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February 9, 2022

Fears of Chinese government espionage to cost US $5.6 billion

By GlobalData Technology

The FCC recently revised figures on how much it will cost US network operators to ‘rip and replace’ Huawei and ZTE’s network infrastructure equipment to at least $5.6 billion. However, the US Congress has only allocated $1.9 billion for reimbursing affected service providers.

This revised figure comes after 181 carriers submitted their applications to the Secure and Trusted Communications Networks Reimbursement Program, which was set up to compensate service providers for costs they reasonably incur for the removal, replacement, and disposal of covered communications equipment or services deemed to pose a national security risk. Not all network operators are eligible for financial support to replace equipment from Huawei and ZTE, with eligibility only extending to smaller operators with up to 10 million subscribers.

FCC Chairwoman Jessica Rosenworcel told Congress on 4 February that the $5.6 billion is an initial request from the network operators. She noted that the agency is still reviewing applications and will need to work with Congress to secure adequate funding to fulfil the equipment replacement program’s goals. The application window for reimbursement funds closed on 28 January, 2022.

US ‘rip and replace’ program

The program requires all network infrastructure equipment that was provided by Huawei and ZTE on or before June, 30 2020, to be removed. Due to how inexpensive Huawei and ZTE’s equipment was compared to that of competitors, a large number of US network operators have installed equipment from them.

The ‘rip and replace’ program was first initiated by the US government in 2019 after critics deemed the Chinese firms a national security risk over fears that the Chinese government would conduct espionage through their network equipment. The FCC was tasked with requiring all service providers to remove network and communication equipment that was developed by Huawei and ZTE, estimating the cost for service providers at that time to be roughly $1 billion.

Europe also followed suit, barring all Huawei and ZTE network equipment from being installed and requiring a similar equipment replacement program initiated in the US.