FCC plans vote to restrict Huawei, ZTE purchases

WASHINGTON (Reuters) — The U.S. telecommunications regulator plans to vote in November to designate China’s Huawei and ZTE as national security risks, barring their U.S. rural carrier customers from tapping an $8.5 billion government fund to purchase equipment or services.

The Federal Communications Commission (FCC) also plans to propose requiring those carriers to remove and replace equipment from such designated companies, FCC officials said on Monday.

At a meeting set for Nov. 19, the FCC said it plans to vote to ask carriers how much it would cost to remove and replace Huawei Technologies Co Ltd and ZTE Corp from existing networks and to establish a reimbursement program to offset the costs of removing the equipment.

“When it comes to 5G and America’s security, we can’t afford to take a risk and hope for the best,” FCC Chairman Ajit Pai said in a statement.

“As the United States upgrades its networks to the next generation of wireless technologies 5G - we cannot ignore the risk that the Chinese government will seek to exploit network vulnerabilities in order to engage in espionage, insert malware and viruses, and otherwise compromise our critical communications networks.”

This is the latest in a series of actions by the U.S. government aimed at barring U.S. companies from purchasing Huawei and ZTE equipment. Huawei and ZTE would have 30 days to contest the FCC’s national security risk designation and a final order compelling removal of equipment is not expected until next year at the earliest.

“In 30 years of business, Huawei has never had a major security-related incident in the 170 countries where we operate,” said a Huawei spokesman in Shenzhen, China.

“Today’s proposal, released by the FCC Chairman, only impacts the broadband providers in the most unserved or underserved rural areas of the United States,” the spokesman said. “Such action will further widen the digital divide; slowing the pace of economic development without further securing the Nation’s telecommunications networks.”

ZTE did not immediately respond to a Reuters’ request for comment.

Pai first proposed in March 2018 to bar companies that posed a national security risk from receiving funds from the FCC’s Universal Service Fund, but did not name Huawei or ZTE. The fund provides subsidies to provide service in rural or hard-to-reach areas, and to libraries and schools.