The Chinese telecom equipment purge: Who's going to pay?
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As the federal government is taking steps to lock down communications networks, agencies are considering how to help the smaller rural telecom firms pay to replace their Chinese-made equipment.
To ensure the telecom equipment that powers the nation's future 5G infrastructure will be secure, the federal government is taking steps to safeguard communications networks.
Federal Communications Commission Chairman Ajit Pai proposed prohibiting companies that receive money from FCC’s Universal Service Fund from purchasing "equipment or services from companies posing a national security threat, like the Chinese companies Huawei Technologies Co. and ZTE Corp." Yet many small, rural telecom providers have already invested in equipment from such firms.
House lawmakers introduced a bill in September that would set aside up to $1 billion in federal funding through 2029 to reimburse those providers as they rip out and replace Chinese gear with more-expensive equipment from trusted suppliers. Sen. Ron Johnson (R-Wis.), chair of the Homeland Security and Governmental Affairs Committee, said those figures seemed "pretty manageable" to address what U.S. officials call a serious national security threat.
FCC Commissioner Jessica Rosenworcel said the details around how and where to purge Chinese equipment must still be hashed out, but that agencies were united on the goal of ensuring next-generation telecommunications networks were disconnected from those suppliers. "I think that we can all agree the goal is to take this equipment out of our networks and to make sure it is no longer there as we head to 5G," she said.
However, when asked if the administration is advocating that providers completely remove Huawei or ZTE equipment from their networks, several officials stopped short.
"I would hesitate to go that far," said Christopher Krebs, director of the Department of Homeland Security's cybersecurity component. "I think we need to look and understand where the risk truly is and focus our efforts there, particularly as you talk about federal resources coming into play."
Acting Assistant Secretary at the National Telecommunications and Information Administration Diane Rinaldo echoed those concerns. "Understanding that there's only a certain amount of money, we want to make sure that we're being smart with that deployment," she said.
How far that money will go and whether it will cover the price of rip and replace remains to be seen. In May, FCC Commissioner Geoffrey Starks told The Verge his team was researching the issue and still working to develop overall cost estimates. Because companies like Huawei are able to offer bids as much as 40% lower than their competitors, rural telecoms would not only be paying to take out Chinese equipment out, they would also need to purchase and install much more expensive replacement equipment.
Krebs said economic realities mean a "flash cut" strategy to replace that equipment immediately could be prohibitively expensive. He noted that telecom providers had told government officials in recent discussions that they were looking at developing a "playbook" that would outline costs for immediately removing Chinese parts. However, he said the administration is looking at a longer-term strategy that could see removal take place over the course of years.
"I think that's the right conversation to have between the administration and Congress on what the appropriate cost sharing and cost burden between federal government and private sector and in some cases state and local authorities about who is ultimately responsible," Krebs said. "Again, we're not talking about pulling all this stuff out tomorrow, there is a reasonable plan likely that would allow for transitioning out over the next year and half or two years."
A longer version of this article was first posted to FCW, a sibling site to GCN.
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