Slaying The Dragon - FCC Will Blacklist Huawei & ZTE Equipment And Services
October 28, 2019 – Federal Communications Commission Chairman Ajit Pai has announced he has circulated a draft Report and Order containing provisions designed to protect U.S. communications networks from national security threats. If adopted, the Report and Order will prohibit communications service providers from using Universal Service Fund (USF) money to purchase equipment or services from any company that poses a national security threat to the U.S. The FCC initially proposed the blacklist rule in an April 2018 Notice of Proposed Rulemaking.[1]
The draft Report and Order initially blacklists only two Chinese companies – Huawei and ZTE Corporation – as national security threats. But, it contains provisions for establishing a process for adding additional companies to the blacklist in the future. The Commission will vote on the item at its November 19, 2019, open meeting.
The prohibition on Huawei and ZTE equipment and services is prospective, and would not itself prohibit the use of existing equipment or services already deployed in U.S. communications networks. This means USF recipients may continue to use equipment or services produced or provided by covered companies that were obtained prior to the issuance of the forthcoming blacklist rule. However, USF support recipients may not use any USF funds to maintain, improve, modify, or otherwise support such blacklisted equipment or services in any way.
Accompanying the draft Report and Order is a draft Further Notice of Proposed Rulemaking that proposes ways to remove and replace equipment produced by blacklisted companies from USF-funded communications networks. It seeks comment on how to provide financial assistance to carriers to help them transition to more trusted suppliers.
Accompanying the draft FNPRM is an Information Collection Order that is intended to help assess the extent to which USF recipients have deployed Huawei and ZTE equipment in their networks, and gauge the overall costs to remove and replace blacklisted equipment and services.
FCC Chairman Ajit Pai released the following statement as part of the announcement of the draft Report and Order and FNPRM:
When it comes to 5G and America’s security, we can’t afford to take a risk and hope for the best. We need to make sure our networks won’t harm our national security, threaten our economic security, or undermine our values. The Chinese government has shown repeatedly that it is willing to go to extraordinary lengths to do just that. And Chinese law requires all companies subject to its jurisdiction to secretly comply with demands from Chinese intelligence services. As the United States upgrades its networks to the next generation of wireless technologies – 5G – we cannot ignore the risk that that the Chinese government will seek to exploit network vulnerabilities in order to engage in espionage, insert malware and viruses, and otherwise compromise our critical communications networks.
The FCC has a part to play in combatting this risk by ensuring that its $8.5 billion Universal Service Fund does not underwrite national security threats. That’s why I have circulated to my colleagues new rules to ban recipients of FCC funds from doing business with untrusted vendors like Huawei and ZTE. I’ve also proposed to scrutinize the equipment already in our USF-funded networks and determine how best to provide the financial support required for carriers operating these networks to remove and replace such equipment.
The draft Report and Order and FNPRM are available online. The FCC has also issued a News Release and background information document.
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[1] Protecting Against National Security Threats to the Communications Supply Chain Through FCC Programs, WC Docket No. 18-89, Notice Of Proposed Rulemaking, FCC 18-42 (Apr. 18, 2019).
