Rip-and-replace equipment not from trusted sources set in motion

The Department of Telecommunications (DoT) has asked telecom operators to give an assessment of how much of their legacy network equipment is not from “trusted sources”.

This self-assessment will help in providing insights into the potential costs associated with replacing such legacy equipment with new one procured from “trusted sources” to ensure national security.

In December 2020, the government had announced the National Security Directive on Telecommunication Sector mandating service providers to buy equipment only from “trusted sources”. The directive came into effect in June next year. This was in line with global concerns around Chinese equipment companies being used to spy on countries.

Before the directive came into force, a number of telecom operators in India had sourced equipment from companies in China, mainly from Huawei and ZTE, and these legacy networks are still live. Now, the self-assessment will serve multiple purposes, including estimating the financial burden on operators for equipment replacement and gauging the extent of government support required if this is agreed upon.

A senior DoT official said that at the moment, the focus is on gathering data from telcos regarding their legacy network components sourced from non-trusted vendors. Once this information is available, DoT plans to assess the associated costs before deciding on further course of action, the official said.

DoT’s proposal is akin to the “rip and replace” programme implemented in the United States, wherein the government allocated funds to reimburse telecom companies for replacing equipment deemed as national security risks. The US programme, launched by the Federal Communications Commission in 2020, initially earmarked $1.9 billion for this purpose. However, due to underestimated costs, additional funding of $3.08 billion was proposed in 2024, with extended replacement deadlines. According to reports, in the US, five telecos have replaced China-made equipment under the state-backed programme till January 2024.

In the UK too, a similar scheme is expected to help telcos replace Chinese equipment by 2027, though some telecom companies have said they won’t be able to meet this deadline.

In India, much of the 5G network has been built by non-Chinese companies, primarily Ericsson and Nokia, alongside some indigenous equipment by Reliance Jio. The country has 450,000 5G towers – more than Europe and the US combined, which have around 300,000.

This is because the government did not clear equipment by Huawei and ZTE as “trusted sources” amidst protests from operators who argued that the Chinese offered high quality gear at attractive prices.

Before the “trusted source” aspect was mandated, operators such as Vodafone Idea, Bharti Airtel, and state-owned BSNL had bought equipment from Huawei and ZTE. Vodafone Idea had contracts with Huawei for Delhi, Kerala, Odisha, Punjab, Bihar and Karnataka; Bharti Airtel had those for Karnataka, Punjab and Kolkata for its 4G network; and BSNL had contracts with both ZTE and Huawei.

However, escalating geopolitical tensions between India and China have prompted many telcos to replace Chinese equipment with other alternatives in even the legacy circles. With 2G customers moving to 4G and 5G, these legacy networks are also shrinking rapidly. In the 4G landscape, though, the Chinese had made an aggressive bid in India and gained substantial market share at the expense of European rivals.

If India adopts the “rip and replace” kind of scheme, it could provide additional business to European telcos, especially as orders for 5G are slowing down after aggressive deployment last year. Business Standard