Is $1B enough to rip out Huawei gear from the US?

The US government plans to provide up to $1 billion to rural US wireless network operators so they can get rid of their Huawei equipment.

But some of those carriers are already warning that they might need more money than they initially expected.

"Viaero reported that it has already reached out to three major vendors to discuss the costs of replacing all of the covered equipment in its network," the company wrote in a new filing to the FCC. Viaero counts around 110,000 customers across rural parts of Nebraska, Colorado and Kansas, and has admitted to purchasing Huawei equipment. The company didn't name the vendors it contacted, but they are likely Ericsson, Nokia and Samsung. "Quotes received to date have so far proven to be higher than initial estimates and one vendor is not able to offer a full end to end solution at this time."

In its lengthy filing on the topic, Viaero outlined all the potential expenses – and problems – involved in physically removing Huawei's equipment from its wireless network.

"Once engineering and design work is completed, each tower must undergo structural analysis to be sure the wind load and weight of new equipment can be safely added to towers, without requiring tower modifications. Viaero noted that the existing equipment can't be removed until the new network is fully functional and operational, which requires double equipment at each tower, until such time as that portion of the network can be transitioned over and the new equipment put into commercial service," the company wrote. "Based on its preliminary analysis, which has already begun, as many as 10% of Viaero's towers may need structural modifications."

The company also said it would need to obtain local permits for the work, conduct proper radio testing and connect the new equipment to local 911 operations.

And there are plenty of other, unknown factors involved. The company added: "Viaero also noted that in the Colorado mountains, the tower climbing season is short, and other circumstances beyond its control can cause delays. The floods in Nebraska last year significantly restricted the amount of time that Viaero could access many of its sites for needed repairs and upgrades."

As a result, the company appeared to push against any deadlines that might be imposed on its efforts: "Equipment vendors have not made it clear to Viaero that they will be able to deliver the turnkey solution for this network replacement within the timelines that may be imposed."

At issue is a bill on President Trump's desk that would set aside $1 billion to pay companies like Viaero to get rid of the Huawei equipment they purchased from the Chinese vendor. US officials for years have warned that Huawei's equipment could be used for spying by the Chinese government, concerns that have blossomed under Trump's administration and his trade war with China. Huawei denies the allegations.

And though Huawei has been largely prevented in recent years from selling any additional equipment to the US government or other American companies, there are worries that Huawei equipment that has already been deployed in the US could be used for international espionage.

To address those concerns, a group of lawmakers early last year proposed up to $700 million to pay US companies to rip out their Huawei equipment and replace it with equipment from other, "trusted" suppliers. That legislation dovetailed with a similar proposal from the FCC, which is looking specifically at companies that used money from its Universal Service Fund (USF) to purchase Huawei equipment.

But almost immediately, the government was cautioned that $700 million wouldn't be enough. "Our analysis shows it's conceivable that the cost to rip and replace banned equipment in rural networks are likely to top $1 billion," wrote the analysts at CoBank's Knowledge Exchange Division in a report last year. The firm, which conducts research into economic issues in rural locations, estimated that there are 30 rural wireless network operators in the US – operating a total of around 10,000 sites – using Huawei equipment.

Not surprisingly, the Rural Wireless Association (RWA), the trade association that represents Viaero and other rural wireless network operators that purchased Huawei equipment, has widely cited the findings from CoBank.

But based on the new comments from Viaero and RWA, even $1 billion might not be enough.

"All users of this equipment (e.g., wireless carriers, wireline carriers, schools, libraries, health care centers) should be required to remove the equipment, regardless of whether they are ETCs [eligible telecommunications carriers] or USF recipients," wrote the RWA in a new filing with the FCC. "Second, all parts and components, and even non-covered company equipment used in tandem with these systems, that must be removed and decommissioned should be eligible for reimbursement. In short, all reasonable costs incurred by small network operators to successfully complete their network transition should be fully reimbursable, without exception."

Added RWA, hopefully: "Congress also allowed for additional funding beyond the $1 billion, if deemed necessary."

The FCC, for its part, recently began soliciting information from companies that have installed Huawei equipment in order to gauge the extent of the "rip and replace" program.

— Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano