FCC Furthers its Crackdown on Chinese Telecommunications Companies

  • Post category:Blog

Recently, the Federal Communications Commission enacted its November 2019 ban on universal service support being used to purchase equipment or services from any company posing a national security threat. Two Chinese companies – Huawei and ZTE, plus their parents, affiliates and subsidiaries – have been found to pose such a threat. As a result, no American telecommunications company receiving USF will be allowed to obtain any form of goods or services from these suppliers.

“With (these) Orders,” said FCC Chairman Pai, “and based on the overwhelming weight of evidence, the Bureau has designated Huawei and ZTE as national security threats to America’s communication’s networks—and to our 5G future. Both companies have close ties to the Chines 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.”

Pai concluded that, “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.”

This proceeding follows earlier FCC actions to revoke the authorizations of five Chinese communications carriers, all of which were owned or under control of the Chinese government. (See our blog of April 30, 2020). Barred from providing service in the U.S. were China Mobile USA, China Telecom Americas, China Unicom Americas, Pacific Networks and ComNet.

The ban on use of Universal Service Funds to buy equipment and services from both Huawei and ZTE will in all probability result in higher 5G costs for RLECs. But we think the FCC’S decision is a wise one, given the anti-American ties of both companies.