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Montana Telecoms In Limbo Over National Policy To Replace Chinese Equipment

Concept image of cables and connections for internet data transfer

Rural internet providers across the country are waiting on the federal government to finish giving directions on what to do with recently banned Chinese equipment. The delay is adding uncertainty and costs to efforts to narrow Montana’s digital divide.

Craig Gates is the CEO of Triangle Telephone Cooperative, a small telecom company based in Havre, MT that provides service to about 20,000 customers in rural Central Montana. It’s expensive to provide internet and cell coverage in areas where customers are spread out, and big companies tend to stay away. 

Looking for a cheaper way to bring high-speed internet to the area, TTC joined many rural providers across the county in 2011 in buying equipment from Huawei, a Chinese company. 

"For a small carrier, that was really the only way we could get into the business," Gates says.

As the number of Americans who use broadband increases, some Montanans are getting left behind. According to one measurement from BroadbandNow, Montana ranked 50th in the country for broadband access and affordability. But the build-out of high-speed internet in the state hit another hurdle with a slow rollout of a new federal act that requires providers to "rip and replace" their Chinese equipment. The law doesn’t give deadlines or dedicate money to help with the undertaking. 

Recent suspicion that Chinese companies like Huawei could be using their technology to gather intelligence on Americans climaxed with the Secure and Trusted Communications Network Act. The act was signed into law earlier this year with wide bipartisan support.

For Gates and his telecommunications company in Central Montana, the new law means his entire network is in question. 

"Yeah, I have no idea what to rip out. Some of it may be viable. I don't have millions of dollars sitting around just to rip out equipment and put it back in."

TTC is one of about 50 providers across the country with the banned equipment in their networks. The Federal Communications Commission, or FCC, estimates that it will take about $1.8 billion to remove and replace the equipment nationwide. The act passed this year promises $1 billion, which Congress hasn’t allocated yet, to help companies with the effort, while also denying the providers existing funds for small carriers.

Gates says the law has already cost his company through evaluating what kind of equipment it has, how much the operation to replace it could cost and what to do next. 

"None of that's free. That all costs money," he says.

Then there’s the security question. When Gates bought the equipment, he had no reason not to trust it. Now that it’s a concern, he says the unclear government directive of what or when to replace it puts him in a difficult place. 

"The members own us, and I'm here to service my members, and I'm never going to do anything knowingly to put them at risk," Gates says.

Jim Lewis is the director of the Technology Policy Program at the Center for Strategic and International Studies, a think tank based in Washington D.C. He says the equipment is definitely a threat. 

"It doesn't mean every time you pick up the phone that the Chinese are listening in, but you don't want to be in a position where they could do that if they chose to do so."

Lewis says the average person probably has nothing to worry about, but a farm might. That’s because the way countries spy has changed. 

"It's not James Bond," Lewis says. "It's more like big data; data analytics."

Usually that data leads to a commercial advantage or a leg up in a business negotiation. Lewis says it’s possible that when making a trade deal, China might look at information that’s already out there, like the futures market, and supplement it with information they get on crops through espionage. 

He also says the strain caused by limited funds for companies ripping and replacing equipment puts the U.S. at a disadvantage in the technology race with China. In short, he says, China is putting major support into developing new technology, while the U.S. is not. 

Geoff Feiss is the general manager of the Montana Telecommunications Association, and he says the new law, and the unclear rules and funding for its requirements, is a curveball for the three Montana companies that have the equipment.

"The ground shifted. The goalposts shifted."

The Senate passed the bill with a unanimous voice vote. In a statement, Sen. Jon Tester said he supported the bill because he wants to, "Ensure rural providers are able to rip and replace compromised equipment with safer networks without hurting their bottom lines." Sen. Steve Daines said the move was critical to, "ensuring our national security and protecting our cell and 911 service in rural Montana."

Tim Donovan is the senior vice president of legislative affairs for the Competitive Carriers Association, which lobbies Congress for some wireless careers. He says providers need to get ready to rip and replace, even without firm guidelines from the federal government. 

"Everyone who has this equipment has had to take steps to make their plan so that when funding is available they can move quickly and get out of this quicksand that they're in right now."

Donovan says the issue keeps providers like Montana’s Triangle Telephone Cooperative in a rut. They're already running on tight margins, and new requirement has already driven a couple companies to shutter their operations. 

"As the country talks about the excitement and the buzz of coming 5G networks, carriers with this equipment are somewhat frozen right now."

The Federal Communications Commissionwill vote December 10th on rules that could provide more clarity for the timeline and costs to implement the law. 

Craig Gates, the CEO of TTC, says if the equipment is a threat, the government should move more quickly on the situation, and the longer it takes, the more his expectations fade. 

"Seems like we're split 50/50 down in the middle in this country, and nobody can decide what we want to do. Well, I'm not really sure I have a lot of faith."

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