Huawei, ZTE Gear Removal From US Telecom Network Will Need Additional $3 Billion, Says FCC

The FCC designated Huawei and ZTE as threats, compelling the companies in the US to remove their gear.

By Reuters | Updated: 16 July 2022 16:00 IST

Huawei, ZTE Gear Removal From US Telecom Network Will Need Additional $3 Billion, Says FCC

Companies are not required to complete the work until after they receive reimbursement

Highlights

US Congress only appropriated $1.9 billion to fund the removal process
A 2019 law compels companies to purge insecure equipment
FCC offered $8.3 billion government fund to purchase new equipment

The US telecoms regulator needs an additional $3 billion (roughly Rs. 25,000) to fund the removal from U.S. networks of equipment made by Chinese telecoms giants Huawei and ZTE, bringing the total cost to $4.9 billion (roughly Rs. 40,000), the agency told Congress on Friday.

"To fund all reasonable and supported cost estimates..., the Reimbursement Program will require $4.98 billion, reflecting a current shortfall of $3.08 billion," Jessica Rosenworcel, the chairwoman of the Federal Communications Commission, said Friday in a letter to Senator Maria Cantwell, who heads the Committee on Commerce, Science, and Transportation.

Since Congress only appropriated $1.9 billion (roughly Rs. 15,000 crore) to fund the removal process, companies would be reimbursed for only about 40 percent of the costs, she added.

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In 2019, Congress passed a law tasking the FCC with compelling US telecoms carriers that receive federal subsidies to purge their networks of telecoms equipment that poses a national security risk, with promises of reimbursement.

The FCC designated Huawei and ZTE as threats, compelling US companies to remove their gear or be frozen out of an $8.3 billion (roughly Rs. 66,000 crore) government fund to purchase new equipment. However, to fund the so-called "rip and replace" effort, Congress only appropriated $1.9 billion, raising questions about how effectively the removal program would be implemented.

"Absent an additional appropriation, the Commission will apply the prioritization scheme Congress specified," Rosenworcel said in the letter, adding that the Commission would begin processing reimbursement claims "as allocations are issued in the coming days."

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Companies are not required to complete the work until after they receive reimbursement.

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