FCC denies ZTE’s petition to remove its “National Security Threat” designation

The Universal Service Fund offers subsidies for the construction of telecommunication infrastructure in the United States, particularly in low-income or high-cost areas, rural telehealth services, schools, and libraries.

FCC denies ZTE’s petition to remove its “National Security Threat” designation
FCC denies ZTE’s petition to remove its “National Security Threat” designation

FCC denies ZTE’s petition to remove its “National Security Threat” designation

The Federal Communications Commission (FCC) has denied Chinese technology company ZTE’s petition to remove its designation as a “national security threat”. American companies will continue to be barred from purchasing equipment and services from ZTE using the FCC’s $8.3 billion Universal Service Fund.

The Universal Service Fund offers subsidies for the construction of telecommunication infrastructure in the United States, particularly in low-income or high-cost areas, rural telehealth services, schools, and libraries. The ban order was issued by the FCC on June 30, preventing U.S. companies from using the fund to buy technology from Huawei and ZTE.

It claimed that both companies have close connections with the Chinese Communist Party and military. Several smaller carriers depend on Huawei and ZTE, two of the biggest telecom equipment providers in the world, for cost-efficient technology.

After evaluating the carriers, the FCC said in September that the cost of replacing Huawei and ZTE equipment would exceed $1.8 billion. Under the Secure and Trusted Communications Networks Act, implemented by Congress this year, most of that amount would qualify for reimbursements under the “rip and replace” program.

However, the program has not yet been funded by Congress, despite receiving bipartisan support. Chairman of ZTE Ajit Pai also said that the FCC will vote on rules to implement the reimbursement program at its next Open Meeting, scheduled for December 10.

The order barring companies considered national security threats from receiving money from the Universal Service Fund was passed by the FCC in November 2019. Huawei challenged the ban by suing the FCC, claiming the agency acted outside its authority and violated the Constitution.