Deep in a pine forest in Wilcox County, Ala., three workers dangled from the top of a 100-meter-tall transmission tower. They were there to remove and replace Chinese equipment from the local wireless network.
After three hours of work, the team ran into a problem. Replacement equipment from a European company jammed an aircraft safety beacon. “We have a problem,” said a crew member on the ground. “They say it blocks the beacon.”
The project had been delayed for months due to storms, slow equipment deliveries and labor shortages. The new snafu, discovered early this month, would add at least two more days and blow the budget, said John Nettles, the president of the Pine Belt Cellular family business, which stands at the base of the tower.
“People in Washington think it’s easy to just swap out the equipment, but there are always problems you didn’t expect, always more costs and always delays,” he said.
As the United States and China battle for geopolitical and technological supremacy, the fallout has reached rural Alabama and small wireless carriers in dozens of states. They are on the receiving end of the Biden administration’s sweeping policies to suppress China’s rise, including trade restrictions, a $52 billion package to support domestic semiconductor production against China, and the divestiture of the video app. TikTok from the Chinese owner.
What the wireless carriers must do, under a program known as “rip and replace,” has become the starkest physical manifestation of the technical Cold War between the two superpowers. The program, which took effect in 2020, requires U.S. companies to remove telecom equipment from Chinese companies Huawei and ZTE. US officials have warned that equipment from those companies could be used by Beijing for espionage and stealing commercial secrets.
Instead, US airlines must use equipment from non-Chinese companies. The Federal Communications Commission, which oversees the program, would then reimburse the airlines out of a $1.9 billion pot intended to cover their costs.
Similar rip-and-replace efforts are happening elsewhere. In Europe, where Huawei products have been an important part of telecom networks, carriers in Belgium, Britain, Denmark, the Netherlands and Sweden have also switched Chinese equipment due to security concerns, according to Strand Consult, a research firm that monitors the telecom industry.
“Rip-and-replace was the first front in a larger narrative of the U.S.-China decoupling, and that narrative will continue for the next decade as a global race for AI and other technologies takes place,” said Blair Levin, a former FCC executive. chief of staff and a fellow at the Brookings Institution.
But cleaning US networks of Chinese technology has not been easy. Costs have already exceeded $5 billion, according to the FCC, more than double what Congress allotted for fees. Many carriers also experience long supply chain delays for new equipment.
The burden of the program has fallen disproportionately on smaller airlines, which have relied more on the cheaper equipment of the Chinese firms than large companies like AT&T and Verizon. Given the rip-and-replace issues, some smaller wireless companies are now saying they may not be able to upgrade their networks and continue to serve their communities, where they are often the only internet providers.
“Many rural communities are faced with the disastrous choice of continuing to use insecure networks ripe for surveillance or shutting down their services,” said Geoffrey Starks, a Democratic commissioner with the FCC.
Last month, Senator Deb Fischer, a Republican from Nebraska, introduced a bill to close the rip-and-replace financing gap for carriers. Passing it will be challenging, with similar legislation failing twice in the past year and fierce debate in Washington over government spending and the debt ceiling. But “we have to follow up,” Ms Fischer said. “Some of these carriers could go out of business.”
The research on Chinese telecom companies goes back more than a decade. In 2012, a congressional committee issued a report on Huawei and ZTE warning of the companies’ ties to Beijing. In 2019, former President Donald J. Trump banned US companies from selling goods to Chinese companies, while the FCC banned companies receiving federal subsidies from buying Huawei and ZTE equipment. The agency expanded those restrictions last year to restrict all imports from the Chinese companies.
Rip-and-replace was rolled out after Congress passed a law in January 2020 that kickstarted the payback effort. But the cost of the program quickly mounted.
In January, the FCC said it had received 126 applications for funding beyond what it could reimburse. Lawmakers had underestimated the cost of shredding Huawei and ZTE equipment, and new equipment and labor costs have risen. The FCC said it could only cover about 40 percent of the costs.
Some wireless carriers immediately paused their replacement efforts. “Until we have certainty about total project financing, this project will continue to be delayed as we wait for the necessary funding needed to build and pay for the new network equipment,” United Wireless of Dodge City, Kan., wrote in a regulatory filing. filing with the FCC in January.
Huawei declined to comment; ZTE did not respond to a request for comment.
In the Black Belt region of southern Alabama, known for its historic cotton plantations and paper mills, rip-and-replace compliance has been a central initiative at Pine Belt Cellular, one of the few wireless providers serving 2,000 homes and businesses in five provinces.
The company was founded in 1958 by James Nettles, a country doctor in Arlington who installed telephone lines in patients’ homes so they could call him for home visits.
After James Nettles’ son, John Nettles, joined the phone company in 1988, the family expanded into wireless services with federal grants. In 2011, John Nettles received additional FCC grants and enhanced Pine Belt’s network with broadband for high-speed Internet service.
Six equipment manufacturers offered him their equipment, he said. Mr. Nettles chose ZTE because the company offered equipment for less than half the cost of other bids. Pine Belt initially purchased $5 million worth of ZTE equipment, including hundreds of antennas, radios and other equipment for its 67 cell towers.
The FCC “told me to find the cheapest equipment, and no one thought twice about ZTE being Chinese,” he said.
But since restrictions on ZTE equipment were introduced, Mr. Nettles has spent most of his time replacing equipment from Western companies such as Nokia and Microsoft.
Pine Belt’s central network hub, a windowless building in downtown Selma, recently housed seven large metal bins filled with ZTE servers, processors and switches, the equipment that routes Internet traffic and transfers calls. There were also racks of new Nokia and Microsoft equipment and Dell computers. The Chinese-made and Western-made technology will work simultaneously until Pine Belt can completely rid its cell towers of ZTE equipment.
In 2021, Pine Belt filed for $68 million in fees from the FCC for the replacement effort. But last July, the agency said it could only reimburse costs up to $27 million. Pine Belt is about 15 percent into the transition of Chinese equipment and is already $5 million over the FCC’s budget, said Mr. Nettles.
At the beginning of this month, Mr. Nettles 15 miles to a rusting 1,000-foot tower where two workers prepared to strip out Chinese equipment. Rigged with ropes and pulleys, they planned to climb the tower to assess whether it could support the weight of three more antennas and radio equipment from Nokia.
The workers decided they should pour cement under the tower to create a stronger base for the extra load. The tower will have to contain the old ZTE and new Nokia equipment during the rip-and-replace work to avoid service interruptions.
While Mr. Nettles was parking at the tower, a customer in Selma called to complain that his cell service was intermittent. The customer was sandwiched between a tower of ZTE equipment and another of Nokia equipment.
“The ZTE and Nokia equipments are not communicating properly,” Mr. Nettles to explain. “Sorry for the inconvenience.”
Adam Satariano contributed reporting from London.
