Huawei Fighting Back as FCC Considers Banning It From US USF Networks

The FCC released a draft proposal Tuesday to ban equipment from Chinese vendors Huawei and ZTE from networks funded by the USF. Industry officials largely welcomed the order. Huawei signaled it will fight. Commissioners are scheduled to vote Nov. 19, after Chairman Ajit Pai circulated the item Monday (see 1910280054). The FCC also posted proposed new 911 location accuracy rules.

“Based on our review of the extensive record ... we adopt a rule that no universal service support may be used to purchase or obtain any equipment or services produced or provided by a covered company posing a national security threat to the integrity of communications networks or the communications supply chain,” the draft says: “USF recipients may not use USF funds to maintain, improve, modify, operate, manage, or otherwise support such equipment or services in any way, including upgrades to existing equipment and services.”

Huawei and ZTE are the first two companies barred. “Both companies’ ties to the Chinese government and military apparatus -- together with Chinese laws obligating them to cooperate with any request by the Chinese government to use or access their systems -- pose a threat to the security of communications networks and the communications supply chain,” the draft says.

The order will take effect upon publication in the Federal Register. Huawei and ZTE have 30 days to object. The draft proposes a mechanism for adding the companies to the banned list. “The Commission will use all available evidence to determine whether an entity poses a national security threat. Examples of such evidence may include, but are not limited to: determinations by the Commission, Congress or the President that an entity poses a national security threat; determinations by other executive agencies that an entity poses a national security threat; and, any other available evidence, whether open source or classified, that an entity poses a national security threat,” the draft says.

The FCC estimates the average cost for a provider to replace its Huawei and ZTE equipment, “excluding ongoing expenses, to range from $40 million to $45 million.” The FCC said seven carriers provided cost estimates: Pine Belt Cellular, Sagebrush, Union Telephone, NE Colorado Cellular, SI Wireless, United TelCom and James Valley Telecommunications.

Huawei Responds

The rules go too far, Huawei Chief Security Officer Andy Purdy told CNN. “If we are forced to go our way we’ll be OK,” but “America will be hurt.”

In 30 years of operations, Huawei “has never had a major security-related incident in the 170 countries we operate,” the company emailed. “Huawei is trusted by over three-billion consumers.” Banning companies based on country of origin won’t protect U.S. networks, Huawei said: It “only impacts the broadband providers in the most unserved or underserved rural areas of the United States. Such action will further widen the digital divide.” ZTE didn’t comment.

“Impacted RWA members will continue to work with the FCC on these issues while balancing the public interest concerns of ensuring that rural constituents and those traveling in rural America have reliable service,” Carri Bennet, counsel to the Rural Wireless Association, told us: “We also need Congress to pass legislation to fund replacement.”

“Safeguarding American telecommunications networks is critical,” emailed Telecommunications Industry Association CEO David Stehlin. “A narrowly-tailored approach with carefully crafted restrictions on USF spending will help ensure the integrity and security of our networks.” Industry has “an obligation to set a high standard for the quality, security and integrity of our networks and the equipment," he said. “The best way to achieve this goal is through a combination of government action, such as this open proceeding, and industry-driven standards.”

A Further NPRM would examine a requirement companies rip and replace ZTE and Huawei gear. The agency would propose the rule apply only to eligible telecom carriers but asks if it also should apply to all companies receiving USF support.

5G Security

Peter Rysavy, president of Rysavy Research, supports the FCC-proposed approach. “Security and dependability of 5G networks is essential,” he said.

“Much of the rural Huawei equipment, assuming it isn’t near sensitive areas like military bases or potential commercial espionage sites, seems like relatively low risk,” said Doug Brake, Information Technology and Innovation Foundation director-broadband and spectrum policy. “It must be frustrating for some to see these poor choices rewarded. That said, there are real challenges with interoperability between legacy Huawei equipment and 5G of other vendors, so just biting the bullet and transitioning to full 5G gear from a trusted supplier might make the most sense.”

Any “compromised equipment in our broadband networks ... could be used to launch cyberattacks, conduct surveillance, steal intellectual property, or otherwise harm U.S. interests,” said Tom Struble, tech policy manager at the R Street Institute. “Chinese vendors have consistently denied that their equipment is compromised, but unless or until the Chinese government implements the same level of judicial and IP protections we have in the U.S., those vendors can't be trusted.”

“It’s important that U.S. 5G providers be both reliable and secure, so Chairman Pai’s proposal could be a useful first step toward ensuring that all carriers, including those in rural areas, rely on trusted technology,” emailed Zack Cooper, China expert at the American Enterprise Institute: “Although Huawei and ZTE have traditionally been cheaper, they could potentially carry significant risk.”

The FCC order, combined with a General Services Administration order barring companies with Huawei and ZTE equipment from being awarded government contacts, “effectively excludes both companies from doing business" in the U.S., said Roger Entner, analyst at Recon Analytics.

911

The agency also released a draft order that would require carriers to identify the vertical axis of wireless calls to 911. It would mandate 3-meter z-axis 911 location accuracy implementation starting in April 2021. Commissioners agreed to seek comment in March, over a dissent by Commissioner Jessica Rosenworcel, who said the proposal doesn’t go far enough (see 1903150067). Industry commenters cautioned that the requirement could be difficult to meet, and APCO questioned whether it would do anything to help first responders, who really need dispatchable location (see 1905210061).

“Numerous commenters, including public safety entities, vendors, and carriers, agree that implementing the proposed 3-meter metric within existing timelines will benefit public safety and is technically feasible,” the draft says: “Although some industry commenters contend that we should take a phased approach or delay adopting a metric pending further testing, and some public safety commenters advocate adopting stricter accuracy standards for the 2021 and 2023 deadlines, we find these arguments unpersuasive.”

The draft notes APCO later said it supports the requirement: “APCO’s revised position aligns with the views of all other public safety commenters that adopting a z-axis metric remains an essential measure to ensure that first responders receive important location information when providing dispatchable location is not feasible."