FCC proposal targeting Huawei garners early praise

The Federal Communications Commission (FCC) is moving aggressively to ban companies from using federal subsidies for equipment from Chinese telecommunications groups Huawei and ZTE, and earning initial praise from lawmakers and industry groups.

Sen. Mark Warner (D-Va.), the top Democrat on the Senate Intelligence Committee and a former technology executive, told The Hill on Tuesday that he was “pleased to see the FCC address the threat to network security posed by vendors such as Huawei and ZTE,” calling it a “critical first step.”

{mosads}But Warner also said Republican FCC Chairman Ajit Pai should have acted sooner and he “urged” the Trump administration to “work with Congress to pass legislation to help rural carriers remove legacy equipment and to harden the U.S. telecommunications supply chain.”

“There is a lot of work left to be done,” Warner added.

The proposed rules, rolled out by Pai on Monday, would bar U.S. telecom groups from using funds from the FCC’s Universal Services Fund (USF) to buy equipment from companies deemed national security threats, and would designate Huawei and ZTE as such.

A second proposal would require U.S. telecom companies that currently use Huawei and ZTE products to rip out and replace that equipment and could establish a “reimbursement program” to help rural companies that rely heavily on Chinese equipment.

The proposal comes as the U.S. crackdown on Huawei and ZTE reaches a critical point.

The FCC is slated to vote on the proposals on Nov. 19, the same day that Huawei is set to be formally added to the Commerce Department’s “entity list,” which bans American companies from doing business with it. Huawei was added to the list in May, but the rule was delayed as the Commerce Department gave U.S. companies more time to comply. 

The U.S. intelligence community has warned of national security concerns over the companies, while Huawei officials deny they pose any threat.

Cracking down on the companies has rare bipartisan support on Capitol Hill, with lawmakers broadly supportive of moves to prevent American companies from using the Chinese firms’ products.

House Energy and Commerce Committee Ranking Member Greg Walden (R-Ore.) told The Hill on Tuesday that he would “want to look at” the proposals before commenting on them, but that he was “probably supportive of them.”

Committee Chairman Frank Pallone (D-N.J.), however, told The Hill that he “couldn’t talk” about the FCC’s plans.

The two lawmakers, though, have been broadly supportive of efforts to help U.S. companies replace Huawei equipment, in particular rural telecom companies. Pallone and Walden, who is retiring after this term, proposed the Secure and Trusted Telecommunications Network Act last month.

It would prohibit the use of federal funding to purchase telecom equipment from companies deemed national security threats and allocate $1 billion to help U.S. telecom companies replace equipment deemed a threat. But the bill has not seen action in Congress.

Across the Capitol, senators also offered cautious optimism about the FCC plans.

“It’s something that I am very interested in, but that I don’t have a reaction to right now,” Sen. Gary Peters (D-Mich.), the top Democrat on the Senate Homeland Security and Governmental Affairs Committee, told The Hill.

“I think that it is appropriate to look at Huawei and what their participation is,” said Sen. Marsha Blackburn (R-Tenn.), who has previously accused China of building a “spy network” through the use of Huawei technologies.

Industry groups also expressed early praise for the FCC effort.

Robert Mayer, the senior vice president of cybersecurity at USTelecom, whose members include telecom giants such as AT&T and Verizon, was positive about the proposals, calling them “timely and prudent.”

“The FCC’s call for a fact-based review on ‘rip and replace’ for existing equipment will also help inform a global discussion about risk tolerance, especially when it comes to national security considerations,” Mayer added.

Claude Aiken, the president and CEO of the Wireless Internet Service Providers Association (WISPA), said in a statement that the FCC proposals could give “clarity” to telecom providers who are trying to “deploy secure and cost-effective equipment.”

Aiken said the proposals mean that “providers who have used now-prohibited equipment will be given the time and resources to make an appropriate transition.”

But there are still many questions over the proposals, including how any rip and replace program would work. And there is also the question of pushback from China, which has sharply criticized efforts to target Huawei and ZTE.

Some industry groups were more cautious in their response, in particular those representing rural telecoms. Those companies are expected to be the hardest hit by any ban on Huawei and ZTE due to their widespread use of their equipment.

Mike Romano, senior vice president of Industry Affairs and Business Development at NTCA- The Rural Broadband Association, which represents over 800 community-based, independent rural telecom companies, told The Hill his organization “needs to review how the FCC’s proposals work.”

But Romano added it was “helpful” to see attention paid to addressing “the ultimate costs of removal and replacement.”