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5G wireless coming to rural America thanks to $9B from FCC

Fox Business Staff

In the wake of security concerns over China telecom Huawei and its usage in rural America, Federal Communications Commission Chairman Ajit Pai unveiled a multibillion-dollar plan to deploy 5G mobile wireless services in rural America.

"I will move forward as quickly as possible to establish a 5G Fund that would bring next-generation 5G services to rural areas," Pai said in a statement Wednesday. In addition, he added that the FCC "would reserve some of that funding for 5G networks that promote precision agriculture."

IS HUAWEI A GROWING THREAT?

Huawei and fellow Chinese telecom ZTE have both been targeted by the U.S. government as security risks while at the same time rural wireless and internet providers have been some of the most frequent customers in the U.S of both companies. The Rural Wireless Association, a lobby group that represents 50 wireless providers with less than 100,000 subscribers, has said that 25 percent of its carrier members would be impacted by a ban and replacement of equipment from the Chinese companies. The RWA estimates that it would cost its members $800 million to $1 billion to replace equipment from Huawei and ZTE.

Pai's plan would alleviate the high cost of replacing the equipment and would hasten rural America's 5G access. Through the FCC's Universal Service Fund, up to $9 billion would be made available and would "target hard-to-serve areas with sparse populations and/or rugged terrain," according to the FCC's press announcement.

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The Universal Service Fund is paid for by contributions of telecommunication providers. Companies contribute a certain percentage of the amount billed to their residential and business customers for interstate and international services, according to the FCC. The exact percentage is adjusted each quarter based on projected funding demand.

Two weeks ago, the Trump administration issued a 90-day extension of the license that allows U.S. companies to continue doing business with ZTE and Huawei. Commerce Secretary Wilbur Ross appeared on FOX Business the day of the extension and said, "The beneficiaries of the general licenses are mostly for our rural telecoms, here in the U.S., who unfortunately over the years loaded up on [Huawei's] equipment."

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