The trade war between China and the US has centered largely on escalating tariffs. But in many rural communities, the focus has shifted to the security of networks for which Chinese giants Huawei and ZTE have long provided equipment. As the 5G future approaches, the US is pushing small carriers to rip out and replace whatever parts of their infrastructure come from China, no matter the cost.
The Federal Communication Commission first proposed the drastic overhaul at the end of October, suggesting that access to FCC subsidies from the $8.5 billion Universal Service Fund (USF) be contingent on removing all Huawei and ZTE equipment. The Commission unanimously approved the initiative on November 22, setting off a wave of protests from the small mobile companies who now have to figure out how to do that—and how to pay for it.
All the major US wireless providers—including AT&T, Verizon, and T-Mobile—cut Chinese equipment manufacturers out of their networks years ago to avoid this potential sticking point. But small rural carriers, which often struggle to stay profitable, bought Huawei and ZTE tech in recent years because they undercut competitors. The FCC decision puts those operators on the hook for a replacement process that could cost a billion dollars or more industry-wide.
In a move that could potentially help ease that burden, the FCC announced a $9 billion investment in rural 5G networks last Wednesday. Later that night, Huawei sued the agency over the ban.
“It’s a whole complicated situation,” says Syed Rafiul Hussain, a 5G and mobile network security researcher at Purdue University in Indiana. “Rural wireless operators may be reluctant to spend money on new cell site equipment, testing, and transition, but protecting security and user privacy comes with a cost.”
Many rural carriers argue that they’ve never had cybersecurity issues with Huawei or ZTE products. Huawei’s lawsuit similarly emphasizes that the FCC and other branches of the US government haven’t provided specific evidence of a credible threat.
“Our basic view is this is a preordained rush to judgment by the FCC where they’re not really interested in looking at facts,” says Michael Carvin, a partner at Jones Day, the Washington, DC-based law firm representing Huawei. “They’re a communications agency; they’re not a national security agency. The question the FCC is supposed to be asking is, are you providing quality service at an affordable, just rate? Huawei is being singled out for unfair treatment.”
ZTE did not return a request from WIRED for comment.
The Department of Justice, Congress, and numerous nongovernmental tech-industry and national security groups have emphasized, though, that they’re concerned about the potential for future threats, rather than something carriers would have already seen problems with.
“Chinese law requires all companies subject to its jurisdiction to secretly comply with demands from Chinese intelligence services,” FCC chairman Ajit Pai said in an October statement announcing the proposal to limit funding for carriers still using Huawei or ZTE equipment. “As the United States upgrades its networks to the next generation of wireless technologies—5G—we cannot ignore the risk that the Chinese government will seek to exploit network vulnerabilities in order to engage in espionage, insert malware and viruses, and otherwise compromise our critical communications networks.”
While Huawei has a clear economic interest in preserving its ability to do business in the US, rural carriers are simply worried about the potential cost of replacing existing equipment while simultaneously building out 5G. Though the FCC initiative to remove Huawei and ZTE equipment has been colloquially called “rip and replace,” it’s not quite so simple. The logistics of the process are closer to “replace and remove.”
First, carriers need to take inventory of how much Chinese tech they have to replace—no small feat in complicated, remote networks—and acquire new equipment from non-Chinese manufacturers like Ericsson and Nokia. Then they set up the new components in parallel with existing infrastructure, using virtualized test environments to catch interoperability issues and troubleshoot as many transitional problems as possible. “There might be initial unforeseen problems in terms of performance and service quality,” says Hussain. Finally, the carriers bring the new equipment online in the live network, phasing out the old tech carefully to minimize outages or downtime.
Some of this transition would happen at central facilities, but some would inevitably need to take place at each individual cell site. This will mean sending crews from tower to tower to replace equipment—a complicated task for rural carriers who maintain infrastructure in all sorts of environments and terrains. The cost of the job will vary by carrier based on factors like labor, network size, and geographic footprint, but most estimates of the total cost across the country from the FCC and trade groups have been about $1 billion. That could be covered by either the $8.5 billion USF or a new $9 billion rural 5G investment plan the FCC announced Wednesday.
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“Our members are very patriotic; they will do what the government tells them to do,” says Carri Bennet, general counsel of the Rural Wireless Association trade group. “But they want to make sure they’re funded to do it, because they’re already working at a hardship and getting subsidies to provide these services anyway. Immediately they have to stop using the money that they’re currently getting from the Universal Service Fund to support and maintain those networks.”
Though the FCC’s Wednesday announcement of a $9 billion rural 5G fund may seem to solve the funding issue, it will likely take at least a year for that money to actually become available, and it seems that most or all of it will not be directed toward Chinese equipment replacement. Plus, the initiative isn’t exactly new money. It supersedes a different $4.5 billion FCC 4G coverage expansion fund called Mobility Fund Phase II that was set to be distributed over 10 years, similar to how the new 5G money will likely be disbursed. Two funding bills were introduced in the Senate and House this year, which could provide up to $1 billion for tech replacement, but both are still pending. Results of Huawei’s suit would likely take more than a year to come down, and in the meantime carriers will need to comply with the FCC’s proposal to continue receiving USF funds.
That’s a lot of uncertainty, but the bottom line is that carriers don’t know if they’ll need to finance the Huawei and ZTE remove projects themselves, or if they can apply USF money to get it done.
Getting in line with the FCC’s restrictions could delay rural carriers’ planned network improvements and 5G expansion. But though “replace and remove” is a complicated and costly process, the Rural Wireless Association’s Bennet says that carriers understand the importance of taking cybersecurity threats seriously. They just aren’t totally convinced that removing Chinese equipment will solve the problem.
“As we move to 5G and everything starts getting connected, it could make it really easy to spy or engage in some sort of nefarious activity—that’s what [the government] is worried about,” Bennet says. “I just don’t know how this necessarily fixes that. It seems like we need a much more robust security system on all of these national networks and more monitoring to keep the bad actors out or detect them if they get in.”
It’s one thing to say you want Huawei and ZTE gone from US 5G networks. As the most affected carriers are quickly learning, it’s entirely another to figure out how to do it.
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