The U.S. Federal Communications Commission designated Huawei Technologies Co. and ZTE Corp. as national security threats, a step toward driving the Chinese manufacturers from the U.S. market where small rural carriers rely on their cheap network equipment.
The action means money from federal subsidies used by many small rural carriers may no longer be used to buy or maintain equipment produced by the companies, the FCC said in a news release.
“Both Huawei and ZTE have close ties to the Chinese Communist Party and China’s military apparatus,” FCC Chairman Ajit Pai said on Twitter. “We are sending a clear message: the U.S. government, and this @FCC in particular, cannot and will not allow the Chinese Communist Party to exploit vulnerabilities in U.S. communications networks.”
The FCC has increasingly scrutinized Chinese companies as tensions grow between Beijing and Washington over trade, the coronavirus and security issues. The agency is considering banning three Chinese telephone companies, and last year barred China Mobile Ltd. from entering the U.S. market.
The U.S. contends that Huawei’s equipment could be used by China for spying. The company has repeatedly denied that it poses any security risk, and insists that it’s independent of the Beijing government.
Tuesday’s action formalizes a proposal the FCC adopted in November. The agency also proposed requiring carriers to remove gear from companies designated a threat -- a step that wasn’t finalized in Tuesday’s action.
FCC Commissioner Geoffrey Starks in a statement Tuesday said that “untrustworthy equipment” remains in place and called for the FCC to institute a replacement program. “There is much more to do,” he said.
Pai on June 24 told Congress a full-scale rip-and-replace program could cost as much as $2 billion. The FCC wants to see “that needed funds are appropriated so we can move forward quickly to implement this program,” Pai said.
Rural carriers had urged the FCC to delay action until Congress dedicates money to buying replacement gear..