'Rip and Swap': Tech Cold War Topples Wireless Carriers (2023)

Deep in a pine forest in Wilcox County, Alabama, three workers hung from the top of a 350 meter cell phone tower. They had to rip out and replace Chinese equipment from the local wireless network.

After three hours of work, the team encountered a problem. Spare equipment from a European company blocked an aircraft safety beacon. "We have a problem," said a crew member on the ground. “They say it's blocking the lighthouse.

The project was already delayed for many months due to storms, slow equipment deliveries and labor shortages. The new snafu, discovered earlier this month, would add at least two more days and strain the budget, said John Nettles, president of family-owned Pine Belt Cellular, who was standing at the base of the tower.

"People in Washington think it's easy to just replace equipment, but there are always problems you didn't expect, always more expenses and always delays," he said.

As the United States and China battle for geopolitical and technological supremacy, the consequences have reached rural Alabama and small wireless carriers in dozens of states. They are in the crosshairs of the Biden administration's sweeping policy of repressionChina's rise, which containsTrade restrictions, A$52 billion packageto strengthen domestic semiconductor production against China anddivestment of the TikTok video appfrom a Chinese owner.

What wireless carriers must do under a program known as "Rip and Replace" has become the most glaring physical manifestation of the technological cold war between the two superpowers. The program, which took effect in 2020, orders US companies to tear down telecommunications equipmentmade by Chinese companies Huawei and ZTE. US officials have warned that the equipment from these companies could be used by Beijing for espionage and the theft of trade secrets.

Instead, US carriers must use equipment from non-Chinese companies. ThatFederal Communications Commission, which oversees the program, would then reimburse carriers out of the $1.9 billion set aside to cover their costs.

Rip-and-replace was the first front in a larger story of separation between the US and China, and that story will continue into the next decade with the global race for artificial intelligence. and other technologies,” said Blair Levin, former FCC chief of staff and fellow at the Brookings Institution.

But cleaning American networks of Chinese technology has not been easy. The cost has already exceeded 5 billion dollars,according to the F.C.C., more than double what Congress has appropriated for reimbursement. Many airlines also face long supply chain delays for new equipment.

The burden of the program fell disproportionately on smaller carriers, which relied more on cheaper equipment from Chinese companies than big companies like AT&T and Verizon. Given the difficulty of rip-and-replace, some smaller wireless companies say they may not be able to upgrade their networks and still serve their communities, where they are often the only Internet service providers.

"Many rural communities face the catastrophic choice of continuing to use unsecured networks ripe for surveillance or having to shut down their services," said Geoffrey Starks, Democratic commissioner of the F.C.C.

Last month, Sen. Deb Fischer, a Republican from Nebraska,presented the draft lawclosing the gap in ad hoc funding for airlines. It will be difficult to pass because similar legislation has failed twice in the past year and there is fierce debate in Washington over government spending and the debt ceiling. But "we have to keep up," Ms. Fischer said. "Some of these carriers may go out of business."

The investigation into Chinese telecommunications companies goes back more than a decade. In 2012 a congressional committeepublished a report on Huawei and ZTEwarning about corporate ties to Beijing. In 2019, former President Donald J. Trump restricted American companies from selling goods to Chinese companies, while the F.C.C. prohibited companies receiving federal grants from buying Huawei and ZTE equipment. The agency extended those restrictions last year to limit all imports from Chinese companies.

In January,The FCC said it had received 126 applicationsseeks funding beyond what it can fund. Lawmakers have underestimated the cost of destroying 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 stopped work on the replacement. "Until we have confidence in the full funding of the project, this project will continue to be delayed as we await the funds necessary to build and pay for the new network equipment," United Wireless of Dodge City, Kan., wrote. 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 was a major initiative of Pine Belt Cellular, one of the few wireless providers to 2,000 homes and businesses in five counties.

The company was founded in 1958 by James Nettles, a rural Arlington physician who installed phone lines in patients' homes so they could call him for house calls.

After James Nettles' son John Nettles joined the telephone industry in 1988, the family expanded into wireless services with federal grants. In 2011, John Nettles was given an additional seat at the F.C.C. grants and upgraded the Pine Belt network to include broadband high-speed Internet access.

He said six equipment manufacturers had donated their equipment to him. Mr. Nettles chose ZTE because the company offered equipment at less than half the price of other offers. Pine Belt initially bought $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 hardware, and nobody thought twice that ZTE was Chinese," he said.

But since restrictions were imposed on ZTE hardware, Mr Nettles spent most of his time trying to replace it with hardware from Western companies such as Nokia and Microsoft.

At the central network hub in Pine Belt, a windowless building in the mountains of downtown Selma, seven large metal containers were recently overflowing with ZTE servers, processors and switches, the hardware that carries Internet traffic and connects connections. There were also racks of new Nokia and Microsoft equipment as well as Dell computers. Chinese and Western technology will operate simultaneously until the Pine Belt is able to completely rid its cell towers of ZTE equipment.

In 2021, Pine Belt filed $68 million in costs with the FCC. for compensation efforts. But last July, the agency said it could only reimburse costs up to $27 million. Nettles said Pine Belt is about 15 percent off Chinese hardware and is already $5 million over the FCC's budget.

Earlier this month, Nettles drove the 15 miles to a rusting 300-foot tower where two workers were preparing to grab Chinese equipment. Armed with ropes and pulleys, they planned to climb the tower to assess whether it could withstand the weight of the additional three antennas and Nokia radio equipment.

The workers decided they needed to pour concrete under the tower to create a stronger base for the extra weight. The tower will accommodate old ZTE equipment and new Nokia equipment during replacement and replacement work to prevent service interruptions.

When Mr. Nettles parked near the tower, called a customer from Selma to complain that his cell phone was going off and on. The customer hesitated between one tower with ZTE equipment and the other with Nokia equipment.

"ZTE and Nokia's hardware don't communicate well," tried Mr. Nettles to explain. "I apologize for the inconvenience."

Adam Satariano reported from London.