FCC Considers Banning Huawei, ZTE Equipment From US Networks
The Federal Communications Commission released a draft proposal Oct. 29 to ban equipment from Chinese vendors Huawei and ZTE from networks funded by the Universal Service Fund. Huawei signaled it will fight. Commissioners are scheduled to vote Nov. 19. President Donald Trump issued an executive order in May that bars imports and other "transactions involving information and communications technology [ICT] or services" without a broad interagency review (see 1905160019).
Sign up for a free preview to unlock the rest of this article
Export Compliance Daily combines U.S. export control news, foreign border import regulation and policy developments into a single daily information service that reliably informs its trade professional readers about important current issues affecting their operations.
“Based on our review of the extensive record ... we adopt a rule that no universal service support may be used to purchase or obtain any equipment or services produced or provided by a covered company posing a national security threat to the integrity of communications networks or the communications supply chain,” the draft says: “USF recipients may not use USF funds to maintain, improve, modify, operate, manage, or otherwise support such equipment or services in any way, including upgrades to existing equipment and services.”
Huawei and ZTE are the first two companies barred. “Both companies’ ties to the Chinese government and military apparatus -- together with Chinese laws obligating them to cooperate with any request by the Chinese government to use or access their systems -- pose a threat to the security of communications networks and the communications supply chain,” the draft says.
The order will take effect upon publication in the Federal Register. Huawei and ZTE have 30 days to object. The draft proposes a mechanism for adding the companies to the banned list. “The Commission will use all available evidence to determine whether an entity poses a national security threat. Examples of such evidence may include, but are not limited to: determinations by the Commission, Congress or the President that an entity poses a national security threat; determinations by other executive agencies that an entity poses a national security threat; and, any other available evidence, whether open source or classified, that an entity poses a national security threat,” the draft says.
The FCC estimates the average cost for a provider to replace its Huawei and ZTE equipment, “excluding ongoing expenses, to range from $40 million to $45 million.” The FCC said seven carriers provided cost estimates.
The rules go too far, Huawei Chief Security Officer Andy Purdy told CNN. “If we are forced to go our way we’ll be OK,” but “America will be hurt.” In 30 years of operations, Huawei “has never had a major security-related incident in the 170 countries we operate,” the company emailed. “Huawei is trusted by over three-billion consumers.” Banning companies based on country of origin won’t protect U.S. networks, Huawei said: It “only impacts the broadband providers in the most unserved or underserved rural areas of the United States. Such action will further widen the digital divide.” ZTE didn’t comment.