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

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

Officially known as the Secure and Trusted Communications Networks Reimbursement Program, the program dates back to 2020 but was underfunded when it was first established. Congress allocated $1.9 billion in 2020 for the program, but the Federal Communication Commission later identified a need for $4.98 billion to meet the program’s goals effectively. The additional $3 billion in funding provided by the new legislation addresses the shortfall.

To gain funding under the program, participating telecom providers must remove and securely dispose of untrusted 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 any risks associated with the transition.

Surprisingly, for a U.S. government program, the additional funding for the program does not rely on raising additional debt alone, with the costs planned to be recovered through proceeds from future spectrum auctions.

The move to expand funding for the rip and replace program comes amid rising concerns this year around hacking campaigns involving alleged China-linked hacking groups, in particular 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 reportedly compromised connections between networks to intercept sensitive communications, focusing on individuals in politically significant areas such as Washington, D.C. In response, officials urged the use of encrypted messaging apps to protect against such intrusions, highlighting the vulnerabilities in existing network infrastructures that the rip and replace program aims to address.

Volt Typhoon, another allegedly Chinese state-sponsored group, has escalated cyber espionage efforts targeting critical U.S. infrastructure, including power grids, water systems and transportation networks. The group’s activities have raised alarms about the potential for widespread disruptions, particularly through the exploitation of zero-day vulnerabilities in network management tools.

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