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Compelled to part ways with Chinese suppliers, small U.S. telecom providers risk survival

Time:2021-10-18 15:33:00 Source: news.cn China Youth International

  James Kail is an American patriot who would never jeopardize the security of his nation for "one buck" that he would otherwise make running his telecom company, LHTC Broadband.

  Having faith in the nation is exactly what the United States has asked of people like Kail when requiring them to abandon the Chinese-made network equipment their businesses rely on to provide services to rural Americans, whose everyday need for TV and stable Internet -- no different from that of metropolitan dwellers -- has often been ignored by large telecom carriers.


  James Kail speaks during an interview in Stahlstown, Pennsylvania, the United States, Oct. 8, 2021. (Xinhua/Deng Xianlai)

  For Kail, "the allegiance to our country" has become a prevailing motif in the country despite the business owner never having encountered any concrete proof that Huawei equipment, which LHTC has been using satisfactorily for seven years, truly posed a security threat to his country.


  LHTC provides telephone, Internet and cable TV services to rural communities across the state of Pennsylvania. Kail decided back in 2014 to formally engage Huawei as a supplier.


  Photo taken on Oct. 7, 2021 shows the South Canaan site of LHTC Broadband company in South Canaan Township, Pennsylvania, the United States. (Photo by Aimee Dilger/Xinhua)

  He chose Huawei because the sales representative offered competitive pricing that could save him hundreds of thousands of dollars. But there was another reason. Despite a warning by the U.S. government against Huawei already in place at the time, his own diligent assessment of Huawei gear found no proof of any security threats or violation of the law.

  "Over the years, there have been accusations about (Huawei) being a security threat," Kail said in a recent interview, his second with Xinhua in two years. "But for this particular product, I haven't been shown any proof that this is being used in any way to breach our security."

  In addition to having no security issue, the Huawei equipment has been "working perfectly fine" since being installed, with excellent reliability that has seldom necessitated technical support, Kail said.

  Bonnie Bond is the general manager of LHTC's branch in South Canaan Township in northeast Pennsylvania where Huawei equipment is being used to provide services for about 1,200 local households.


  Photo taken on Oct. 7, 2021 shows Huawei equipment at South Canaan site of LHTC Broadband company in South Canaan Township, Pennsylvania, the United States. (Photo by Aimee Dilger/Xinhua)

  She said customers, albeit having no need to know their TV signals and Internet connections were made possible by Huawei, "haven't had any problems" with the services rendered.

  Due to U.S. government restrictions, Huawei has discontinued its U.S. optical network terminals, the equipment used to supply LHTC. As a result, LHTC has been blocked from purchasing any Huawei equipment for two years, meaning new customers won't get what has become time-tested, good-quality service.

  Kail said he hopes a replacement would match Huawei quality-wise. "That's the hope, but anytime you are putting any new solution in, there may be bugs -- may be things you have to work through."


  The Federal Communications Commission (FCC) finalized a 1.9-billion-U.S.-dollar program to reimburse most rural U.S. telecom carriers for removing equipment in their networks made by Huawei and ZTE Corp, another Chinese company.

  Companies with 10 million or fewer customers like LHTC are eligible for the program.

  In the two years between Kail's interviews with Xinhua, the U.S. government's clampdown on Huawei reached a watershed moment for Kail.

  He has no other option now but to comply with the government's order to rip and replace the smoothly functioning Huawei gear that LHTC is currently using to serve about one fifth of its client base.

  If he had obvious concerns that the Huawei product would threaten the security of the LHTC network, "I wouldn't have deployed it" in the first place, Kail said, adding that had he been shown any problem along the way, "we would have replaced it on our own."

  But Huawei has long been a sticking point in the years-long trade dispute that Washington initiated with China, leaving LHTC and its peers with no choice but to comply with government directives.

  "It's not an option ... If the government tells you to do something, are you going to say, 'No, we are not doing this'?"

  Kail expects it to take at least one year for his company to completely swap out the Huawei equipment.

  The concern, he said, was that replacing the units for the 1,200 or so households was intrinsically time-consuming for a company with just 65 employees. Furthermore, the shortages of equipment caused by the ongoing pandemic-related supply-chain disruptions could result in longer replacement times, making it harder for the company to run smoothly.


  The U.S. government has been suppressing Huawei for quite some time. In May 2019, the U.S. Department of Commerce added Huawei and an additional 68 of its affiliates to the "Entity List," citing national security threats. And 46 more Huawei affiliates were blacklisted in August of the same year.

  Meanwhile, the FCC has also gone to great lengths to try to force Huawei equipment out of the U.S. telecom market. In June 2020, the agency formally designated Huawei and ZTE as posing threats to U.S. national security, a declaration that barred U.S. telecom firms from tapping the country's annual Universal Service Fund of 8.3 billion dollars to purchase equipment from the two Chinese companies.

  The FCC voted unanimously in July to finalize the ripping and replacing program.

  Analysts and industry insiders are warning that notwithstanding its 1.9 billion dollars in total funding, the program could do more harm than good to rural telecom providers, even risking their survival.

  "These poor carriers have been between a rock and a hard place," said Carri Bennet of the Rural Wireless Association, a trade group representing small wireless network operators. The group estimated in 2018 that 25 percent of its members used equipment from Huawei and ZTE.

  Her association expects no reimbursement checks to arrive until the second or third quarter of 2022 for operators under the replacement program.

  To make things worse, the FCC program won't pay for new terminals like fixed wireless receivers, nor will it cover any network-operating costs. For small carriers who have already found themselves in an adverse situation combining chip shortages and a scarcity of trained workers, the replacement process could ultimately put their businesses in a tailspin.

  "We are counting on a lot of patience and financing from the vendors," said John Nettles, president of Alabama-based Pine Belt Communications, another carrier with Chinese equipment in its network. The company hasn't started removing any of its Chinese equipment yet and is planning to find appropriate vendors as replacement.

  For Chris Townson, who leads Tennessee-based DTC Communications and is looking for a vendor to replace the company's ZTE-supplied wireless network, the idea that DTC could ultimately come out ahead financially "is a farce."

  Any delay or problems with the reimbursement program, Townson warned, "would cause us to make some really hard decisions, up to and including exiting the business."

Original Title:Compelled to part ways with Chinese suppliers, small U.S. telecom providers risk survival
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