FCC Chairman Looks To Bar Federal Spending On Chinese Gear

FCC chair Ajit Pai said a new proposal will seek to block federal broadband subsidies from being spent on products from ‘certain Chinese equipment providers’

FCC chairman Ajit Pai has submitted a proposal that would block US telecommunications companies from using certain government funds to buy equipment the regulator deems a risk to national security, more specifically targeting Chinese manufacturers such as Huawei and ZTE.

In a blog post on Monday, Pai called the proposal a “targeted” measure that would prohibit the use of monies from the Universal Service Fund (USF) from being used to buy “equipment or services from any company that poses a national security threat to the integrity of US communications networks or the communications supply chain”.

The USF is made up of surcharges on individuals’ mobile phone bills, and is used for purposes including extending telecommunications and internet services to remote areas.

Pai said the proposal is due to be published on Tuesday.

Huawei CeBIT 2017Security threat?

The FCC’s move is the latest US government measure to bar the purchase or use of offerings from the Chinese companies, which intelligence officials and politicians say could be used for espionage, sabotage and other nefarious purposes.

The US is also concerned about the  influence of Chinese firms such as Huawei over emerging 5G mobile wireless standards, something cited in the national security probe of Broadcom’s proposed hostile takeover of Qualcomm.

Broadcom abandoned its efforts in the face of that investigation and a subsequent executive order barring the deal.

“Threats to national security posed by certain communications equipment providers are a matter of bipartisan concern,” Pai wrote in a statement announcing the proposal. “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.”

The statement doesn’t directly refer to Huawei or ZTE. But In his blog post, Pai refers to a letter received from lawmakers in December that expressed “their continued concern about the national security risks posed by certain Chinese communications equipment providers”. The letter in question does name ZTE and Huawei.

The race to 5G

Like the Committee on Foreign Investment in the US (CFIUS), which investigated Broadcom, Pai linked US leadership in 5G technology with the country’s security. In the same post, Pai said the FCC is moving ahead with measures intended to prepare the way for the US’ auction of spectrum for use with 5G networks later this year.

“By kicking off the pre-auction processes, we take another important step to promote American innovation in 5G wireless services,” Pai wrote.

Pai announced that auction at Mobile World Congress (MWC) in Barcelona last month.

Huawei, which made a number of 5G announcements at the conference, also gave its opinion on recent comments by US intelligence chiefs depicting the company as a national security threat.

At the expo, Huawei chief executive Richard Yu said the US moves were a response to Huawei’s ambitious strategy to  become the world’s top smartphone maker – in other words, he said, the US finds Huawei  “too competitive”.

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