FCC: Only Five Firms Have Finished ‘Rip and Replace’ of China Gear

WASHINGTON, January 7, 2024 – In a new report to Congress, the Federal Communications Commission says just a handful of telecommunications companies has finished removing tech equipment supplied by companies considered to have close ties to China’s Communist government.

In 2019, Congress passed the Secure and Trusted Communications Networks Act, which authorized the FCC to reimburse certain telecommunications providers for

the removal of Huawei Technologies Co. and ZTE Corp. communications equipment and services within one year of receiving funds. The FCC was flooded with funding requests.

In the FCC report, the agency said just five funding recipients have submitted final certifications that Huawei and ZTE gear is out of their networks. The report did not include the names of the five firms.

Huawei and ZTE, both based in Shenzhen near Hong Kong, are global suppliers of telecommunications equipment, including technology for advanced 5G wireless networks. Huawei says its company is entirely employee-owned. The Chinese government reportedly has a substantial stake in ZTE, which also makes inexpensive Android smartphones.

The FCC’s report was prepared for the Senate Commerce Committee and the House Committee on Energy and Commerce, panels that oversee the FCC and the communications sector.

The FCC said funding recipients attributed the sluggish pace to “lack of funding, supply chain delays, labor shortages, and weather-related challenges.”

Congress appropriated $1.9 billion for the “rip and replace” program, the shorthand phrase that many use to refer to the 2019 law. But applications for funding sought $4.98 billion, creating a $3.08 billion shortfall.

The FCC said it has so far received 12,983 reimbursement claims “across 122 of the 126 applications approved for a funding allocation.” The agency’s budget officials have approved $396.5 million in disbursements, which will cover both removal and replacement costs.

In 2020, the FCC formally determined that Huawei and ZTE posed a national security threat to the integrity of U.S. communications networks and communications supply chains. That decision cut off the FCC’s Universal Service Program as a funding source to acquire equipment provided by Huawei or ZTE.

“We cannot treat Huawei and ZTE as anything less than a threat to our collective security,” Republican FCC Commissioner Carr said in a June 30, 2020 statement.

Ted Hearn is the Editor of Policyband, a new website dedicated to comprehensive coverage of the broadband communications market. This piece was published on Policyband on January 6, 2024, and is reprinted with permission.