Pai Proposes to Ban Carriers from Using USF Money on Huawei, ZTE


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FCC Chairman Ajit Pai Monday circulated to his colleagues two proposals aimed at protecting U.S. communications networks from national security threats. He hopes the agency will vote on the proposals at the November 19 meeting.  

First, a draft Report and Order would prohibit companies from using money from the FCC’s $8.5 billion Universal Service Fund (USF) to purchase equipment or services from any company that poses a national security threat.

The draft R&O would initially designate Chinese telecoms Huawei and ZTE as companies that pose a national security risk. The Commission could add more companies over time. The ban would apply to both wireline and wireless carriers; however the agency believes Huawei gear is purchased by mostly wireless carriers. 

Second, a draft Further Notice of Proposed Rulemaking and draft Information Collection Order would propose to remove and replace equipment produced by covered companies from USF-funded communications networks. The agency would conduct an assessment to find out how much Huawei and ZTE equipment is in these networks and the costs to remove and replace it.  

The plan calls for financial assistance to help carriers transition to more trusted suppliers. Hundreds of carriers receive USF funding, according to an FCC official. The official told reporters that there are two possible funding sources to help carriers that need to rip and replace equipment or technology — Congress or the FCC which could potentially raise the funds through USF contributions.

Congress is calling for the Commission to take action. A bipartisan group of 18 Senators and Representatives wrote to the FCC regarding their concern about Chinese telecommunications equipment. 

Congress has prohibited federal agencies from using Huawei and ZTE equipment. Both companies’ ties to the Chinese government and military — together with laws requiring such companies help the Chinese government with intelligence activities—pose a threat to the security of U.S. communications networks and the communications supply chain, say the FCC, the Administration and U.S. intelligence agencies. Pai has said such equipment may allow for surveillance, spying and the introduction of malware.

October 29, 2019

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