American Carriers Anxious Over ‘Rip And Replace’ Costs In Huawei Ban

A Huawei company logo is seen at a shopping mall in Shanghai, China June 3, 2019. Picture taken June 3, 2019. (Photo: REUTERS/Aly Song)

Internet and telecoms carriers in rural U.S. regions have expressed deep concerns over the potentially massive costs that could come as the Huawei blacklisting drags on. The biggest issue is the looming "rip and replaces" order that the White House could unleash anytime.

Eastern Oregon Telecom is just one of the rural wireless carriers that could be affected by growing expenses following the U.S. government's blacklisting of China's leading tech behemoth.

The American wireless connection provider told The Verge that it has cut purchases of Huawei equipment around a year ago. At that time, the White House started picking on the Chinese firm and its technology.

CEO of Eastern Oregon Telecom Joe Franell said Huawei's equipment has not failed so far. The tools are cheaper compared to other providers but the quality is excellent. However, Franell and other carrier chiefs are worried about the "rip and replace" process.

The tech industry refers to "rip and replace" as the process of entirely removing Huawei products from a carrier's networks. Ripping and replacing already active and existing networks powered by Huawei equipment comes with massive costs.

According to Franell, switching tech equipment providers is not a cheap way around the government's issues against Huawei. Purchasing new parts could cost millions. In fact, getting the assistance of a contractor and replacing the Chinese provider's tools with a new brand could cost around $1.2 to $1.5 million.

Since Franell's company is a rural firm that isn't as big as other American giants like Google and Facebook, the CEO noted that he isn't sure Eastern Oregon Telecoms can shoulder millions in costs even if the government decides to reimburse the expenses.

The Rural Wireless Association that represents SMEs, has tried to approach the U.S. Federal Communications Commission (FCC) regarding costs that rip-and-replace orders will bring. The organization noted that around 25 percent of the group's members will be affected by replacing Huawei equipment.

Other American sectors are also suffering from the blow that came with Trump's Huawei ban. Semiconductors stocks have dropped over the last few weeks ever since the White House added the Chinese tech provider to its Entity List.

Meanwhile, Huawei has found new allies outside of the U.S. following the increased scrutiny from U.S. President Donald Trump and his administration. While the ban has yet to be lifted, the Chinese tech giant is spending time forming business partnerships with other countries.

The Guardian confirmed that Huawei has signed a deal to help develop Russia's 5G network. The agreement was signed with Russian telecoms firm MTS and work on the project is expected to kick off sometime soon.

The deal includes "the development of 5G technologies and the pilot launch of fifth-generation networks in 2019-2020," MTS said of the joint venture. For Huawei, the Russian deal is a victory following the business fallouts with Microsoft and Google.

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