FCC Boots Chinese Telecom Companies, Citing Security

The Federal Communications Commission’s (FCC) Public Safety and Homeland Security Bureau on March 12 identified five Chinese companies they said posed a threat to U.S. national security. These companies are: Huawei Technologies Co., ZTE Corp., Hytera Communications Corp., Hangzhou Hikvision Digital Technology Co. and Dahua Technology Co.

The declaration, according to the FCC, is in accordance with the requirements of the Secure and Trusted Communications Networks Act of 2019, which requires the FCC to “publish and maintain a list of communications equipment and services that pose an unacceptable risk to national security or the security and safety of U.S. persons.”

In June 2020, the FCC designated both ZTE and Huawei as national security threats. “… [B]ased on the overwhelming weight of evidence, the Bureau has designated Huawei and ZTE as national security risks to America’s communications networks—and to our 5G future,” said then-FCC chairman Ajit Pai. Pai continued, “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.  The Bureau also took into account the findings and actions of congress, the executive branch, the intelligence community, our allies, and communications service providers in other countries. We cannot and will not allow the Chinese Communist Party to exploit network vulnerabilities and compromise our critical communications infrastructure. Today’s action will also protect the FCC’s Universal Service Fund—money that comes from fees paid by American consumers and businesses on their phone bills—from being used to underwrite these suppliers, which threaten our national security.”

ZTE’s petition for reconsideration in November 2020 was immediately rejected. Huawai also petitioned for reconsideration, and their appeal was rejected in December 2020, after a few weeks of deliberation.

Following the rejections, the FCC adopted an order which effectively results in a mass rip-and-replace of ZTE and Huawei equipment within U.S. infrastructure. In late December 2020, a $1.895 billion fund was created, from which telecommunications operators could seek reimbursement for the costs of removal of the equipment, as part of the Secured and Trusted Communications Networks Act of 2019. Given the likelihood reimbursement amounts will exceed available funding, the FCC has proposed a priority scheme which would give priority to customers with ten million or fewer customers. An additional recommendation is to offer reimbursement for equipment purchased prior to June 2020.

At the February 2020 FCC open meeting, FCC Commissioner Brendan Carr noted that “The threats posed by Communist China do not end with Huawei or ZTE.” He went on to note a plethora of Chinese companies operate within the U.S. telecommunications infrastructure.

The importance of network security was highlighted by FCC acting chairwoman, Jessica Rosenworcel, who said, “This list provides meaningful guidance that will ensure that as next-generation networks are built across the country, they do not repeat the mistakes of the past or use equipment or services that will pose a threat to U.S. national security or the security and safety of Americans.”

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Christopher Burgess

Christopher Burgess (@burgessct) is a writer, speaker and commentator on security issues. He is a former Senior Security Advisor to Cisco and served 30+ years within the CIA which awarded him the Distinguished Career Intelligence Medal upon his retirement. Christopher co-authored the book, “Secrets Stolen, Fortunes Lost, Preventing Intellectual Property Theft and Economic Espionage in the 21st Century”. He also founded the non-profit: Senior Online Safety.

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