Huawei and ZTE Manufactured Equipment Could Be Considered “A Threat”

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FCC Chairman Ajit Pai on Monday proposed the agency block companies that pose a national security threat from receiving Universal Service Funds. Responding to concerns from 18 lawmakers in Congress led by Sen. Tom Cotton (R-AR) in December, Pai circulated the proposal to his colleagues for a vote and says he intends to have the item ready for public action at the Commission’s April 17 meeting.

In his response to lawmakers, Pai says he shares their concern. The Chairman characterized the proposal as “targeted” to prohibit the use of USF dollars to purchase equipment or services from any company that poses a national security threat to the integrity of U.S. communications networks or the communications supply chain.

Telecoms in the USF program receive subsidies to provide broadband in rural areas. Lawmakers called out Chinese companies Huawei and ZTE, saying the House Permanent Select Committee on Intelligence investigated them, “highlighting the potential security threat posed by Chinese telecommunications companies with potential ties to the Chinese government or military.”

“In particular, to the extent these companies are influenced by the state, or provide Chinese intelligence services access to telecommunication networks, the opportunity exists for further economic and foreign espionage by a foreign nation-state already known to be a major perpetrator of cyber espionage,” state the lawmakers in the letter released last Friday. The committee remains “unsatisfied with the level of cooperation and candor provided by each company.” Neither was willing to provide sufficient evidence to ameliorate the committee’s concerns, they state.

In a briefing for reporters yesterday, a senior FCC official said the item to be released today, seeks input on how to define the suppliers covered under such circumstances, how to enforce its rules for those that violate the law and how any USF funds should be recovered.

The changes would pertain to new communications network equipment only; “We’re not forcing a carrier to rip out any equipment they’ve already spent money on,” said the official. The agency will seek comments on how equipment upgrades should be treated. The Chinese companies being discussed have a low market share in the U.S. “We don’t want companies that pose a threat to national security to expand that market share,” said the official.

Huawei says it is not a threat to U.S. national security, reports The Verge. Fears of state-sponsored spying and cyber attacks led AT&T and Verizon to cancel deals for a new smartphone with the manufacturer. Also, Best Buy announced last week it will no longer sell Huawei products.

March 27, 2018                      

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