FCC wants to use state muscle to ban Huawei and ZTE even more

What little presence Chinese vendors still have in US networks will be further eroded by a new initiative from the US regulator.

Federal Communications Commission Chairman Ajit Pai (pictured) announced at the World Radiocommunication Conference that the FCC will soon vote on a move to deny federal funds to any company that does business with any company that poses a national security threat.

Right now US operators get some state wonga from something called the Universal Service Fund, which is positioned as a pot of cash to ensure everyone in the US is connected. Any time a company is dependent on the state for funds, however, that leaves it vulnerable to state intervention in its business and that seems to be what Pai has in mind. Suddenly universal service is secondary to geopolitics.

With the usual preamble about how Chinese companies are compelled to assist their government in its spying operations, Pai said he thinks even more needs to be done to counter that threat to US national security.

“Recognizing this risk, today, I’m circulating an order that would prohibit the use of Universal Service Fund dollars to purchase equipment or services from any company—like Huawei—that poses a national security threat,” said Pai. “Going forward, we simply can’t take a risk when it comes our networks and hope for the best.

“In the process of examining this issue, I also determined that the FCC needs to take a look back, so to speak. That’s because some rural wireless carriers that receive USF funds have already installed Chinese equipment.  So, I’m proposing that the Commission initiate a process to remove and replace such equipment from USF-funded communications networks.

“My plan calls first for an assessment to find out exactly how much equipment from Huawei and another Chinese company, ZTE, is in these networks, followed by financial assistance to these carriers to help them transition to more trusted vendors. We’ll seek public input on how big this “rip and replace” program needs to be and how best to finance it.  I hope that my colleagues will join me in voting for these important steps to protect our national security at our November 19 meeting.”

Public funds are a two-way street, you see. They can be taken away if you’re bad, but increased if you’re good. We don’t know how substantial the USF is, but operators could always just forgo that cash if they really felt like using Chinese gear, we suppose. However they would then find themselves on a governmental naughty list and presumably face all sorts of other state sanctions, so will probably decide discretion is the better part of valour when it comes to doing what they’re told in this case.