FCC Bars Use of USF Funds to Purchase Huawei, ZTE Equipment
Friday, November 22, 2019 | Comments

The FCC barred use of funds from its $8.5 billion a year Universal Service Fund (USF) to purchase equipment and services from companies that pose a national security threat. The commission’s order initially designates Huawei Technologies and ZTE as companies covered by this rule and establishes a process for designating additional covered companies 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 (FNPRM), the FCC proposed requiring carriers receiving USF funds, known as eligible telecommunications carriers, to remove and replace existing equipment and services from covered companies. The notice also seeks comment on how to pay for such removal and replacement.

To aid in the design of a removal and replacement program, the FCC will collect information to determine the extent to which eligible telecommunications carriers have equipment from Huawei and ZTE in their networks and the costs associated with removing and replacing such equipment.

As the United States upgrades its networks to the next generation of wireless technologies, 5G, the risk that secret “backdoors” in U.S. communications networks will enable a hostile foreign power to engage in espionage, inject malware or steal Americans’ data becomes even greater, an FCC statement said.

“Both Huawei and ZTE have close ties to the Chinese government and military apparatus and are subject to Chinese laws requiring them to assist with espionage, a threat recognized by other federal agencies and the governments of other nations,” the statement said. “The public funds in the FCC’s USF, which subsidizes U.S. broadband deployment and service through four separate programs, must not endanger national security through the purchase of equipment from companies posing a national security risk.”

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

“With 5G technology ushering in unprecedented connectivity, ensuring global networks are safe and reliable is more important than ever before,” said David Stehlin, CEO of the Telecommunications Industry Association (TIA). “TIA applauds the FCC’s actions to protect USF-funded network equipment from foreign adversaries. We believe this is a necessary step to safeguard the U.S. national telecommunications network and establish a system of diverse, competitive and trusted suppliers.”

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