Trump signs into law $1B for rural carrier rip-and-replace

Secured and Trusted Network Communications Act targets rip-and-replace of Huawei, ZTE network equipment

President Trump on March 12 signed into law the Secured and Trusted Network Communications Act, which among other things, will provide up to $1 billion in funding to rip-and-replace network infrastructure primarily among rural U.S. operators. While the legislation doesn’t name Huawei and ZTE, it tasks the U.S. Federal Communications Commission with putting together a list of covered communications equipment or services;” in the past the FCC has called out risks associated with the two aforementioned Chinese vendors.

While none of the Tier 1 domestic carriers use gear from Huawei and/or ZTE, some rural carriers do given the advantageous cost as compared to Ericsson or Nokia. Per language in the new law, funding will be directed to carriers with 2 million or fewer customers.

The funding was praised by the Rural Wireless Association, a trade group that represents smaller operators. The group said in a statement, “Now with a funding mechanism almost in place, rural carriers can begin planning for the removal of banned Chinese equipment from their networks…Without this crucial funding, rural carriers would lack the financial means to effectuate rapid replacement of the banned equipment.”

FCC Chairman Ajit Pai called on Congress “to appropriate the necessary funding to reimburse carriers for replacing any network equipment or services found to be a national security threat. The funding is essential to successfully transition communications networks–especially those of small and rural carriers–to infrastructure provided by more trusted vendors.”

This development comes in the run-up to the Competitive Carriers Association’s annual Mobile Carriers Show; as of publication, the event was set to start March 30 in Dallas, Texas.

Does rip-and-replace present an opportunity for open RAN vendors?

The trade battle between the U.S. and China has drawn out companies like Huawei and ZTE as proxies. U.S. officials have also pressured allies, particularly those in intelligence-sharing relationships, to preclude the Chinese vendors from 5G deployments based on security concerns. That effort has been met with mixed results.

This larger issue, coupled with technological development led by groups like the O-RAN Alliance and Telecom Infra Project, have brought open RAN vendors to the forefront. In addition to the political angle, open RAN vendors are playing up their ability to shift network economics as a whole by providing carriers with the ability to mix-and-match equipment through software-based interoperability.

A group of senators led by Democrat Sen. Mark Warner recently suggested the government invest north of $1 billion to support U.S. companies working on open RAN–Altiostar, Airspan, Mavenir and Parallel Wireless, for instance. The funding, as considered, would give the FCC $750 million to allocate and also establish a $500 million “Multilateral Telecommunications Security Fund.”

Airspan Networks CEO Eric Stonestrom told RCR Wireless News in a statement that the U.S.-based company is in favor of the government’s “bold stance” he believes the legislation “will allow and encourage rural and regional carriers to adopt models of disaggregated and open architectures that can revolutionize the telecommunication infrastructure supply chain, serving as a benchmark for the rest of the world for how to deliver innovation at a fraction of the cost.”

Airspan sees the coming rip-and-replace as “a fantastic opportunity,” Stonestrom said. The company is a RAN provider for Rakuten Mobile, which is preparing to enter the Japanese market with an LTE offering.  Rakuten Mobile CTO Tareq Amin has characterized the operator’s deployment as “the world’s first open RAN deployment today across any telco,” and he projects the architecture to yield a 40% lower capex and 30% lower opex when compared to traditional networks.

Mavenir CEO Pardeep Kohli, in a statement released following Trump’s codification of the new law, said, “It is clear now that the United States needs secure, domestic alternatives to power our 4G and 5G networks.” He said that as officials “seek to strengthen American competitiveness in this space, it is imperative that modern approaches like OpenRAN be prioritized.”

On the other side of the viability of open RAN as an alternative to vendors like Ericsson, Huawei and Nokia, Attorney General William Barr made his opinion clear earlier this year, calling open RAN efforts “pie in the sky. He called for U.S.-led investment in Nokia and Ericsson, Finnish and Swedish network infrastructure vendors that are Huawei’s biggest rivals. “Putting our large market and financial muscle behind one or both of these firms would make it a far more formidable competitor and eliminate concerns over its staying power or their staying power. We and our closest allies certainly need to be actively considering this approach.”

 

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