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U.S. lawmakers unveil proposed $1 billion fund to replace Huawei equipment

U.S. lawmakers unveil proposed $1 billion fund to replace Huawei equipment
FILE PHOTO: The Huawei logo is pictured at the IFA consumer tech fair in Berlin, Germany, September 5, 2019. REUTERS/Hannibal Hanschke/File Photo -
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HANNIBAL HANSCHKE(Reuters)
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By David Shepardson

WASHINGTON (Reuters) – A U.S. House panel unveiled bipartisan legislation this week that would authorise $1 billion (800 million pounds) for small and rural wireless providers to remove network equipment bought from companies including Huawei Technologies Co Ltd and ZTE Corp <000063.SZ>, which lawmakers say poses a national security risk.

The legislation is similar to a bill approved in July by the U.S. Senate Commerce Committee that would authorise about $700 million in grants to remove Huawei equipment to boost the security of the telecommunication network’s supply chain.

The top Democrats and Republicans on the House Energy and Commerce Committee said in a joint statement that the bill will protect the “nation’s communications networks from foreign adversaries by helping small and rural wireless providers root-out suspect network equipment and replace it with more secure equipment.”

The panel will hold a hearing on the bill Friday. Huawei did not immediately comment.

In May President Donald Trump signed a long-awaited executive order declaring a national emergency and barring U.S. companies from using telecommunications equipment made by firms posing a national security risk. The order directed the Commerce Department, working with other government agencies, to draw up an enforcement plan by October.

The U.S. government blacklisted Huawei in May, alleging the Chinese company is involved in activities contrary to U.S. national security or foreign policy interests. In August, the Commerce Department added more than 40 additional Huawei’s units to its economic blacklist, raising the total to more than 100 Huawei entities covered by the restrictions.

The House bill would prohibit the use of federal funds to purchase communications equipment or services from any company that poses a national security risk to American communications networks and require the Federal Communications Commission (FCC)to assist small communications providers with the costs of removing prohibited equipment or services from their networks and replacing the prohibited equipment.

A defence bill approved last year places a broad ban on the use of federal money to purchase products from Huawei and the White House said in June it will meet a two-year deadline to comply with the ban.

In April 2018, the FCC voted unanimously to advance new rules to bar the use of funds from a government programme to purchase equipment or services from companies that pose a security threat to U.S. communications networks including Huawei. The proposal is still pending.

While large U.S. wireless companies have severed ties with Huawei, small rural carriers have leaned on Huawei and ZTE switches and equipment because they are often less expensive.

The Rural Wireless Association, which represents carriers with fewer than 100,000 subscribers, estimates that 25% of its members have Huawei and ZTE in their networks, and have said it would cost $800 million to $1 billion to replace it.

(Reporting by David Shepardson; Editing by Lisa Shumaker)

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