Phone Carriers Fear Possible Order to Rip Out Huawei Equipment
U.S. Federal Communications Commission is considering barring some subsidy funding for carriers that use Huawei gear.
(Bloomberg) -- Some small U.S. phone companies fear they’ll be forced to rip out network equipment made by Huawei Technologies Co. as tensions rise following the arrest of the Chinese gear maker’s chief financial officer.
The Rural Wireless Association in a filing to the U.S. Federal Communications Commission asked for funding and time to “rip and replace” if U.S. officials order carriers to remove equipment from Huawei, which Congress has identified as a security threat for its ties to the Chinese government.
Huawei’s Chief Financial Officer Meng Wanzhou was arrested in Vancouver on Dec. 1 on the orders of U.S. authorities for allegedly violating American sanctions on selling technology to Iran. The arrest has become a flash-point in ties between the U.S. and China that’s rattled investors and sent stock markets tumbling.
The rural wireless trade group submitted its filing to the FCC, which is considering barring some subsidy funding for carriers that use Huawei gear, generally regarded as less expensive than competitors’ equipment, out of security concerns.
“Rip-and-replace costs vary by carrier, but are significant,” the trade group representing carriers with fewer than 100,000 subscribers said in the filing posted Monday on the FCC’s website. One carrier -- Sagebrush Cellular Inc. of Scobey, Montana -- estimated it would cost $57 million to replace its network, an amount that “for a small rural carrier is prohibitive without replacement funding” the trade group said.
The arrest of Meng, 46, a daughter of Huawei’s founder, Ren Zhengfei, has become an international incident, with China summoning the American ambassador and demanding her release. President Donald Trump’s staff is seeking to insulate trade talks with China from the arrest.
A Huawei representative in Washington didn’t return a telephone call Monday. In a Dec. 7 filing to the FCC, the company said the agency can’t rely on an American defense measure, which became law in August,to act against Huawei, since the law restricts the provision of loans and grants rather than the subsidies the FCC is weighing.
In earlier filings at the FCC, the Shenzhen-based networking giant said its presence in the U.S. “has been artificially restricted by unfounded allegations and suspicions based solely on misperceptions” about its relationship with China’s government.
The agency under Chairman Ajit Pai, who was appointed to his post by Trump, has proposed barring telecommunications companies from using a federal subsidy to buy gear from companies such as Huawei and ZTE Corp. that are judged to be a national security risk. The agency hasn’t indicated when it may vote on the measure.
Japan’s top three carriers -- NTT Docomo Inc., SoftBank Group Corp. and KDDI Corp. -- will ban telecommunications equipment by Huawei and ZTE, Kyodo News reported. The news agency didn’t offer any specifics beyond saying that the ban would impact equipment at base stations.
Huawei, China’s top telecommunications equipment vendor and a leading smartphone maker, was founded in 1988 by Ren, a former Chinese army engineer.
To contact the reporter on this story: Todd Shields in Washington at tshields3@bloomberg.net
To contact the editors responsible for this story: Jon Morgan at jmorgan97@bloomberg.net, John Harney
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