Chinese stuff at Indian telcos: An old chapter reopens

Government officials aware of the matter said that India’s telecom department may ask service providers such as Bharti Airtel and Vodafone Idea to assess their networks and selectively replace equipment from non-trusted, or Chinese sources. This approach would be markedly different from that of the US government, which has embarked on a ‘rip and replace’ exercise to change all telecom network equipment regardless of source.

Earlier this year, the department had asked the carriers to provide details of non-trusted equipment on their networks, but that information is yet to come in.

“At this stage, we’re evaluating what needs to be done, which will depend on the information that we get from telcos," one of the officials cited above said, requesting not to be named. “Either we do rip and repair, or they can mitigate it through active surveillance of their own systems, do a threat assessment, and then replace."

A second official said that taking the 'rip and replace' recourse that the US has adopted could lead to telcos spending billions of dollars in deploying new equipment at higher costs and, therefore, may not be the only solution that the government may look at. “It will depend on the scale," he said, alluding to the volumes of equipment from Chinese vendors currently active in telcos’ networks.

According to sector experts, Vodafone Idea and Bharti Airtel, which have legacy networks, will be impacted by any move to replace older equipment. Noting that about 20-25% of gear could be from Chinese vendors, the experts said that most of these equipment came from Huawei and ZTE, and have been deployed over the past several years.

Queries to the telecom department, Bharti Airtel and Vodafone Idea did not elicit a response as of Tuesday evening.

Indian vendors have used Chinese equipment prior to the National Security Directive on Telecommunication Sector (NSDTS) issued by the government in June 2020, which mandated that telecom equipment must come from ‘trusted sources’ from June 2021.

The directive, at that time, did not envisage mandatory replacement of existing equipment that was already inducted in the networks of the telcos. It also did not cover ongoing annual maintenance contracts (AMCs) or updates to existing equipment already inducted in the network. Therefore, no disruption was created by the directive.

Since the directive, all equipment that goes into networks is approved by the National Cyber Security Coordinator. Indian telcos that have deployed 5G network over the past year or so have relied on European vendors such as Nokia and Ericsson. Till date, Huawei and ZTE have not been granted ‘trusted source’ status.

“From a monetary perspective, the value of Chinese gear in existing networks would be about ₹9,000-10,000 crore, but the disruption cost and replacement cost of these equipment would be much higher," a sector expert said, requesting anonymity.

In the US, the government-backed Secure and Trusted Communications Networks Reimbursement Program, better known as the ‘rip and replace’ program announced in 2020 requires US telecom companies to replace Chinese telecom equipment with modern non-Chinese alternatives. The US Congress has allocated $1.9 billion for the program, with the potential addition of another $3 billion for successful execution.

The Indian government has not announced any such financial support for the sector.