FCC Bars Use of USF Funding for Gear Posing National Security Risks


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The FCC Friday barred the use of its $8.5 billion a year Universal Service Fund (USF) to purchase equipment and services from companies that pose a national security threat. The Order names Huawei Technologies Company and ZTE Corp. specifically as companies covered by the rule; there could be more in the future.

 The Order also establishes a certification and audit regime to enforce the new rule.

In an accompanying Further Notice of Proposed Rulemaking that also passed, the agency proposes requiring carriers receiving USF funds to remove and replace existing equipment and services from covered companies. The Further Notice also seeks comment on how to pay for it. 

To help design a removal and replacement program, the Commission will collect information to determine how much Huawei and ZTE gear carriers have in their networks and the cost of removing and replacing it.  

“Huawei and ZTE, which have ties to military apparatus, are subject to Chinese laws, obligating them to cooperate with any request in the intelligence services and to keep those requests secret. Both companies have engaged in conduct like intellectual property theft, bribery, and corruption,” said FCC Chairman Ajit Pai during the vote. “We know the hidden backdoors to our networks and routers and switches and other network equipment can allow a hostile adversary to inject viruses and other malware.”

FCC Commissioner Geoffrey Starks said mostly small rural carriers use such gear because of its low cost. “These carriers are made up of hard-working men and women that serve hard-to-reach communities that the major carriers can’t or won’t serve, operating with small teams and tight budgets. And they’re worried. They’re concerned that they’ll be punished for using Chinese equipment in their networks that they bought lawfully and in good faith, in many cases before the full strength of our concerns about network vulnerabilities linked to Chinese telecoms manufacturing surfaced,” Starks explained during the vote.

These carriers understand the risks, “and they want to fix it,” Starks added. “But they need our help, and this [item] is the first step on the road to doing so.”

The rule barring purchase of equipment and services from covered companies takes effect immediately upon Federal Register publication.

November 25, 2019             

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