The Federal Communications Commission Tuesday designated Chinese telecommunications titans Huawei Technologies and ZTE Corp. (ZTCOY) as national security threats.
Bloomberg noted the FCC action means money from federal subsidies used by many small rural carriers may no longer be used to buy or maintain equipment produced by Huawei or ZTE.
The FCC, in a statement, said the money from "the FCC’s $8.3 billion a year Universal Service Fund may no longer be used to purchase, obtain, maintain, improve, modify, or otherwise support any equipment or services produced or provided by these suppliers.”
FCC Chairman Ajit Pai Pai offered strong words to explain the move.
“The Bureau has designated Huawei and ZTE as national security risks to America’s communications networks - and to our 5G future,” he said in the statement.
“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,” he said.
Further, Pai said, “we cannot and will not allow the Chinese Communist Party to exploit network vulnerabilities and compromise our critical communications infrastructure.”
He cited Chinese law “requiring them [Huawei and ZTE] to assist in espionage activities, known cybersecurity risks and vulnerabilities in their equipment, and ongoing Congressional and Executive Branch concern about this equipment.”
Tuesday’s move also will “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,” Pai said.
In November, the FCC first designated Huawei and ZTE as security threats, and Tuesday’s move formalizes that designation.