Chip, workforce shortages raise worries for rural carriers

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It’s possible for operators to start on their rip and replace programs by paying for them and then asking the government for reimbursement, but most rural operators don’t have that kind of cash on hand. (Pixabay)

U.S. wireless operators looking to rip and replace Huawei equipment from their networks are facing a double whammy: chip shortages affecting the telecom supply chain and a scarcity of trained workers for building the new networks.

The Rural Wireless Association (RWA) is concerned that these two factors could have a big impact on the timing associated with its members’ ability to replace Huawei and ZTE gear in their networks, as mandated by the Secure Networks Act of 2019.

“RWA is concerned that the equipment component and workforce shortages will cause significant delay in carrying out the mandates established by the Federal Communications Commission … in its Supply Chain Reimbursement Program,” the organization told the agency. “RWA members anticipate that these shortages will immensely hinder their ability to meet the one-year deadline to complete their transition process.”

RWA said it agrees with Nokia in that the one-year deadline given to operators to complete the removal and replacement isn’t enough time. RWA is urging the FCC to grant a 6-month blanket extension from the start of the program and more freely grant individual extensions so operators can better plan their network transitions. “Knowing ahead of time that these extensions are in place will avoid mismanagement of scarce resources and overpaying for limited resources,” RWA said.

The FCC is in the process of forming the rules for distribution of $1.9 billion that was appropriated in December 2020 to help operators in their rip and replace efforts. The first distribution of those funds isn’t expected until early 2022.

RELATED: FCC advances $1.9B program to rip and replace Huawei gear

Last month, the FCC named Ernst & Young as the fund administrator for the reimbursement program, responsible for reviewing requests and providing funding recommendations.

Operators can start on their replacement programs but they have to do it using their own funds and the FCC still needs to finalize a third Report and Order, which is expected to come out this summer, according to Carri Bennet, general counsel at RWA.

Knowing that this is coming, carriers are starting to put the wheels in motion, she said. One of the first things they need to do is make decisions on which suppliers they’re going to use. “They have to build a whole new network and then migrate their customers onto the new network once it’s built,” she said. “It’s going to be probably a two- to four-year process.”

The vendor decisions that carriers make include using incumbent vendors like Ericsson and Nokia, and to what extent they’re going to use open Radio Access Network (RAN) vendors with technology that’s newer to the scene.

It’s possible for operators to start on their rip and replace programs by paying for them and then asking the government for reimbursement, but most of the smaller operators don’t have that kind of cash on hand. Most of the carrier members of RWA serve fewer than 10,000 subscribers.

“They’re going to need to get funded pretty quickly in order to get through the process,” she said.

RWA’s Smart & Secure Networks Summit will be held in Dallas next month, where carriers will have a chance to meet with vendors in person, many of them for the first time since the pandemic struck.

When it comes to labor, smaller carriers are also competing with the big nationwide carriers in rural areas, as well as Dish Network coming onto the scene. RWA told the FCC it should also consider requiring supply chain vendors to prioritize small carriers replacing Chinese gear over large carriers.

“This is a national security issue which has been in the making for more than three years,” RWA told the commission. “There needs to be a higher level of urgency to replace the unsecure equipment and services in these smaller carriers’ networks and prioritizing these carriers’ needs over those of large carriers will assist in a more timely replacement process that will serve the public interest.”