US allocates $3 billion to ‘rip and replace’ Chinese technology in small telecom companies

A defense funding bill signed by U.S. President Joe Biden on Monday included $3 billion in funding to help telecommunications companies remove and replace Chinese technology used in their operations.

The so-called “rip and replace” provision of the National Defense Authorization Act of 2025 targets equipment from companies such as Huawei Technologies Co. Ltd. and ZTE Corp. which have been identified as posing potential espionage and cyber threat risks due to their links to the Chinese. government. With $3 billion in funding, the government is seeking to ease the financial burden on small, rural telecommunications providers who rely on affordable equipment from these providers.

Officially known as the Secure and Reliable Communications Networks Reimbursement Program, the program dates back to 2020 but was underfunded when it was created. Congress appropriated $1.9 billion in 2020 for the program, but the Federal Communication Commission later identified a need for $4.98 billion to effectively achieve the program’s goals. The additional $3 billion provided by the new legislation addresses this deficit.

To obtain funding under the program, participating telecommunications providers must safely remove and dispose of unreliable equipment while ensuring continuity of service for their customers. The program also includes measures to monitor compliance and track the deployment of secure alternatives to mitigate risks associated with the transition.

Surprisingly, for a US government program, additional funding does not rely solely on raising additional debt, with costs expected to be recouped through proceeds from future spectrum auctions.

The decision to increase funding for the extract and replace program comes amid growing concerns this year about hacking campaigns involving suspected hacking groups linked to China, particularly Salt Typhoon and Volt Typhoon.

Salt Typhoon has been linked to various attacks targeting U.S. telecommunications networks, including those of major carriers like AT&T Inc. and Verizon Communications Inc. The group is believed to have compromised connections between networks to intercept sensitive communications, focusing on individuals in politically important areas such as Washington, D.C. In response, officials requested the use of encrypted messaging apps to protect against such intrusions, by highlighting vulnerabilities in existing network infrastructures that the rip and replace program aims to resolve.

Volt Typhoon, another allegedly Chinese state-sponsored group, has stepped up its cyberespionage efforts targeting U.S. critical infrastructure, including power grids, water systems, and transportation networks. The group’s activities have alarms triggered on the potential for widespread disruption, including from the exploitation of zero-day vulnerabilities in network management tools.

Image: SiliconANGLE/Ideogram