FCC formally designates Huawei and ZTE as national security threats

The Federal Communications Commission (FCC) on Tuesday formally designated Chinese telecommunications groups Huawei and ZTE as national security threats, blocking them from accessing FCC funds.

The move was the formalization of a unanimous decision by the FCC in November to ban U.S. telecom groups from using the FCC’s $8.3 billion Universal Service Fund to purchase equipment from companies deemed threats.

Both Huawei and ZTE were identified as national security threats in November, with the FCC’s Public Safety and Homeland Security Bureau formalizing this process Tuesday.

FCC Chairman Ajit Pai, a Republican, said in a statement that the decision was made “based on the overwhelming weight of evidence” against the companies.

“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,” Pai said. “We cannot and will not allow the Chinese Communist Party to exploit network vulnerabilities and compromise our critical communications infrastructure.”

FCC Commissioner Geoffrey Starks, a Democrat, applauded the decision, but emphasized that action needed to be taken to rip out and replace existing equipment in U.S. networks that could pose a threat.

“Network security is national security,” Starks said in a statement. “Today’s actions will help secure our networks against new threats from Huawei and ZTE equipment. We must not, however, lose sight of the untrustworthy equipment already in place. Last year, I called for the FCC to find the untrustworthy equipment in our networks, to fix the problem by instituting a replacement program, and to fund the replacement of that equipment. Find it. Fix it. Fund it. The Commission has taken important steps toward identifying the problematic equipment in our systems, but there is much more to do.”

Concerns around both Huawei and ZTE, along with other major Chinese tech companies such as TikTok, have mounted over the past year. Members of Congress and the Trump administration have pointed to concerns around a 2017 Chinese intelligence law that requires Chinese citizens and companies to disclose sensitive data to the government if requested.

Both companies have repeatedly pushed back against allegations against them, with Huawei announcing it would sue the FCC in December following its initial designation as a national security threat. Huawei did not immediately have a comment on the FCC’s decision Tuesday. 

Huawei is the largest 5G equipment manufacturer in the world, and there is currently no American company that can compete.

Sen. Mark Warner (Va.), the top Democrat on the Senate Intelligence Committee, said during a virtual event on Tuesday that he was concerned that allowing Huawei or ZTE access to the buildout of American 5G networks could open up U.S. communications systems to vulnerabilities.

Warner noted that there was increasing bipartisan agreement that Huawei “presents a long-term security threat.”

“We need to reassert Western leadership, we need to have the active ability to compete with the Chinese government’s chosen entity Huawei,” Warner said. “We need to send a message to our allies that, and potential folks around the world that want an alternative, that there will be an alternative.”

Sen. Ben Sasse (R-Neb.), a member of the Intelligence Committee, applauded the formal designation of both companies as threats, describing Huawei as an “arm” of the Chinese Communist Party (CCP).

“CCP has gained footholds in countries around the world with Huawei and ZTE under the premise that they are independent companies,” Sasse said in a statement on Tuesday. “Now the world is learning that is not true. The United States will not put US dollars in the communists’ pockets and today’s decision shows that. This is good for our national security and for our shared fight against China becoming the world’s leading superpower.”

The move by the FCC was the latest in a string of actions by the federal government to limit Huawei and ZTE’s influence in the U.S. over the past year.

The Commerce Department added both companies to its “entity list” last year, effectively blacklisting them, and last month announced it would restrict Huawei’s ability to use American technology to manufacture chips. 

President Trump signed into law legislation in March that bans U.S. companies from using federal funds to buy Huawei equipment. The legislation also provided $1 billion to help small rural telecom groups rip out Huawei equipment and replace it.