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Lawmakers propose $1B in grants to help replace Huawei networking gear

Members of the U.S. Energy and Commerce Committee unveiled bipartisan legislation on Tuesday that would authorize $1 billion in grants to small and rural wireless network providers.

The money would be used to replace banned networking equipment from Chinese firms such as Huawei Technologies Co. Ltd. and ZTE Corp.

The legislation is similar to another bill that was approved by the U.S. Senate Commerce Committee in July. That bill authorized around $700 million in grants for companies to remove Huawei equipment that officials say could pose a national security risk.

Democratic and Republican members of the committee said in a joint statement the bill was designed to protect U.S. telecommunications networks from foreign adversaries by “helping small and rural wireless providers root-out suspect network equipment and replace it with more secure equipment.”

The committee plans to hold a special hearing on the bill this Friday, Reuters reported.

The proposal stems from U.S. President Donald Trump’s decision to place Huawei on a list of banned entities that American firms can only do business with if they have a special license authorizing them to do so. Trump did so by way of an executive order signed in May, justifying the move by saying Huawei posed a significant risk to U.S. national security.

The largest U.S. wireless companies, such as AT&T Inc. and Verizon Communications Inc., have already cut ties with Huawei and ZTE, but many smaller carriers serving rural areas still rely on those companies’ network switches and equipment.

The Rural Wireless Association, which is a group that represents carriers with less than 100,000 customers, says about 25% of its members are still using equipment supplied by Huawei and ZTE. It estimates the cost of replacing this equipment at around $800 million to $1 billion.

Constellation Research Inc. analyst Holger Mueller told SiliconANGLE the bill seems to indicate that the U.S. government’s allegations against Huawei really are serious, and that the company isn’t just being used as a hostage in its ongoing trade war with China.

“It’s key from a legal perspective that any telcos that have purchased Chinese equipment should be compensated, as they didn’t do anything wrong at the time,” Mueller said. “But as with all things in lawmaking and Washington, we’ll have to wait and see if these bills pass.”

Photo: Telefónica in Deutschland/Flickr

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