Huawei and ZTE have each filed comments with the FCC urging the agency not to move forward in designating the Chinese vendors as U.S. national security threats, which would bar carriers from using the $8.5 billion Universal Service Fund to purchase equipment from those firms.
The Commission voted unanimously in November to initially classify both Huawei and ZTE as national security risks, in conjunction with a new underlying rule that prohibits U.S. providers from federal USF subsidies to buy telecom gear and services from such entities.
The 30-day comment period on the initial designation closed Monday, and the FCC’s Public Safety and Homeland Security Bureau is tasked with entering a final designation.
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In nearly 200-page reply comments, Huawei asserts that the FCC’s decision was not evidence-based, and aimed to single out Huawei and ZTE, claiming external pressure on the agency from U.S. Congress.
“The designation was not based on a sober, objective assessment of reliable evidence developed and considered through a fair and lawful process, but rather a gerrymandered recitation of ad hoc, Huawei-specific conclusions designed to implement a campaign by certain government officials, including members of Congress, to single out Huawei for burdensome and stigmatizing restrictions; put it out of business in the United States; and impugn its reputation around the world,” Huawei’s filing says.
The fight with the FCC comes amid a larger U.S. push aimed at keeping Huawei gear out of allies’ next-generation networks, again over security concerns, related to the vendor’s close ties with the Chinese government. Huawei has denied it would or could be forced to engage in state-sponsored acts like espionage, cyber-attacks, or disruption to telecom infrastructure.
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Last week the U.K. decided to allow Huawei a limited role in 5G networks, but restricted its presence to the radio access portion, with a 35% cap. The European Union also recommended limiting, but not an outright ban on so-called high-risk vendors like Huawei.
Huawei, in its filing, said the FCC ignored the company’s expert submissions regarding Chinese law, and claims the move is unlawful because the vendor wasn’t granted required prior notice before the initial designation was entered.
At the FCC vote in November, Chairman Pai said the agency’s actions were made “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.”
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ZTE, meanwhile, in its Monday FCC filing (PDF) asked the agency to take more time before making a final determination. The Chinese vendor specifically called out its progress in two key areas, citing compliance with U.S. export controls and economic sanctions, and cybersecurity assurance.
ZTE said it spent “hundreds of millions of dollars” to implement a compliance program related to U.S. export controls that included an updated global export control compliance program. Among its cybersecurity efforts, ZTE called out three security labs it opened in 2019. ZTE says the labs allow customers, regulators and other third parties to perform independent security assessments and audits of its products and services.
Huawei in its recent filing questioned the FCC’s authority to classify it as a national security threat and last December filed a lawsuit asking a federal appeals court to throw out the FCC decision.
The FCC in November also furthered steps to require providers to “rip and replace” existing telecom gear deemed insecure, from vendors like Huawei and ZTE. Congress previously introduced legislation that would help fund such an undertaking, which some have estimated could cost more than $1 billion.
Huawei claims the FCC designation and rule would most hurt rural carriers, many of which receive USF support.
“Indeed, the lack of competition generated by Huawei’s market presence will substantially drive up prices, reduce coverage, degrade customer support, and introduce uncertainty—to the particular detriment of rural carriers,” wrote Huawei in its filing.