FCC bars Huawei and ZTE from USF program

The FCC voted to prohibit the use of its $8.5 billion a year Universal Service Fund (USF) to purchase equipment and services from Huawei and ZTE.  The FCC cited a national security threat, noting that both Huawei and ZTE have close ties to the Chinese government and military. The newly adopted order also establishes a certification and audit regime to enforce the new rule.

Furthermore, the FCC is proposing to require carriers receiving USF funds, known as eligible telecommunications carriers, to remove and replace existing equipment and services from Huawei and ZTE. 

The FCC will study the extent to which eligible telecommunications carriers have equipment from Huawei and ZTE in their networks and the costs associated with removing and replacing such equipment. 

FCC Chairman Ajit Pai commented "We take these actions based on evidence in the record as well as longstanding concerns from the executive and legislative branches about the national security threats posed by certain foreign communications equipment manufacturers, most particularly Huawei and ZTE.  Both companies have close ties to China’s Communist government and military apparatus.  Both companies are subject to Chinese laws broadly obligating them to cooperate with any request from the country’s intelligence services and to keep those requests secret.  Both companies have engaged in conduct like intellectual property theft, bribery, and corruption. 
Moreover, we know that hidden “backdoors” to our networks in routers, switches, and other network equipment can allow a hostile adversary to inject viruses and other malware, steal Americans’ private data, spy on U.S. companies, and more."