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FCC rules to oust Huawei in a move to bolster national security,

  • The FCC approved the “rip and replace” order requiring US carriers to ditch equipment manufactured by Huawei and ZTE.
  • And smaller, rural carriers will bear the brunt of the decision.
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The FCC unanimously voted to adopt the Secure and Trusted Communications Networks Act of 2019, mandating US broadband and wireless carriers to ditch all equipment manufactured by Huawei, and the agency pressed go on proceedings to decide if China Telecom will be met with the same fate, according to Bloomberg.

rural broadband lagged in home broadband adoption in 2019

FCC orders network providers to ditch Huawei.

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The ruling is part of a broader push to fortify security and stamp down Chinese companies’ role in US telecommunications. The US government passed “rip and replace” legislation in March that bans carriers from putting government funds toward buying network equipment from Huawei and ZTE.

When rip-and-replace was originally envisioned last year, lawmakers believed $700 million would be enough to cover reimbursements for providers who need to install new equipment—but the estimations have ballooned more than twofold, and the FCC asked Congress to dole out $1.6 billion for reimbursements in March. The “rip and replace” process will commence once Congress allocates the funds.

The mandate will mostly impact smaller, rural US carriers, which might struggle to meet the FCC’s requirements—but SpaceX’s Starlink is poised to be the saving grace for rural connectivity.

  • Funds procured from the government might not cover the expenses involved for replacing equipment. Several dozen rural carriers have put government subsidies toward constructing networks using Huawei or ZTE gear, according to CNET—and the FCC estimates that each firm will need $40–45 million to supplant it. But the approximations don’t align with providers’ calculations: Colorado-based Viaero and Wyoming-based Union Wireless have calculated their equipment replacement costs to be $410 million and $300 million, respectively, for example. The time and cash it will take for already-struggling rural providers to recuperate could exacerbate the rural US’ broadband divide: Fewer than two-thirds of rural US residents had broadband access in 2019, compared with three-quarters of urban residents, according to Pew Research Center.
  • With newly-granted government funding, SpaceX shows promise in filling in connectivity gaps in rural US regions. Earlier this week, the FCC awarded SpaceX $886 million in Rural Digital Opportunity Fund subsidies—which have historically been granted to fixed providers—for its Starlink satellite broadband project. The money will help SpaceX meet its goal of bringing broadband to more than 600,000 rural homes and businesses across the US. The FCC is placing its bets on SpaceX to stitch up holes in broadband access, which is becoming increasingly necessary as the pandemic shines a spotlight on insufficient access in rural areas and as rural providers contend with swapping out equipment.

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