FCC estimates $1.8 billion to replace Huawei, ZTE telecom parts (Report)

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FCC estimates $1.8 billion to replace Huawei, ZTE telecom parts (Report)
FCC estimates $1.8 billion to replace Huawei, ZTE telecom parts (Report)

U.S. rural telecommunications networks, which have relied on inexpensive network equipment from China’s Huawei Technologies Co and ZTE Corp (000063.SZ), have told the government that it would cost $1.837 billion to replace those switches and routers, the Federal Communications Commission said on Friday.

In June, the FCC formally designated Huawei and ZTE as threats to U.S. national security, a declaration that bars U.S. firms from tapping an $8.3 billion government fund to purchase equipment from the companies.

The U.S. telecommunications regulator voted last year to propose requiring rural carriers to remove and replace equipment from the two Chinese companies from U.S. networks.

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FCC commissioners said the report shows the need for Congress to approve funding to replace that equipment. Congress has authorized reimbursements but has not approved the money.

The FCC said it believes the carriers would be eligible for reimbursements of about $1.62 billion.

“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,” FCC Chairman Ajit Pai said, urging 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.”

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The FCC identified more than 50 mostly smaller telecom companies with ZTE or Huawei equipment or using services from the companies, as well as a few larger companies like CenturyLink (CTL.N) and Verizon Communications Inc (VZ.N)

Verizon said its networks do not include equipment from Huawei or ZTE but has a small number of devices, called VoiceLink, made by Huawei that some customers use to make voice calls. Verizon said it expects to retire all VoiceLink devices this year.

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CenturyLink said the “legacy equipment at issue cannot be used to route or redirect user traffic” and is not covered under restrictions established by Congress. The company added it has “actively been removing and replacing equipment and continue to work with federal policymakers to accelerate the process.”

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