The Federal Communications Commission’s (FCC) Public Safety and Homeland Security Bureau formally designated manufacturers Huawei Technologies Company and ZTE Corporation as national security threats. The designation also applies to the companies’ parent organizations, affiliates and subsidiaries. As a result, money from the FCC’s $8.3 billion a year Universal Service Fund may no longer be used to buy, obtain, maintain, improve, modify or otherwise support any equipment or services that these suppliers produce or provide.
“With today’s Orders, and based on the overwhelming weight of evidence, the Bureau has designated Huawei and ZTE as national security risks to America’s communications networks—and to our 5G future,” FCC Chairman Ajit Pai said in a statement. “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.
“The Bureau also took into account the findings and actions of Congress, the Executive Branch, the intelligence community, our 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. Today’s action will also protect the FCC’s Universal Service Fund—money that comes from fees paid by American consumers and businesses on their phone bills—from being used to underwrite these suppliers, which threaten our national security.”
In November 2019, the FCC had unanimously adopted a ban on the universal service support to purchase, obtain, or maintain any equipment or services produced or provided by companies posing a national security threat to the integrity of communications networks or the communications supply chain. At the time, the FCC proposed this rule covered Huawei and ZTE because of their ties to the Chinese government, Chinese law requiring them to assist in espionage activities, known cybersecurity risks and vulnerabilities in their equipment, as well as ongoing Congressional and Executive Branch concern about this equipment.
In these newly issued orders, the Public Safety and Homeland Security Bureau based its final designations on all of the evidence it had at it disposal, including evidence that supported the FCC’s initial designations and filings that Huawei, ZTE and other interested parties submitted into record. The final designations of both companies are effective immediately.
“We cannot treat Huawei and ZTE as anything less than a threat to our collective security,” FCC Commissioner Brendan Carr said in a statement. “Communist China intends to surveil persons within our borders and engage in large-scale, industrial espionage. Nothing short of prohibiting subsidized Huawei and ZTE gear from our networks could address this serious national security threat. After all, Chinese law does not meaningfully restrain the Communist regime given its authoritarian nature. The FCC will continue to take whatever steps are necessary to secure America’s communications networks from bad actors that would do us harm.”