“It’s like watching a slow-motion disaster,” he remarked. “Everything seems to be moving at a snail’s pace.”
After four years of being directed by Congress to remove all telecommunications equipment from Huawei and ZTE, Chinese companies, due to security concerns, progress on the “rip-and-replace” program has been impeded by a $3 billion shortfall. This shortfall is greater than the $1.9 billion initially allocated by Congress.
The Federal Communications Commission (FCC) is sounding the alarm, cautioning that certain rural areas might lose cellular service if additional funding isn’t secured soon. Small carriers are struggling to keep their operations afloat amidst the pressure to spend millions on replacing their networks.
FCC Chairwoman Jessica Rosenworcel, in a letter addressed to Sen. Maria Cantwell, outlined the precarious situation, stating that 40% of local network operators are unable to complete the removal of Huawei and ZTE equipment without additional financial support. She highlighted the risk of some carriers having to shut down their networks entirely.
Sen. Cantwell’s office did not provide an immediate response to the letter. However, concerns have been raised by her committee, acknowledging the financial strain faced by rural providers due to the rip-and-replace program’s status. Cantwell recently proposed the Spectrum and National Security Act to address the $3 billion funding gap using proceeds from commercial auctions overseen by the FCC.
The challenges encountered by the rip-and-replace program underscore the logistical hurdles and escalating costs likely to reverberate across various sectors of the U.S. economy amid heightened restrictions on Chinese vendors. The impending TikTok ban, for instance, could impact the broader online video ecosystem, while law enforcement agencies anticipate difficulties in combating crime without access to drones manufactured by China’s DJI.
Huawei and ZTE equipment has long been restricted from major U.S. networks due to concerns over potential espionage by China’s intelligence agencies. However, small rural carriers were permitted to use this equipment until recently. With China emerging as a significant technological competitor, security concerns have intensified, prompting the need for a nationwide replacement effort.
In 2020, Congress passed the Secure and Trusted Communications Networks Act, mandating the FCC to establish the rip-and-replace program. However, it quickly became apparent that an additional $3 billion would be necessary to fully fund the initiative. As a temporary measure, the FCC allocated 39.5% of the required funds to small carriers in 2022 and 2023.
Leslie Williams, president of SI Wireless, revealed the dire situation faced by his company. Their network has been offline since 2022 due to equipment replacement efforts, resulting in significant financial strain. The reimbursement process has been sluggish, with invoices taking an average of 150 days to process, exacerbating the financial strain.
The consequences are also felt by customers, with rural areas experiencing dead zones where cellular reception used to be available. The program mandates the complete removal of Huawei and ZTE equipment within a year of receiving initial funds. However, with the remaining 61% of funds yet to materialize, many carriers are pleading for extensions as they grapple with the financial burden.
Several carriers have voiced their concerns, detailing the challenges they face in replacing equipment amidst soaring costs and limited funds. The Bristol Bay Cellular Partnership, for instance, highlighted the impact on their operations in remote areas accessible only by plane or boat. Without additional funding, smaller companies are finding it increasingly difficult to compete.
Despite the urgency of the situation, Congress’s failure to address the funding gap has left many carriers in limbo. The FCC has granted numerous extensions, but the looming deadline for equipment replacement remains a pressing concern. With vital services at risk of being disrupted, urgent action is needed to address the funding shortfall and ensure the viability of rural networks.
