WASHINGTON, January 11, 2024 – A group of nine wireless and wireline trade groups on Thursday urged Congress to allocate an additional $3.08 billion in funding for providers to comply with a 2020 law, mandating the replacement of some foreign-manufactured equipment in U.S. communications networks.

In a jointly-written letter, spearheaded by the Competitive Carriers Association, groups argue the reimbursement program designed to fund equipment replacement efforts is significantly underfunded, and say without full financial support many providers could be stranded mid-effort.

The Federal Communications Commission, responsible for overseeing the program, granted approval for $4.98 billion in applications seeking funding from the Secure and Trusted Communications Networks Reimbursement Program in July 2022, but was compelled to prorate funds, providing 39.5 percent of reasonable costs upfront.

However, this approval revealed a significant overcommitment from the $1.9 billion appropriation for the program assigned by the Consolidated Appropriations Act of 2020.

With deadlines for providers to remove all Huawei and ZTE communications equipment from their networks ranging from October 8, 2023 to September 23, 2024 – the associations implore Congress to promptly allocate full funding.

An FCC bureau granted several six-month extensions to eligible communications providers in October 2023, due to what the FCC recognizes as a lack of funding slowing the removal, replacement, and disposal processes.  

In an October letter addressed to Rep. Frank Pallone, ranking member of the House Energy & Commerce Committee in October, FCC Chairwoman Jessica Rosenworcel emphasized that “the grant of these extensions does not lessen the urgency for a fully funded reimbursement program.”

The trade organizations argue that following the guidance of Congress and the FCC, carriers initiated the “rip and replace” procedure to eliminate such equipment, with the expectation of full reimbursement.

In a report to Congress last Friday, the Federal Communications Commission says just a handful of telecommunications companies has finished removing tech equipment supplied by companies considered to have close ties to China’s Communist government.

WASHINGTON, January 7, 2024 – In a new report to Congress, the Federal Communications Commission says just a handful of telecommunications companies has finished removing tech equipment supplied by companies considered to have close ties to China’s Communist government.

In 2019, Congress passed the Secure and Trusted Communications Networks Act, which authorized the FCC to reimburse certain telecommunications providers for the removal of Huawei Technologies Co. and ZTE Corp. communications equipment and services within one year of receiving funds. The FCC was flooded with funding requests.

In the FCC report, the agency said just five funding recipients have submitted final certifications that Huawei and ZTE gear is out of their networks. The report did not include the names of the five firms.

Huawei and ZTE, both based in Shenzhen near Hong Kong, are global suppliers of telecommunications equipment, including technology for advanced 5G wireless networks. Huawei says its company is entirely employee-owned. The Chinese government reportedly has a substantial stake in ZTE, which also makes inexpensive Android smartphones.

The FCC’s report was prepared for the Senate Commerce Committee and the House Committee on Energy and Commerce, panels that oversee the FCC and the communications sector.

The FCC said funding recipients attributed the sluggish pace to “lack of funding, supply chain delays, labor shortages, and weather-related challenges.”

Congress appropriated $1.9 billion for the “rip and replace” program, the shorthand phrase that many use to refer to the 2019 law. But applications for funding sought $4.98 billion, creating a $3.08 billion shortfall.

The FCC said it has so far received 12,983 reimbursement claims “across 122 of the 126 applications approved for a funding allocation.” The agency’s budget officials have approved $396.5 million in disbursements, which will cover both removal and replacement costs.

In 2020, the FCC formally determined that Huawei and ZTE posed a national security threat to the integrity of U.S. communications networks and communications supply chains. That decision cut off the FCC’s Universal Service Program as a funding source to acquire equipment provided by Huawei or ZTE.

“We cannot treat Huawei and ZTE as anything less than a threat to our collective security,” Republican FCC Commissioner Carr said in a June 30, 2020 statement.

Ted Hearn is the Editor of Policyband, a new website dedicated to comprehensive coverage of the broadband communications market. This piece was published on Policyband on January 6, 2024, and is reprinted with permission.

WASHINGTON, August 24, 2023 – China’s ability to remain competitive in the global artificial intelligence race will depend on its ability to produce its own chips, as U.S. restrictions on the export of that product to the adversarial nation will hobble its ability to move forward, experts said Thursday.

“U.S. chip export sanctions are a huge roadblock” for AI development in China, said Qiheng Chen, a senior analyst at consulting firm Compass Lexecon.

The ability to manufacture advanced chips domestically will be essential for the country to continue researching and implementing AI, Chen added at the AI event hosted by the Asia Society Policy Institute.

The Commerce Department imposed in October 2022 restrictions on exports of advanced semiconductors and chip manufacturing equipment to China and required U.S. citizens to get a permit before working with Chinese chip manufacturers.

The move was designed to limit China’s ability to compete with the U.S. by curbing its access to hardware required for cutting-edge military technology. It also makes AI research and development, a highly chip-dependent process, more difficult.

Other panelists Tuesday emphasized chip making as a top priority of the Chinese government.

The country has already moved toward independence from the U.S. in other areas, like satellites and fiber optics, as a response to Trump administration policies.

This has continued under President Joe Biden, with a 2021 executive order restricting investment in Chinese firms drawing criticism from Huawei, the Chinese telecom company.

Experts have previously said the threat of restricting access to global trade even further could make China hesitant to retaliate for the sanctions. This is because advanced chip manufacturing requires materials, components, and processes that would be difficult for a single nation to source entirely within its borders.

“It’s too complex, too global, too interdependent for one country to be able to produce all these technologies on their own,” said Jimmy Goodrich, vice president of Global Policy at the Semiconductor Industry Association, at a conference earlier this year.

A Huawei spokesperson estimated at a conference following the investment ban that it would take three to five years for Chinese chip manufacturing to become self-sufficient and rely less on American components and investments.

Biden signed the CHIPS and Science Act into law last year, two months before the export restrictions went into effect. It allocates $52 billion for American semiconductor manufacturing and gives tax credits for investments in the industry.