Western allies continue to push for Huawei restrictions abroad, even as operators struggle to comply at home
A UK deadline for ‘rip and replace’ passes with looming uncertainty
On 31 December 2023, the deadline passed for telecoms operators to remove any equipment from network cores that was supplied by high-risk vendors, namely Huawei. Following the vendor designation directive issued in October 2022, an immediate ban on the new installation of Huawei equipment in 5G networks went into effect along with this interim deadline for partial removal. An overarching requirement to remove all Huawei equipment from 5G networks by the end of 2027 was also imposed. Despite reports that some operators, including BT, failed to meet the 31 December target for removal from network cores, Ofcom has yet to issue an update following the so-called ‘rip and replace’ requirement deadline. Operators which fail to meet the different deadlines for removing Huawei equipment could face fines of up to 10% of turnover or £100,000 per day. While uncertainty on the enforcement of the interim target lingers, operators are still managing the ongoing costs of replacing Huawei equipment, estimated at £500m by BT, along with delays to further network development programmes without financial support from the Government.
The FCC provides an update demonstrating limited progress for US operators
On 5 January 2024, the US Federal Communications Commission (FCC) issued its third interim report on the progress of its rip and replace programme for Huawei and ZTE equipment. So far, only five operators have certified that they have completed the permanent removal and replacement of the banned equipment. The FCC also offered an update on its distributions through the Secure and Trusted Communications Networks Reimbursement Program, which offers funding to operators with fewer than 10 million subscribers to support equipment replacement. To date, the FCC has approved $396m (£309m) in claims against the up to $1.9bn (£1.48bn) in total funding made available by Congress. However, total applications for funding now stand near $5bn (£3.9bn), and the regulator reports that lack of funding is one of the primary reasons for delay reported by operators implementing the restrictions. Under additional extensions granted by the FCC, operators now have through November 2024 to complete the removal of banned equipment even as they struggle to balance costs and supply chain disruptions.
Western allies continue to push for restrictions globally, despite implementation issues at home
Following the US’ lead in restricting the use of equipment sourced from Chinese firms such as Huawei and ZTE, the EU and UK have also been pressuring global allies to follow suit. Costa Rica is the most recent country to adopt vendor restrictions, joining India, Japan and Taiwan in alignment with Western allies. The Philippines, Jamaica and Kenya are the next likely targets of US-EU pressure to adopt policies restricting Chinese telecoms equipment. Amid this ongoing international campaign, the task of removing Huawei and ZTE equipment has proven difficult and contentious in the US and UK as well as the EU. In Germany, a yearslong public debate on implementing vendor restrictions appeared briefly to be nearing a new chapter as officials from the Ministry of the Interior proposed banning both Huawei and ZTE equipment. That proposal, which did not include any compensation for impacted operators, has not since progressed and remains a point of discussion for the EU-U.S. Trade and Technology Council. European operators such as Telefonica in Germany, as well as Bouygues Telecom and SFR in France, have sought compensation for rip and replace mandates comparable to that offered in the US, though without success thus far. Throughout the EU more broadly, similar concerns for high costs and complications for ongoing network rollouts have plagued the implementation of vendor restrictions . When considering the costs and challenges already encountered by governments and operators alike in enforcing these bans, achieving global alignment on widespread vendor restrictions beyond US or UK shores will likely prove a continued uphill battle.
