The FCC notifies Congress that service providers requested ~$5.6B to replace Huawei and ZTE equipment in US networks, up from the FCC’s $1.8B estimate in 2020 (Mitchell Clark/The Verge)
The Federal Communications Commission (FCC) recently notified Congress of the rising costs associated with replacing Chinese telecom companies, Huawei and ZTE, in US networks.
According to the notification, service providers have requested a total of ~$5.6 billion to replace these companies’ equipment an increase from the FCC’s original estimate of $1.8 billion in 2020.
What Does This Cost Increase Mean for US Telecom Companies?
This cost increase poses a significant challenge for US telecom companies looking to replace Huawei and ZTE equipment from their networks.
Not only must they now budget for nearly three times as much as originally estimated, but they must also manage the complexities associated with replacing and modernizing complex network infrastructure.
Many telecom companies are already feeling the strain financially due to the coronavirus pandemic, making this cost increase even more challenging to address.
Why is Replacing Huawei and ZTE Equipment Necessary?
Huawei and ZTE have long been considered potential security threats by US officials due to their close ties with the Chinese government.
With American intelligence agencies raising further concerns about these companies’ activities, US officials have taken steps to protect national security by banning these companies from participating in any new contracts or purchases within federal agencies or contractors since May 2019.
This has led many private telecom providers across the country to take precautions by replacing existing equipment installed by either company on their networks over concerns of data breaches or espionage activities.
What Is Congress Doing To Help Telecom Companies?
In response to this increased cost pressure on telecom companies, some members of Congress are attempting to provide assistance through targeted funding initiatives designed specifically for those replacing Huawei and ZTE equipment in their networks.
For example, Senator John Cornyn (R-TX) introduced an amendment earlier this year which would give carriers up to $500 million per year through 2022 specifically for removing foreign threat actors from their systems including those from China like Huawei and ZTE.
It remains unclear if this amendment will pass both houses of Congress before subjecting it to President Biden’s signature into law; however, it could provide much-needed relief for carriers struggling under the financial burden posed by this upgrade effort if passed into law in its current form.
What Are The Implications Of This Upgrade Effort?
As more countries become increasingly dependent on sophisticated digital technologies such as 5G networks, greater attention is being given to protecting vital national infrastructure against potential cyberattacks or interference from foreign actors like China’s Huawei and ZTE corporations a reality that US intelligence agencies consider one of the most pressing security threats facing America today.
If successful in removing these two firms’ hardware from American networks nationwide, not only can greater confidence be placed in our ability to protect ourselves against external adversaries, but also opens up opportunities for domestic telecom businesses seeking new customers without fearing potential cyber espionage activities targeting them or their clients’ data by foreign actors like Huawei or ZTE.
Replacing Huawei and ZTE equipment from US telecom networks poses a significant financial challenge for providers, but it is an essential step to protect national security.
Congress has taken steps to provide relief through targeted funding initiatives, yet the success of these efforts remains uncertain.
In any case, this upgrade effort will have far-reaching implications both in terms of protecting against external adversaries as well as opening up opportunities for domestic businesses seeking new customers without fearing potential cyber espionage activities targeting them or their clients’ data by foreign actors like Huawei or ZTE.
Ultimately, this endeavor could be transformative if successful and result in a greater confidence being placed in our ability to secure ourselves against malicious threats now and into the future.