FCC Designates Huawei and ZTE as National Security Threats

Federal Communications Commission (FCC) Chairman Ajit Pai announced Tuesday that the FCC has now designated Huawei, ZTE, and related entities as companies that pose a national security threat to the United States. Consequently and as part of the previous November 2019 ban, telecommunication companies will not be able to purchase equipment or services produced by these suppliers using any of the $8.3 billion Universal Service Fund.

Specifically, the FCC and the U.S. government are concerned about Huawei’s and ZTE’s close ties to the Chinese government; additionally, these telecommunications companies are subject to Chinese laws that allegedly require them to cooperate with China’s intelligence services. Chairman Pai tweeted that “[w]ith this decision, we are sending a clear message: the U.S. Government, and this @FCC in particular, cannot and will not allow the Chinese Communist Party to exploit vulnerabilities in U.S. communications and compromise our critical communications infrastructure.”

“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. “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…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 banned the “use of 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.” Specifically, the FCC has stated that Huawei and ZTE should “be covered by this rule because of their substantial ties to the Chinese government, Chinese law requiring them to assist in espionage activities, known cybersecurity risks and vulnerabilities in their equipment, and ongoing Congressional and Executive Branch concern about this equipment.” Chairman Pai states that the FCC used information and input from a wide array of sources, including Congress, the Executive Branch, the intelligence community, allies, and communications service providers to come to this decision. 

The designation comes after the Trump Administration extended a Huawei ban over 5G concerns until May 2021, the Senate passed a bill to replace network gear from Huawei and ZTE, Huawei was indicted in February, and Huawei moved to appeal the FCC’s ban in December.