FCC Denies ZTE Petition to Reverse National Security Threat Designation

The FCC Public Safety Bureau denied ZTE’s petition for reconsideration of the bureau’s June 30 order designating the Chinese telecom equipment maker as a threat to U.S. national security. The order, which also covers Huawei, bars both companies from participating in the USF (see 2007160051). Huawei also sought reversal (see 2007310048). The FCC denied ZTE’s argument that the FY 2019 National Defense Authorization Act and the Secure and Trusted Communications Networks Act (HR-4998) limit “authority to implement a prohibition on USF support for ZTE equipment. ZTE has previously raised this argument and we find no grounds on which to reconsider it here.” The company “does not dispute critical facts underlying” the ban, “and those uncontroverted facts, standing alone, are enough to sustain” it, the bureau said. It reviewed “the totality of the evidence, which included legal and political analysis from Congress and the Executive Branch, Chinese law experts, as well as evidence of security threats provided by allied intelligence services and outside cybersecurity experts.” The bureau “determined that either directly [through] the application of the Chinese National Intelligence Law, or indirectly through the application of political pressure, Chinese companies like ZTE are required to cooperate with intelligence agencies by providing customer information and network traffic information.” It said ZTE “has substantial ties to the Chinese government and its military” apparatus. “We continue to find that vulnerabilities and cybersecurity risks plague ZTE equipment,” the bureau said. It “also took into account ZTE’s record of knowingly violating U.S. law, obstructing U.S. investigations, and making false statements to U.S. authorities even after entering a guilty plea for violating U.S. trade sanctions.” The gearmaker didn’t comment. The denial is “another important step in our ongoing efforts to protect U.S. communications networks from security risks,” said FCC Chairman Ajit Pai. He noted plans for commissioners to vote Dec. 10 on rules (see 2011190059) to help U.S. telecom companies replace suspect network equipment proposed in HR-4998. “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,” Pai said. Lawmakers are pushing to allocate $1.6 billion-$1.8 billion (see 2009140062).