FCC closes Huawei loophole, extends ban to private deals

The FCC on Friday announced that it adopted new rules prohibiting communications equipment from the likes of Huawei and ZTE from being authorized for importation or sale in the United States. The vote was 4-0 in favor of the new rules.

If that sounds familiar, that’s because the U.S. already banned the use of Universal Service Fund (USF) support to buy Chinese equipment deemed a national security risk. But it didn’t cover gear purchased using other financing methods. Friday’s order extends the ban to any new equipment from Huawei and ZTE, meaning operators can’t buy gear using their own finances.

It also applies to telecom and video surveillance equipment from Hytera Communications, Hangzhou Hikvision Digital Technology and Dahua Technology.

In her statement, FCC Chairwoman Jessica Rosenworcel ticked off a litany of steps the agency has already taken to eliminate security threats from the nation’s networks. However, throughout all these activities and up until Friday’s action, the FCC continued to put its stamp of approval on equipment through its equipment authorization process – which doesn’t make any sense, she noted. 

The FCC’s latest action covers base station equipment that goes into U.S. networks, as well as phones, cameras and Wi-Fi routers that go into homes, she said.

“In other words, this approach is comprehensive,” she said, adding that because issues evolve over time, they’re also seeking additional comments on the need to update the equipment approval process to address component parts.

Interestingly, Bloomberg, citing an unidentified U.S. official, reported that the FCC’s move didn’t come up in the bilateral meeting between President Biden and Chinese President Xi Jinping in Indonesia earlier this month. Biden did discuss technology issues more broadly with Xi, the report said.

Long time coming

The new rules aren’t exactly coming out of the blue. U.S. President Joe Biden last November signed into law the Secure Equipment Act of 2021 that requires the adoption of such rules, the agency acknowledged. The FCC’s order was first circulated among the full commission in early October.

Commissioner Brendan Carr noted in his statement Friday that in March of 2021, he had called on the FCC to take this action as a way to address threats posted by China and other bad actors.

At that time, “I noted that the FCC’s then-unprecedented decision in 2020 to prohibit the use of federal universal service subsidies to purchase equipment from companies like Huawei that pose an unacceptable national security threat represented real progress towards safeguarding our networks,” he stated.

However, “those FCC rules expressly allowed carriers to use private funds to purchase the exact same equipment and place it in the exact same point in their networks. I argued that it was time to close this Huawei loophole. I am thankful that we do exactly that today,” he added.

Commissioner Geoffrey Starks noted that the FCC’s new order properly eliminates equipment authorization for “white-labeled equipment,” which is gear produced by one company that is marketed or branded under another’s name. Re-branding insecure equipment does nothing to change the threat profile and in fact, it can increase risk because consumers may be more trusting of one brand than they otherwise would be if they knew who actually made it, he added.

Commissioner Nathan Simington said in prepared remarks that in addition to banning equipment from untrustworthy state-controlled companies, he would like to see the FCC address the proliferation of insecure devices more generally.

“Hundreds of millions of actively used wireless devices in our country are susceptible to security vulnerabilities for which they will never be patched,” Simington said. “This is a ticking time bomb for the security of our wireless networks and devices, and a disincentive to building more, because the public will have justified, low expectations of their security.”RELATED: Smaller carriers in limbo because of $3.7B Huawei rip and replace shortfall

Of course, none of this is helpful for the smaller U.S. carriers in need of federal funding to rip out old Huawei or ZTE gear and replace it. The Competitive Carriers Association (CCA) points out there’s still a $3 billion shortfall, and some smaller operators face the prospect of going out of business if they don’t get the funds they need.