The U.S. ban on Chinese-made telecom equipment, rife with uncertainties surrounding compliance rules and government funding, is creating significant headaches for rural wireless operators, says a rural cooperative bank that lends funds to communications providers.
According to a new report from CoBank’s Knowledge Exchange, the confluence of these events could not have come at a worse time as the pandemic has forced people to rely on communication services to live, learn, and work like never before. The report examines the challenges facing rural operators as they are forced to overhaul their networks, and how the current environment is impacting rural residents.
The Secure and Trusted Communications Networks (STCN) Act enacted in March was designed to prevent communications equipment or services that pose a national security risk from entering U.S. networks. The act, largely designed to target Chinese companies, requires U.S. operators to rip and replace all non-compliant equipment in their networks and includes $1 billion of funding for operators with less than two million subscribers to pay for changes mandated in the new law.
“The funding is not only insufficient, it has yet to be appropriated by Congress,” said Jeff Johnston, lead communications economist at CoBank. “And at this point, the FCC has yet to formalize the rules operators need to follow, which keeps them in a holding pattern that impedes their ability to develop a network transition strategy.”
Rural operators cannot start signing contracts and procuring new equipment until Congress appropriates the $1 billion that was included in the Act. These uncertainties and restrictions paralyze an operator’s ability to make the necessary investments in their network to support the surge in data traffic stemming from home-bound consumers, and the associated massive digital transformation that’s underway, according to CoBank.
For rural American residents, the fallout from STCN would be less of an issue if they had options from other service providers such as T-Mobile, AT&T and Verizon, notes the lender. But despite the speculation and anticipation surrounding national operators expanding their service to rural America, there simply isn’t evidence that this is happening in any meaningful way, states CoBank. For many rural residents, the service offered by rural wireless operators is their only option.
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