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FCC order to ‘rip and replace’ Chinese 5G gear will confront Biden

The FCC estimates it will cost $1.6 billion to replace the ZTE and Huawei equipment

Huawei logo is seen displayed on a phone screen in this illustration photo.
Huawei logo is seen displayed on a phone screen in this illustration photo. (NurPhoto via Getty Images)

The timing of the Federal Communications Commission’s latest effort to rid U.S. wireless networks of equipment manufactured by Huawei and ZTE, the Chinese firms labeled threats to national security, means it will fall to President-elect Joe Biden and Congress to execute and fund the agency’s plans.

The FCC voted unanimously last week to approve a “rip and replace” supply chain security order that will require certain telecommunications providers to remove components manufactured by the Chinese companies from their networks and provide funding to reimburse them for the cost of the work.

But the agency has not yet said which providers and equipment would fall under the order’s requirements, and Congress has not provided the money necessary for the reimbursements.

“We are taking steps within our power to implement the reimbursement program,” said outgoing FCC Chairman Ajit Pai, a Republican leaving his post when Biden takes office. “But we can’t actually implement the reimbursement program unless and until Congress appropriates the necessary funding.”

The FCC estimates it will cost $1.6 billion to replace the equipment by ZTE and Huawei — one of the world’s largest providers of 5G components — that is expected to be covered by the order. Pai has said the total cost could end up being greater.

The agency’s allies in Congress, including Sen. Roger Wicker, R-Miss., the chairman of the Commerce, Science and Transportation Committee, are urging party leaders to include the funding in an upcoming omnibus spending package for the fiscal year that began Oct. 1, which could be filed and come up for a vote in the House as soon as this week.

“This is a national security imperative,” Wicker and a group of mostly Republican senators wrote to Majority Leader Mitch McConnell, R-Ky., Minority Leader Charles E. Schumer, D-N.Y., and top appropriators last week. “Fully funding this program is essential to protecting the integrity of our communications infrastructure and the future viability of our digital economy at large.”

Should Congress opt not to fund the effort, it will fall to the next crop of lawmakers to provide the funding. And it will be Biden’s nominee to lead the FCC who will be tasked with dispensing it.

Current Democratic FCC Commissioners Jessica Rosenworcel and Geoffrey Starks, who are considered leading contenders for the top job, voted last week to approve the “rip and replace” plan and outlined their visions for securing existing networks and burgeoning 5G networks from possible Chinese intrusion.

“China is playing the long game,” said Rosenworcel. “It means what we do here — banning two vendors and removing their equipment from our nation’s networks — is a start, but it is not enough. The United States needs a more comprehensive approach to secure 5G, both at home and abroad.”

Rosenworcel said she supported a multilateral effort with other countries against challenges posed by the proliferation of Chinese equipment around the globe. She also said she favors “a robust plan for research and development, incentives for carriers to bring next-generation connections to rural and underserved communities so we do not deepen our digital divide, and across-the-board efforts to boost competition.”

The O-RAN solution

Starks and Rosenworcel both expressed support for Open Radio Access Networks, known as O-RANs, which could be key to the United States’ efforts to diversify its network supply chain by providing affordable alternatives to low-cost Chinese manufacturers such as Huawei. O-RANs use standardized radio interfaces to ensure operability of wireless networks built using equipment from different vendors.

Starks said the supply chain order “represents an opportunity to make changes in U.S. networks that will promote innovation, reduce costs, and kickstart a new generation of American technological leadership.”

“I’m optimistic that O-RAN can support all three of those goals,” he added.

Industry groups pushing O-RAN as the easiest way to build secure and cost-effective 5G networks applauded the FCC’s decision. “Because open and interoperable interfaces provide a foundation and architecture for security in the U.S. communications supply chain, carriers should be encouraged to consider such solutions when upgrading or replacing equipment,” said Diane Rinaldo, director of the Open RAN Policy Coalition.

Biden is expected to take a multilateral approach to the government’s efforts to counter China’s telecommunications dominance. Antony Blinken, Biden’s announced choice to lead the State Department and a former foreign policy adviser to his campaign, told Reuters this summer that Biden would seek NATO’s assistance in stopping Huawei from building 5G networks in Europe.

The Chinese government slammed the FCC’s decision on Friday, with a spokesperson for the Foreign Ministry telling Bloomberg that the U.S. should stop “stretching the concept of national security, stop suppressing Chinese specific companies and provide fair, just and nondiscriminatory environment for companies operating there.”

But Huawei, facing a downturn in business if the Biden administration keeps the company in its cross-hairs, is offering the Biden administration an olive branch. The company is hoping for a “reset” in relations when Biden is inaugurated, a senior executive at the unit of the company that produces 5G equipment told CNBC in November.

“We would welcome more dialogue,” said Paul Scanlan, chief technology officer at the Huawei Carrier Business Group. “With dialogue comes understanding, then comes trust, and then people can do business together.”

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