Senators Unveil $1.2 Billion Plan to Develop Alternatives to Huawei’s 5G Equipment 

Telecom operators applauded legislation introduced this week by a senior group of senators promoting an effort to require mobile networking equipment meet interoperability standards as a way for U.S. networks to skirt Chinese providers seen as a national security threat.

“AT&T applauds Senator Warner, Senator Burr and the bipartisan group of cosponsors for introducing legislation that will promote the development and deployment of open standards-based advanced telecommunications networks,” said Tim McKone, executive vice president of federal relations at AT&T. “We look forward to working with Congress through the legislative process to see this measure enacted.”

Providers of networking gear—like Huawei, but also western companies like Nokia and Ericsson—may currently employ proprietary mechanisms so that the telecom companies have to purchase their entire suite, or “kit,” from one company, allowing their telecom customers limited leverage to negotiate. 

The bill aims to give operators more flexibility in building their networks and introduce more competition among providers by having the Federal Communications Commission require equipment meet standards of interoperability—as described by associations like the Open Radio Access Network Alliance—so that various networking interfaces can work together. 

“The Commission shall establish a requirement, as part of the equipment authorization program of the Commission, to obtain a certification that advanced mobile network equipment is in compliance with O-RAN network architectures,” the bill reads.

The interoperability principle is supported by a move to software-defined networks and virtualization of functionality that would enable services—including cybersecurity—to be done through cloud computing. These areas, as opposed to the hardware, are seen by the lawmakers to be where U.S. companies excel.

The press release acknowledges a major thrust of U.S. cybersecurity policy—getting allied nations to shun Huawei equipment, which policymakers fear can be used for espionage or to compromise critical infrastructure—is faltering.

“Heavily subsidized by the Chinese government, Huawei is poised to become the leading commercial provider of 5G, with far-reaching effects for U.S. economic and national security,” the release reads. “With close ties to the Communist Party of China, Chinese state-directed technology companies present unacceptable risks to our national security and to the integrity of information networks globally. However, U.S. efforts to convince foreign partners to ban Huawei from their networks have stalled amid concerns about a lack of viable, affordable alternatives.”

Sen. Bob Menendez, D-N.J., ranking member of the Foreign Relations Committee and a co-sponsor, put it this way: “The Trump Administration’s lecturing of our allies about the dangers of relying on the Chinese for 5G is no replacement for the development of 5G alternatives. This bill, which will supply the U.S. government with resources to help the private sector create viable 5G alternatives from all ends of the supply chain, is a long-overdue step in the right direction. As I’ve said over and over again, confronting China is not the same as being competitive with China. It is time we do just that.”

The bill would create a new Federal Advisory Committee—with participating members spelled out in its text—to inform the National Telecommunications and Information Administration’s issuance of grants from a fund supplied by money from spectrum auctions held by the FCC. 

It calls for the FCC to put 5% or $750 million—whichever is greater—of proceeds from companies’ competitive bidding for the use of electromagnetic spectrum over the next five years toward a new “Public Wireless Supply Chain Innovation Fund.” The NTIA would then award grants up to $20 million for entities “promoting development and inclusion of security features enhancing the integrity and availability of equipment in multi-vendor networks,” for example.

The bill would also tap spectrum auction proceeds to create the $500 million “Multilateral Telecommunications Fund,” controlled by the Secretary of State. But money from that fund “may only be allocated upon the Secretary of State reaching an agreement with foreign government partners to participate in the common funding mechanism.”

Separate legislation—the bipartisan 5G Leadership Act—has also called for proceeds from spectrum auctions, which can amount to tens of billions of dollars that would otherwise go directly to the U.S. Treasury, to be made available to rural telecom operators so they can rip and replace Huawei and ZTE equipment in their networks. 

Movement on that effort is unclear after Sen. Mike Lee, R-Utah, voted down a related House bill that came to the floor for unanimous consent in December. Lee noted the House bill did not specify spectrum auction proceeds would be the funding source. 

Through its independent rulemaking process, the FCC has also proposed beneficiaries of the Universal Service Fund—a pool of money gathered through fees on consumers’ phone bills used to expand broadband services in hard to reach places—be required to rip and replace their Huawei and ZTE equipment, and the establishment of a reimbursement program “contingent” on the availability of funding. 

At a meeting of the Software Supply Chain Assurance forum this week, held under the Chatham House Rule, an official speaking on the FCC’s rulemaking said, if Congress doesn’t authorize the use of proceeds from the spectrum auctions or appropriate money for the reimbursement fund, the fees in consumers’ phone bills may increase.