FCC approves rule denying subsidies to carriers using equipment from Huawei and ZTE

What just happened? Huawei is continuing to feel pressure as the US government clamps down on what it considers “national security threats.” On Friday, the FCC approved a measure to cut funding to US projects using equipment from Huawei and ZTE or any other “bad actor.” The long delayed vote was unanimous.

The Federal Communications Commission’s Universal Service Fund has $8.5 billion earmarked for subsidizing carriers in making improvements to the communications infrastructure in the US. In today’s ruling, it said that none of that money would go to carriers who use parts or equipment from the banned companies.

“We take these actions based on evidence in the record as well as longstanding concerns from the executive and legislative branches,” said Chairman Ajit Pai in a statement on the proposal. “Both companies have close ties to China’s Communist government and military apparatus. Both companies are subject to Chinese laws broadly obligating them to cooperate with any request from the country’s intelligence services and to keep those requests secret. Both companies have engaged in conduct like intellectual property theft, bribery, and corruption.”

“It should not have taken us eighteen months to reach the conclusion that federal funds should not be used to purchase equipment that undermines national security.”

The two companies have repeatedly denied the allegations Pai mentioned, with Huawei filing a suit against the US for its continuing ban despite some rollback. However, the FCC feels, on a bipartisan level, that allowing the suspect companies to participate in building US communication infrastructure is too risky to allow.

“This is not hard,” Commissioner Jessica Rosenworcel said after the unanimous approval was announced. “It should not have taken us eighteen months to reach the conclusion that federal funds should not be used to purchase equipment that undermines national security.”

The significance of the ban will be felt by the carriers, especially the smaller ones, which will see the costs of their projects increase. The FCC recognized this extra burden and said that the Commission has a plan to help ease efforts in smaller rural areas.

“To mitigate the financial impact of this requirement, particularly on small, rural carriers, we propose to establish a reimbursement program to help offset the cost of transitioning to more trusted vendors,” said Chairman Pai.

Image credit: Mark Van Scyoc via Shutterstock