data center switch

The FCC today has approved funding for over 80 small carriers and other entities to rip and replace equipment from Huawei and ZTE that has been deemed to be a threat to the security of U.S. communications networks. The funding will not cover the full replacement cost, however, as the FCC explains in a public notice released today.

In 2021, the U.S. Congress approved $1.9 billion to cover the cost of replacing the equipment based on cost estimates provided at that time. When the FCC opened an application filing window late last year that closed in January, however, the total funding requested exceeded $5 billion.

This occurred, in part, because the commission invited larger carriers to apply for funding on a lower-priority basis in the event that some funding might be left over after the smaller carriers were funded. A small carrier is defined as one with fewer than two million customers, according to the rules for the funding program, known as the Secure and Trusted Communications Networks Reimbursement Program.

After the larger carriers were removed from the application pool, however, the FCC determined that the smaller higher priority carriers have submitted over $4.6 billion in cost estimates that are “reasonable and supported.”

The $1.9 billion appropriated covers approximately 39% of that amount. Accordingly, each approved carrier is slated to receive 39% of what the FCC determined to be the carrier’s cost to rip and replace Huawei or ZTE equipment.

When the initial budget shortfall was announced in February, FCC Chair Jessica Rosenworcel said she looked forward to “working with Congress to ensure that there is enough funding available for this program to advance Congress’s security goals and ensure that the U.S. will continue to lead the way on 5G security.”

The small carriers that are slated to receive the rip and replace funding will not be allowed to collect Universal Service Fund (USF) support if they do not replace the Huawei and ZTE equipment and many of the carriers rely on USF to support their daily operations, as they typically serve rural areas where the cost of providing service is higher.

Concerns that Huawei equipment might pose a security threat were initially raised about a decade ago and as a result, the nation’s largest carriers opted not to use it. The Huawei equipment was less costly than equipment from other manufacturers, however, and as a result, some smaller carriers opted to use it.

A full list of companies slated to receive funding for the rip and replace program, along with the funding allocated to them, can be found in today’s public notice.

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