FCC Supply Chain Report: 49 Communications Providers Say They Have Huawei & ZTE Equipment In Their Networks, Estimated Cost To Replace – $1.837 Billion
September 4, 2020 – The FCC’s Wireline Competition Bureau and Office of Economics and Analytics have released a Public Notice[1] showing the results of the Supply Chain Security Information Collection.[2]
The Public Notice contains a list of Eligible Telecommunications Carriers (ETCs) that have reported the presence or use of Huawei or ZTE equipment or services in their networks, or in the networks of their affiliates or subsidiaries. The Bureau estimates it could cost $1.837 billion to remove and replace Huawei and ZTE equipment found in the networks of all communications providers that filed information with the FCC.
In the FCC’s November 2019 Supply Chain Order, the FCC adopted a rule prospectively prohibiting the use of Universal Service Fund (USF) support to purchase or obtain any equipment or services produced or provided by a covered company posing a national security threat to the integrity of U.S. communications networks or the U.S. communications supply chain.[3] Huawei and ZTE were initially designated as covered companies and established a process for designating additional covered companies in the future. Also, the FCC directed the WCB and OEA to conduct an information collection to determine the extent to which potentially prohibited equipment exists in current networks and the costs associated with removing such equipment and replacing it with equivalent equipment.
In February 2002, the Wireline Bureau announced the commencement of an information collection on the use of Huawei Technologies Company and ZTE Corporation equipment and services in U.S. communications networks. Every ETC was required to report the extent to which their networks contain or use potentially prohibited equipment or services provided by Huawei, ZTE, or their subsidiaries, parents, or affiliates, and the costs associated with removing such equipment and replacing it with equivalent equipment. Even those ETCs that do not use Huawei or ZTE equipment or services were required to report that they do not use such equipment or services.
Eligible Telecommunications Carriers That Reported The Presence Or Use Of Huawei Or ZTE Equipment Or Services In Their Networks
The Public Notice shows that the following ETCs, by holding company name, have reported the presence or use of Huawei or ZTE equipment or services in their networks, or in the networks of their affiliates or subsidiaries:
Adak Eagle Enterprises, LLC
Albion Telephone Company, Inc.
América Móvil
American Broadband Communications et al.
American Samoa Telecom, LL
CATN International, Inc.
Baraga Telephone Company Inc.
Bristol Bay Cellular Partnership
Buffalo Lake Erie Wireless Systems Co. LLC
CenturyLink, Inc.
Chariton Valley Telephone Corporation
Cincinnati Bell Inc.
Cintex Wireless, LLC
Copper Valley Telephone Cooperative
Crystal Automation Systems, Inc.
DeKalb Telephone Cooperative, Inc.
ENMR Telephone Cooperative, Inc.
Futurum Communications Corp.
Gallatin Wireless Internet, LLC
Hargray Communications Group, Inc.
Hiawatha Communications, Inc.
Hilliary Communications, LLC
IdeaTek Systems, Inc.
JAB Wireless, Inc.
James Valley Cooperative Telephone Company
Laurel Highland Total Communications, Inc.
Leaco Rural Telephone Cooperative, Inc.
LICT Corporation
Mark Twain Rural Telephone Company
Mercury Network Corporation
Metronet Holdings, LLC
Natural G.C. Inc.NE Colorado Cellular, Inc.
Nemont Telephone Cooperative, Inc.
NewPhone Wireless, LLC
North American Local, LLC
Oklahoma Western Telephone Company
Panhandle Telephone Cooperative, Inc.
Pine Belt Communications Co. Inc.
Pine Telephone Company
Roome Telecommunications Inc.
Santel Communications Cooperative
SI Wireless, LLCTC Telephone, LLC
Texas 10, LLC
Triangle Telephone Cooperative Assn., Inc.
Union Holding Corp.
United Telephone Association, Inc.
Verizon Communications Inc.
Western Elite Incorporated Services
Windstream Holdings, Inc.
Cost To Remove Huawei & ZTE Equipment – $1.837 Billion
Based on the collected data, the Wireline Competition Bureau provides two estimates on the cost to remove and replace Huawei and ZTE equipment: (1) cost based on data submitted by all filers; and (2) cost for filers that appear to initially qualify for reimbursement under the Secure and Trusted Communications Network Act of 2019. The Bureau notes that other communications service providers may not have participated in the information collection and yet may still be eligible for reimbursement under the Secure Networks Act.
Based on data submitted by all filers, the Bureau estimates it could cost $1.837 billion to remove and replace Huawei and ZTE equipment from all filers communications networks.
For filers that appear to initially qualify for reimbursement under the Secure and Trusted Communications Network Act of 2019, the Bureau estimates it could cost $1.618 billion to remove and replace the Huawei and ZTE equipment.
Section 4 of the Secure and Trusted Communications Networks Act of 2019 directs the FCC to establish a reimbursement program for “providers of advanced communications service” replacing covered communications equipment or services.[4] Eligibility for the reimbursement program is limited to providers with two million or fewer customers, and the program restricts funding to the permanent replacement of covered equipment and services obtained before August 14, 2018, so long as the equipment and services replaced are identified as “covered” on the initial list issued by the FCC.
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[1] Wireline Competition Bureau And Office Of Economics And Analytics Release Results From Supply Chain Security Information Collection, Universal Service Fund Support Recipient Networks With Huawei And ZTE Equipment And Services Identified, WC Docket No. 18-89 Public Notice, DA 20-1037 (Sep. 4, 2020), https://docs.fcc.gov/public/attachments/DA-20-1037A1.pdf.
[2] Wireline Competition Bureau And Office Of Economics And Analytics Open Reporting Portal For Supply Chain Security Information Collection, Requires Eligible Telecommunications Carriers to Report Existing Huawei and ZTE Equipment and Services and Replacement Costs, WC Docket No. 18-89, Public Notice, DA 20-166 (Feb. 26, 2020).
[3] Protecting Against National Security Threats to the Communications Supply Chain Through FCC Programs, WC Docket No. 18-89, Huawei Designation, PS Docket No. 19-351, ZTE Designation, PS Docket No. 19-352, Report And Order, Further Notice Of Proposed Rulemaking, And Order, FCC 19-121 (Nov. 26, 2019), https://www.fcc.gov/document/protecting-national-security-through-fcc-programs-0.
[4] Secure and Trusted Communications Networks Act of 2019, H.R.4998, 116th Cong., 2nd Sess., PL 116-124, 133 Stat. 158 (Mar. 12, 2020) (codified as amended at 47 U.S.C. §§ 1601–1609), https://www.congress.gov/116/bills/hr4998/BILLS-116hr4998enr.pdf.