As expected, the FCC voted today to prevent wireless carriers that receive money through the Universal Service Fund (USF) program from using that money on equipment and services from Chinese vendors Huawei and ZTE. According to the commission, equipment from those companies poses a threat to national security.

The commission also adopted a further notice of proposed rulemaking seeking comment on a proposal to require carriers receiving USF funds to remove and replace existing equipment from those companies. In the meantime, the FCC said it will collect information from service providers to determine the extent to which the providers have deployed Huawei and ZTE equipment and the costs associated with replacing it.

Huawei issued a statement saying it believes the FCC order is unlawful and that the FCC’s conclusion that the company poses a security risk is based on a mistaken view of Chinese law – an apparent reference to FCC Chairman Ajit Pai’s previously expressed concern that “Chinese law requires all companies subject to its jurisdiction to secretly comply with demands from Chinese intelligence services.”

FCC Bans Huawei
At today’s monthly FCC meeting, where the moves against Huawei and ZTE were made, Pai noted that an independent cybersecurity firm found that over half of Huawei firmware had at least one potential “backdoor” that could enable the company to spy on the U.S. In addition, Huawei devices that the firm tested had an average of 102 known vulnerabilities.

He also noted that both ZTE and Huawei have “engaged in conduct like intellectual property theft, bribery and corruption.”

FCC Commissioner Geoffrey Starks, who has experience in enforcement and national security matters, said he already has spoken with over two dozen rural wireless carriers and that replacing untrustworthy equipment and networks could cost as much as two billion dollars or more.

“The FCC has a critical role to play in protecting [national] security” and it “must be proactive, not reactive, in our national security measures,” Starks said. He added that, “Although we have done much, much more remains to be done.”

Starks recommended that the commission create an FCC national security task force and pointed to two other potential national security risks that he said should be addressed, including:

  • An undersea submarine cable between Los Angeles and Hong Kong that connects to one of the largest telecom conglomerates in China and on which communications could be blocked and modified on the Hong Kong end
  • Several states that use the same networks to transmit voting results that are used for mobile phones and which are therefore, subject to the same threats as other wireless communications

He said he had reached out to wireless carriers to discuss how they will help protect networks when working with election officials and that he is seeking more information about concerns about potential communications blockages or modifications such as those involving the undersea cable.

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