Congress pulls the rug on U.S. plan to beat Huawei

“To cut it came completely out of the blue,” said Sen. Mark Warner (D-Va.), vice chair of the Senate Intelligence Committee. “I think it’s crazy. It’s like a gift to China.”The defunding is a major setback for America’s prolonged effort to root Chinese-made equipment out of the world’s telecommunications backbone. That campaign has reached into the American heartland, caused drama with allies internationally and even led to global intrigue when Huawei’s chief financial officer was arrested, extradited to the U.S., and later traded in a prisoner swap.The program was launched to address the security risks created by the world’s dependence on Chinese telecom equipment. Worried about the dominance of Huawei and ZTE, Congress began paying to develop an alternative technology called an open radio access network, or open RAN.The idea is still in the early stages, and although some companies have started to incorporate open RAN technology into their networks, it remains heavily supported by government money for research and deployment.Warner, who secured the money in 2022 with support from both Democrats and Republicans, believes the move this summer caught even some Trump administration officials off guard.As recently as February, Trump talked up the technology in a meeting with Japan’s prime minister.Many congressional Republicans, too, continue to support the idea. “We don’t want China to win,” Sen. John Cornyn (R-Texas), who unsuccessfully fought the cut, told POLITICO. “In the absence of U.S. developing alternatives like ORAN, I think there’s a risk that they will.”The cut was spearheaded by Senate Commerce Chair Ted Cruz, who framed the decision as fiscal responsibility.The Texas Republican never commented publicly on the matter. In response to questions from POLITICO, his staff sent a list of talking points that the technology was flawed and not paying off as expected. A Cruz spokesperson declined to comment further for this report.The crisis for open RAN demonstrates the challenges of using industrial policy to reshape an established marketplace — and to regain American footing in an area that it long since ceded ground.The program was still relatively new, launched in 2023 with $1.5 billion in funding from the previous year’s bipartisan CHIPS and Science Act.When Cruz first floated the idea of clawing back the grant money in June, it set off surprise and consternation in both parties, including from senior GOP colleagues like Cornyn. The idea never appeared in House Republicans’ budget plans. But on Capitol Hill, Cruz’s office defended his objections to the program in a one-pager shared at the time with POLITICO, criticizing the lack of an overarching strategy for the grants and questioning whether they were accomplishing their goals. The cut quickly became part of the final version of the reconciliation package.In the wake of the funding cut, the Trump administration says it still supports the broader objectives that drove the $1.5 billion program, and is still sensitive to alleged risks from China’s dominance of 5G technology.“Seeing what China has done globally with rare earth restrictions raises questions about communications and other critical infrastructure,” said a U.S. official, who requested anonymity to describe delicate issues. “Resilience and security can only be assured when we work with trusted vendors.”The official declined to answer questions about why Trump signed the open RAN cut.In a June statement to POLITICO, a State Department spokesperson reiterated its support for open RAN, and said its diplomats were pushing the case “that secure technology is the foundation of a prosperous economy.”That contradictory approach to the issue extends to Capitol Hill as well. Just days after Trump signed the reconciliation law slashing the remaining $850 million in open RAN grants, the House of Representatives unanimously passed a bill directing the government to alert small companies to the benefits of open RAN — even letting them know about how to participate in the program the GOP had just gutted.Open RAN has plenty of critics, including Cruz, who point out that the technology has been slow to develop. While some telecom companies have begun incorporating aspects of open RAN, the technology hasn’t been seen as widely transformative as initially hoped.Skeptics also fear the current rollout would further entrench the existing telecom giants, including traditional European hardware players like Ericsson and Nokia, the largest non-Chinese 5G equipment makers, which integrated open RAN into their own marketing and offerings.Cruz’s team also questioned open RAN on technical grounds, arguing in the June document that its technical architecture actually increases security vulnerabilities, and that in “a time of rising geopolitical cyber threats, policymakers should not push unproven architectures as the foundation of critical infrastructure.”House Energy and Commerce Chair Brett Guthrie (R-Ky.) was among the first evangelists pushing for grants five years ago, but recently told POLITICO the cutback now seems “reasonable.”“We fought for the open RAN program as it was developing and coming into being,” Guthrie said. “Eventually these programs have to stand on their own, and they can’t be funded forever. … With open RAN, there’s a lot of startup money, a lot of it’s been initiated, and now it’s time for it to live on its own.”It’s not clear if that’s a viable option yet. Some longtime U.S. champions of the technology, including the telecom companies EchoStar and Mavenir, ran into financial challenges.Supporters of open RAN research say the money cut by Congress could have addressed the looming challenges it was facing.While the wireless fund’s initial rounds centered on hardware and broad R&D, the next grants were supposed to be devoted to the software challenges of operating an open 5G network — “kind of the game-changer for open RAN,” said Diane Rinaldo, who served in the first Trump administration and now leads the Open RAN Policy Coalition, which includes AT&T, Cisco, Google and Nokia as members.Future funding rounds may have also sought to directly drive commercial deployment. She lamented the lost opportunities.“It was incredibly unfortunate and upsetting to us,” Rinaldo said. “But it was about the money, not about open RAN — that was kind of made loud and clear to us.”The industry was eager for the money: This spring, the administration announced more than 90 applications requesting nearly $3 billion from the planned next round of funding.A spokesperson for the National Telecommunications and Information Administration, the Commerce agency administering the grants, said that research funding from the program’s first two rounds would continue, and that it’s still “exploring options” for pursuing the planned third funding round, without detailing specifics. (Accounting for the program’s full budget, there’s likely a small amount of funding left after the cut.)Supporters are now on the hunt to take advantage of the administration’s other wireless research money, like R&D funding for 5G and 6G at the Pentagon, and to redouble efforts to convince U.S. officials of the technology’s global merits.Its advocates acknowledge the speedbumps, but say getting the U.S. strategy on course may prove necessary to countering China.“The truth is, ORAN has taken longer to implement than we’d hoped,” Warner told POLITICO. “But if we’re ever going to be competitive against Huawei, we have to move against the kind of traditional stack of equipment.”