Huawei equipment currently deployed by 25% of U.S. rural wireless carriers, RWA says

As countries around the world move to ban Huawei, the Rural Wireless Association said that it believes fully a fourth of its membership currently uses equipment from Chinese suppliers like Huawei and ZTE.

RWA’s statement was contained in the association’s filing with the FCC this week urging the agency not to ban Huawei and ZTE from the U.S. market.

For its part, Huawei argued in its own filing this week that countries including the United States should embark on a comprehensive cybersecurity strategy rather than banning select providers from competing for carriers’ business. “Other countries that adopt a holistic approach to cybersecurity have far less concern, if any, about suppliers such as Huawei—and, resultantly, can reap the benefits of Huawei’s sophisticated technology, dedication to innovation, international presence, and ability to facilitate 5G deployment,” the company wrote.

RELATED: Editor’s Corner—Here are the U.S. wireless carriers currently using Huawei equipment

The ongoing debate over Huawei’s business in the United States is particularly noteworthy given developments in recent weeks regarding the Chinese company and China’s global trade situation.

Specifically, Huawei’s CFO—the daughter of the company’s founder—was arrested in Canada last week due to requests from U.S. officials, who are looking to extradite Meng Wanzhou to the United States as part of an investigation into Huawei’s alleged use of the global banking system to evade U.S. sanctions against Iran. Yesterday, Meng’s attorneys reportedly worked to convince a Canadian judge that the executive should be released from jail because she wouldn’t try to escape the country as the extradition process moves forward.

As that extraordinary situation plays out, Huawei is facing a growing number of countries and operators working to shut it out of lucrative 5G equipment deals, mainly due to concerns that the company’s equipment could be used by Chinese spies. Most recently, Japanese operators Softbank and Docomo reportedly said they won’t purchase Huawei equipment, just days after the Japanese government forbade government agencies from purchasing telecommunications equipment from the Chinese supplier.

And looming over that issue is the ongoing trade negotiations between the United States and China; hanging in the balance there is an additional $200 billion in tariffs that could be levied against Chinese goods by President Trump.

Thus, the filings this week by the RWA and Huawei take on heightened importance, despite the fact that they relate to an issue that’s been debated since March. That’s when FCC Chairman Ajit Pai proposed rules that would would bar the use of money from the FCC’s Universal Service Fund to purchase equipment or services from companies that "pose a national security threat to United States communications networks or the communications supply chain."

The FCC’s Universal Service Fund doles out money to smaller telecom operators—including members of the RWA—to deploy internet services in rural areas.

“RWA and other commenters have discussed in great detail the substantial harm that the Commission’s proposed rule would cause to rural wireless carriers and their customers,” the association wrote this week. “RWA estimates that at least 25% of its carrier members would be impacted. Estimated rip-and-replace costs vary by carrier, but are significant across the board. Pine Belt estimates that the purchase price of replacement equipment ‘would be from $6 million to $10 million, and the downtime from installing new equipment would likely cause Pine Belt to forego [sic] another $1 to 3 million in roaming fees.’ In total, the proposed rule could easily result in $7 to $13 million in direct costs to Pine Belt. Sagebrush estimates the cost of replacing its network at around $57 million, and notes that such replacement cost for a small rural carrier is prohibitive without replacement funding.”

If, however, the FCC does move against companies like Huawei and ZTE, RWA argued that the agency should also help smaller wireless operators finance the costs of removing that equipment from their networks. “The Commission should consider establishing a fund from which USF recipients that have installed equipment later deemed to pose a national security threat can seek reimbursement to offset the replacement costs of compliant equipment.”

RWA is a trade association representing rural wireless carriers that each serve fewer than 100,000 subscribers. Companies represented among its board of directors include Sagebrush Cellular in Montana, Panhandle Telephone Cooperative in Oklahoma, NewCore Wireless in Minnesota, Pine Belt Wireless in Alabama, Union Wireless in Wyoming and, perhaps not surprisingly, Huawei.