FCC says most requests for funds to replace Chinese telecom equipment are deficient

By David Shepardson

WASHINGTON (Reuters) – The Federal Communications Commission (FCC) told Congress on Wednesday it had found deficiencies in two-thirds of applications to reimburse U.S. carriers for removing equipment from Chinese companies deemed national security threats.

FCC Chair Jessica Rosenworcel said of 181 applications filed by mostly rural carriers under a $1.9 billion program, 122 were found to be “initially materially deficient.”

The FCC told applicants they have 15 days to fix their applications, and it “expects to complete this process by July 15.”

The FCC currently estimates the cost estimate to remove the equipment from companies like Huawei and ZTE Corp from the “rip and replace” program is $5.3 billion, much higher than what Congress set aside.

In July 2021, the FCC voted to finalize the program that had been funded by Congress in December 2020.

The FCC designated Huawei and ZTE as national security threats to communications networks in July 2020 – a declaration that barred U.S. firms from tapping an $8.3 billion government fund to purchase equipment from the companies.

The FCC in December 2020 adopted rules requiring carriers with ZTE or Huawei equipment to “rip and replace” that equipment.

The issue is a big one for rural carriers that face high costs and difficulty finding workers to remove and replace equipment.

Huawei said last year the “FCC initiative only creates extraordinary challenges for carriers in the most rural/remote areas of the U.S. to maintain the same high level and quality of service they provide to their customers without disruption.”

Rosenworcel’s letter noted the FCC “will allocate funding first to approved applications that have 2 million or fewer

customers.”

She said to date “all but one of the eligible

applicants falls within the first prioritization group, and the collective demand of these applicants exceeds available funds for the program.”

(Reporting by David Shepardson; Editing by Leslie Adler and Raju Gopalakrishnan)