FCC Report: U.S. Rural Operators Face Funding Gap for Huawei & ZTE Equipment Removal

The U.S. Federal Communications Commission (FCC) has released a new report showing that over 40% of rural operators lack the funds needed to remove Chinese telecommunications gear, such as those from Huawei and ZTE. The FCC has made it clear that there is a funding gap. This issue stems from a mandate requiring the removal of this gear due to national security concerns.

Background

In 2021, the FCC mandated that rural operators in the United States remove network gear from Chinese firms like Huawei and ZTE, citing national security threats. Many rural operators had chosen this gear due to their appealing terms and lower costs. To help with the removal costs, the FCC introduced the Secure and Trustworthy Communications Network Reimbursement Program (Rip and Replace program), first estimated to cost $1.9 billion. However, due to rising costs, the budget is now not enough.

FCC Funding Gap

Earlier this year, a bill to increase the program’s funding by $3 billion did not pass. As a result, over 40% of the more than 100 operators in the removal plan now need extra funds. This is a big increase from January when only 19% of rural operators said they needed more funds. Despite knowing the financial strain, the FCC still mandates the removal of all chosen gear from Huawei and ZTE.

FCC Chairwoman Jessica Rosenworcel said

“While Congress provided $1.9 billion to operate the Rip and Replace program, this latest report by the FCC makes clear that this amount is not enough to secure our networks; particularly those from providers in small and rural areas…We currently face a $3.08 billion shortfall and, unless we receive an additional appropriation, we can only provide forty cents on the dollar to those companies in reimbursement, which threatens our national security and risks the shutdown of rural networks,”

On the funding issue, Senator Cantwell said

“Congress must pass the Spectrum and National Security Act that funds this program’s shortfall, helps get small providers back on their feet and ensures rural communities stay connected,”

Operator Challenges

The report points out several issues faced by rural operators:
1. Labor Shortages: 32% of rural operators said they had trouble hiring workers, up from 16% six months ago.
2. Weather Delays: Weather issues caused project delays for 15% of operators, up from 10% before.
3. Reimbursement Issues: Some operators said that the removal costs were not paid back.

The funding shortage means that many rural operators are stuck. They need to remove the gear but do not have the funds to do so. The FCC’s Known Issue Rollback feature helps to some extent, but it is not enough. Operators need more support to deal with the labor shortages, weather delays, and reimbursement problems.

The labor shortage is another big issue. Many operators cannot find enough workers to do the removal work. This problem has doubled in the past six months. Weather delays add to the problem, making it even harder to finish the work on time.

Reimbursement issues make things worse. Some operators have not been paid back for the removal costs. This puts more financial strain on them, making it hard to continue with the work. Only a few operators have finished the work. The rest are still trying to meet the FCC’s deadline.

Progress and Extensions

Now, more than half of the 126 rural operators that asked for funds have been given a six-month extension to finish the removal task. Despite the funding gap, operators getting funds are still required to remove all related telecommunications gear and services from their networks.

Completed Projects

So far, only 14 of the 126 rural carriers have finished the final check, showing that they have fully removed, replaced, and disposed of all related gear. The remaining 112 firms may need more funds from Congress to finish the task.

Future Steps

The FCC publishes progress reports on the removal plan twice a year. With the funding gap and other issues, the FCC and Congress must find ways to help rural operators in finishing the required gear removal.

Conclusion

The FCC report shows the big problems rural operators face in following the rule to remove Chinese telecommunications gear. The funding gap, labor shortages, weather delays, and reimbursement issues make the process hard. In the end, the FCC and Congress must work together to help rural operators. They need more funds, more workers, and better ways to deal with delays. Only then can they meet the mandate and keep their networks secure and trustworthy. If they dont get more funds, it is likely that they will not be able to remove these equipment.