmakers “to fully fund the Secure and Trusted Communications Networks Reimbursement program to ensure that carriers, especially those serving rural areas, have the resources needed to remove covered equipment and services while keeping Americans connected.” Inside Towers reported that when Berry testified before Congress on this issue, he explained carriers need to maintain their existing services while building completely new networks, a very expensive endeavor. 

NTCA recently suggested the FCC maintain an updated list of equipment affected by national security concerns, citing the need for both sufficient advance notice and adequate reimbursement mechanisms.

House Energy and Commerce Chairman Frank Pallone, Jr. (D-NJ) sponsored the Secure and Trusted Communications Networks Act that was signed into law earlier this year. It calls for small carriers to be reimbursed for the costs of replacing suspect communications equipment from companies like Huawei and ZTE.  

“The FCC’s estimate of the costs of replacing suspect equipment in U.S. networks shows just how prevalent suspect equipment is – particularly among smaller carriers who cannot afford to replace it on their own,” said Pallone. “That’s why it’s critical Congress fund the Secure and Trusted Communications Networks Act’s rip and replace program to secure our communications supply chain.”

Pallone explained: “Suspect equipment introduces vulnerabilities into our communications networks, allowing hostile foreign governments to engage in espionage or to disrupt our communications at the push of a button. The risks are real and cannot be ignored, which is why Congress must step up and fund this reimbursement program.” 

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