FCC's Pai proposes ban on USF use on 'national security threats'

Federal Communications Commission (FCC) Chairman Ajit Pai said the will have drafted a Notice of Proposed Rulemaking that would bar the use of Universal Service Funds to buy equipment from companies deemed national security threats. The action is in response to the latest wave of concerns on Capitol Hill regarding alleged ties between the Chinese military and intelligence communities and Chinese companies such as Huawei and ZTE.

Federal Communications Commission (FCC) Chairman Ajit Pai said the will have drafted a Notice of Proposed Rulemaking that would bar the use of Universal Service Funds to buy equipment from companies deemed national security threats. The action is in response to the latest wave of concerns on Capitol Hill regarding alleged ties between the Chinese military and intelligence communities and Chinese companies such as Huawei and ZTE.

Pai will call for a vote on the proposal at a meeting April 17. The announcement comes after reports last Friday that he sent a letter to Congress in which he stated he shares concerns recently expressed about Huawei. For example, in February, Senators Tom Cotton (R-Arkansas) and Marco Rubio (R-Florida) introduced the "Defending U.S. Government Communications Act," which would prohibit the United States government from buying or leasing telecommunications equipment and/or services from Huawei, ZTE, or any their subsidiaries or affiliates. Congressman Mike Conaway (Texas-11) introduced a similar bill in the House of Representatives in January.

"Threats to national security posed by certain communications equipment providers are a matter of bipartisan concern," said Pai in a press statement. "Hidden ‘back doors' to our networks in routers, switches—and virtually any other type of telecommunications equipment—can provide an avenue for hostile governments to inject viruses, launch denial-of-service attacks, steal data, and more. Although the FCC alone can't safeguard the integrity of our communications supply chain, we must and will play our part in a government- and industry-wide effort to protect the security of our networks."

The statement did not say who would determine which firms posed enough of a security threat to warrant exclusion from Universal Service Fund spending or how such a determination would be made.

Huawei and ZTE previously have been the subject of congressional scrutiny regarding their alleged ties to arms of the Chinese government (see "U.S. House Intelligence Committee sees Huawei and ZTE as security threats"). Both have consistently denied the existence of such ties.

In addition, ZTE recently extricated itself from the Department of Commerce's dog house regarding shipments of telecommunications equipment containing U.S. sourced components to countries on the department's restricted export list (see "ZTE admits guilt, settles export squabble").

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