Removing existing Huawei network equipment could cost $1B: CoBank

Huawei building
The costs of removing and replacing existing network gear made by the Chinese vendor and used by rural operators are likely to top $1 billion, according to CoBank. (Huawei)

As the U.S. takes steps to ban Huawei telecom equipment going forward, the costs of removing and replacing existing network gear made by the Chinese vendor and used by rural operators are likely to top $1 billion, according to a report from CoBank.

Congress has introduced legislation that would provide up to $700 million to help carriers remove Huawei equipment, but Jeff Johnston, lead economist for the communications sector at CoBank, said in a statement the price tag will require more support.

"If U.S. carriers are required to replace Huawei gear, the government needs to increase its proposed support mechanism to avoid putting rural operators in dire straits," said Johnston in a statement.

Johnston participated at FCC Commissioner Geoffrey Starks’ workshop with stakeholders about addressing potential security threats from existing telecom equipment, speaking Thursday on a panel session focused on approaches to funding what could be a very complex process.  

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Competitive Carriers Association (CCA) Senior Vice President and General Counsel Alex Maltas also spoke at the workshop and said the discussion was productive. 

CCA is hoping for more clarification from the government on the scope and what kind of equipment will or won’t be allowed. Maltas noted that while many of the organization’s members don’t use Huawei equipment, some CCA members do.

CoBank’s report said that a Huawei ban will impact rural telecom operators more severely than other service providers in the country, finding that rural operators in recent years “had little choice” other than to purchase core network technologies from Huawei.

“For some rural operators that sought bids, competing vendors would not respond to proposal requests for network equipment, or the prices quoted were 30% to 40% higher than what Huawei was offering,” CoBank said.

Nokia’s Brian Hendricks, VP of policy and government relations, also participated in the FCC event and indicated the vendor is prepared to work closely with smaller operators on efforts to replace existing insecure network equipment if necessary.

RELATED: U.S. mulls ban on 5G equipment made in China: report

Nokia has already committed to support efforts to find financing assistance for smaller operators, but the vendor believes there needs to be a collective plan B aside from more funding from Congress.

Outside of funding, operational issues, including disruption to services, need to be considered, CoBank says.

"A system-wide replacement of network technology from a new vendor can lead to service outages and other operational issues that can impact network access," Johnston said in a statement. "Even if the government does not require a rip-and-replace, some operators may be forced to do so anyway. Mixing and matching vendor equipment in a network can be problematic, increasing the need for product development and testing costs, for example."