The Federal Communications Commission banned wireless providers from using federal subsidies to purchase any equipment or services from Chinese technology companies Huawei and ZTE on Friday.
The agency’s unanimous 5-0 vote concluded the two Chinese telecom giants pose a threat to national security and blocked them from receiving any money from the U.S. government’s $8.5 billion Universal Service Fund. The fund subsidizes building broadband infrastructure to increase internet access across the United States in underserved areas. Only 65% of residents in rural areas and 60% on tribal lands have high-speed service, compared with 97% in urban areas.
Chairman Ajit Pai pointed to the close ties Huawei and ZTE have to the Chinese Communist government, as the agency prepares for wider use of the fifth generation of wireless networks, known as “5G.”
“We know the hidden backdoors to our networks, routers, switches, and other network equipment can allow a hostile adversary to inject viruses and other malware, steal private data of Americans, spy on U.S. companies and more,” Pai said. “If the Chinese government is willing to use its leverage over things like professional basketball and Taiwanese flag emojis, imagine what could happen if we allowed Chinese company equipment into our 5G networks.”
Other commissioners agreed the agency has more work to do. Jessica Rosenworcel said the U.S. needs a national plan for dealing with the threats and worried the Trump administration might reverse progress in a trade deal with China. Geoffrey Starks called for an FCC national security task force and noted Huawei and ZTE equipment was already embedded in broadband infrastructure, especially in rural areas, and said the FCC needs to help wireless carriers transition from Chinese technology.
The DOJ has backed the FCC’s proposal to replace any broadband equipment made by the two Chinese companies already in place, pointing to criminal proceedings involving both companies.
But the FCC’s bold move against Huawei highlights the Trump administration’s contradictory policy toward the Chinese telecom. On Monday, the Commerce Department granted another 90-day extension on the granting of licenses, which allow companies to sell goods to Huawei, even though the U.S. government placed the company on essentially a blacklist in May, amid claims that Huawei is “engaged in activities that are contrary to U.S. national security or foreign policy interests.” The U.S. has granted repeated reprieves to Huawei since then.
On Tuesday, Commerce Secretary Wilbur Ross defended the Trump administration’s decision, saying nothing the U.S. had done would help Huawei’s 5G abilities, and noted the agency had received “290-something requests for specific licenses.” As of Wednesday, the Commerce Department had processed half the requests it received, and half of the processed requests were approved. The others were denied. And Microsoft said on Thursday that the Commerce Department granted its request for a license to export mass-market software to Huawei.
The ability of Microsoft and other large companies to begin selling products to Huawei again will be a relief to a company which had been feeling a squeeze from the U.S.
The Trump administration is considering banning other federal agencies from doing business with Huawei, but Trump has shown an openness to using Huawei as a bargaining chip in trade talks with China.
The DOJ and U.S. intelligence agencies believe that Huawei and ZTE are working hand-in-hand with the Chinese government, potentially giving China’s surveillance state access to hardware and networks around the world. Secretary of State Mike Pompeo has repeatedly warned European allies against using Huawei’s 5G technology.
The DOJ has increased its scrutiny of China’s activities in recent years, charging an increased number of people in China-related espionage cases, cracking down on China-based hacking schemes, prosecuting Chinese efforts to steal trade secrets, and more. Despite Barr’s trip to the United Kingdom in late July, disagreements over the use of Huawei technology remain between the U.S. and its closest intelligence allies.
The U.S. government is also seeking the extradition from Canada of Huawei’s chief financial officer Wanzhou Meng, who faces federal charges for an alleged scheme to circumvent U.S. sanctions on Iran. James Cole, former deputy attorney general under the Obama administration, represents Huawei in that criminal case, despite efforts from the DOJ to have him removed.
And Samir Jain, senior director for cybersecurity policy for the National Security Council under the Obama administration, registered as Huawei’s lobbyist this year.
