The Federal Communications Commission has confirmed ZTE and Huawei are threats to US national security. As a result, US operators may not use federal funds to purchase equipment from the Chinese companies.
The designations follow the agency’s November 2019 ban on the use of universal service support to purchase equipment or services from companies posing a national security threat. ZTE and Huawei appealed that decision. However, the FCC's Public Safety and Homeland Security Bureau has now issued a final determination, confirming the decision to label the Chinese companies a threat, with immediate effect. As a result, money from the FCC’s USD 8.3 billion a year Universal Service Fund may no longer be used to purchase equipment from these suppliers.
"Both companies have close ties to the Chinese Communist Party and China’s military apparatus, and both companies are broadly subject to Chinese law obligating them to cooperate with the country’s intelligence services," said FCC Chairman Ajit Pai.
The FCC said it also took into account the findings and actions of Congress, the Executive Branch, the intelligence community, US allies, and communications service providers in other countries. "We cannot and will not allow the Chinese Communist Party to exploit network vulnerabilities and compromise our critical communications infrastructure," Pai said.
The US government has approved funds to help operators using Huawei and ZTE equipment to replace this with other suppliers.
Nevertheless, the Rural Wireless Association, which represents small operators, said it was "stunned" by the FCC's decision to impose the immediate ban. They said the decision puts at risk their ability to maintain their networks and it would be difficult to separate out universal service fund spending in their operations. While the FCC decision allows operators to apply for waivers, the association noted that there was no time provided for this before the decision takes effect.
