Yes, We Can Afford to Replace Huawei Network Equipment

In recent months, CTT highlighted proposed legislation by members of Congress that addresses threats to communications networks and supply chains.  Another measure introduced last week in the House of Representatives would provide resources for rural, smaller wireless providers to rip and replace network equipment from companies that pose security risks and expose data to backdoors – such as Huawei and ZTE.

Much discussion over the last few years revolved around how the federal government can prevent malicious intrusions into its hardware and networks.  Often left unaddressed was how smaller networks that service customers across the country should remove parts from Chinese companies that have been deemed a threat.  These networks often use foreign equipment or parts to keep costs low.

In 2018, Congress inserted language in the National Defense Authorization Act (NDAA) that banned federal agencies from doing business with Huawei and ZTE.  In May, the Commerce Department added Huawei and its affiliates to the Entity List, which bars American companies from doing business with anyone on the list without explicit government approval.

The bipartisan Secure and Trusted Communications Networks Act (HR 4459) addresses the next issue – what about Huawei equipment already integrated into networks?  The bill requires the FCC to establish the “Secure and Trusted Communications Reimbursement Program” to finance the costs of removing and replacing prohibited equipment from smaller, rural networks across America.  The bill appropriates $1,000,000 over the next fiscal year to accomplish this, and a similar amount annually over the next decade.  This is a welcome step, and the Energy and Commerce Committee should move it to a vote, as it enjoys support by democrats and republicans.

While there are real costs to replacing network equipment, they have been wildly exaggerated.  GSMA, an industry association that includes China Mobile among its members, claimed it would cost $62 billion to replace Huawei equipment in Europe.  This claim assumed there was no security risk associated with Huawei equipment and that there are only two alternate vendors, and ignored the reality that most operators would look to upgrade their networks anyway if they want 5G.  A more detailed, transparent report from Strand Consult that accounted for relevant factors found the cost be $3.5 billion – or just over $7.50 per subscriber.

The report stated, “Restricting Huawei and ZTE from networks does not harm the economy for Europe’s mobile operators nor does it meaningfully reduce competition nor does it delay rollout. However, removing Huawei and ZTE equipment from the network can greatly improve security.”  The statement also applies to the United States.

Security is worth paying for, especially when it can come at an affordable price.  More policymakers on both sides of the Atlantic are thankfully coming to recognize this, when it comes to communications networks.