Federal Communication Commission Reaffirms That ZTE Poses a US National Security Threat

The logo of Chinese telecommunications equipment maker ZTE is seen outside the ZTE R&D building in Shenzhen, China on April 27, 2016. Bobby Yip/Reuters

The Federal Communications Commission (FCC) doubled down on its previous designation, reiterating that the Chinese company, ZTE is a national security threat to the U.S. communications networks.

On Tuesday the FCC rejected a petition from ZTE Corp which asked the agency to reconsider its June decision that prohibits U.S. firms from tapping an $8.3 billion government fund to purchase equipment from the company.

In a Tuesday press statement (pdf), the FCC wrote that “After reviewing the record, the Bureau found no basis for reconsideration.  As a result, the FCC’s $8.3 billion a year Universal Service Fund cannot be used to purchase, obtain, maintain, improve, modify, or otherwise support any equipment or services produced or provided by ZTE as well as its parents, affiliates, and subsidiaries.”

“With today’s order, we are taking another important step in our ongoing efforts to protect U.S. communications networks from security risks,” said FCC Chairman Ajit Pai.

Pai continued, “At the next Open Meeting on December 10, the Commission will vote on rules to implement the Secure and Trusted Communications Networks Reimbursement program to help carriers remove and replace untrusted equipment from their networks, months before the statutory deadline.  Now it is more vital than ever that Congress appropriate funds so that our communications networks are protected from vendors that threaten our national security.”

Reps. Frank Pallone, Jr. (D-N.J.), Greg Walden (R-Ore.), Doris Matsui (D-Calif.), and Brett Guthrie (R-Ky.) sponsored the bipartisan legislation, The Secure and Trusted Communications Networks Act, which led the FCC to establish the Secure and Trusted Communications Reimbursement Program.

In addition to the reimbursement program, the bipartisan legislation prohibits the use of federal funds (that is administered by the FCC), to be used to purchase communications equipment or services from any company that poses a national security risk to American communications networks and helps the government “share supply chain security information” with carriers, with a focus on smaller carriers.

President Donald Trump signed The Secure and Trusted Communications Networks Act in March 2020, which was designed to help secure America’s telecommunications supply chain.

“Securing our networks from malicious foreign interference is critical to America’s wireless future, especially as some communications providers rely on equipment from companies like Huawei that pose an immense threat to America’s national and economic security,” the lawmakers said in a press statement.

In the FCC’s Public Safety and Homeland Security Bureau’s initial, June decision, Huawei Technologies Company (Huawei) and ZTE Corporation (ZTE), as well as their parents, affiliates, and subsidiaries were designated a national security threat.

In the June press statement (pdf), Pai said, “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.”