US needs $3 billion more to remove Huawei, ZTE from US networks, regulator says

Companies are not required to complete the work until after they receive reimbursement.

WASHINGTON, July 15 (Reuters) - The U.S. telecoms regulator needs an additional $3 billion dollars to fund the removal from U.S. networks of equipment made by Chinese telecoms giants Huawei and ZTE (000063.SZ), bringing the total cost to $4.9 billion, the agency told Congress on Friday.

Reimbursement Program will require $4.98 billion, reflecting a current shortfall of $3.08 billion," Jessica Rosenworcel, the chairwoman of the Federal Communications Commission, said Friday in a letter to Senator Maria Cantwell, who heads the Committee on Commerce, Science, and Transportation.

Since Congress only appropriated $1.9 billion to fund the removal process, companies would be reimbursed for only about 40% of the costs, she added.

In 2019, Congress passed a law tasking the FCC with compelling U.S. telecoms carriers that receive federal subsidies to purge their networks of telecoms equipment that poses a national security risk, with promises of reimbursement.

The FCC designated Huawei and ZTE as threats, compelling U.S. companies to remove their gear or be frozen out of an $8.3 billion government fund to purchase new equipment. However, to fund the so-called "rip and replace" effort, Congress only appropriated $1.9 billion, raising questions about how effectively the removal program would be implemented.

"Absent an additional appropriation, the Commission will apply the prioritization scheme Congress specified," Rosenworcel said in the letter, adding that the Commission would begin processing reimbursement claims "as allocations are issued in the coming days."

Companies are not required to complete the work until after they receive reimbursement.