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FCC Releases Draft Order to Protect National Security from Chinese Espionage

On October 29, 2019, the FCC released draft Order and Further Notice of Proposed Rulemaking as part of a "permit-but-disclose" proceeding. This document would ensure the following:

  • Prohibit the use of USF funds to purchase equipment from a company that poses a national security threat to the U.S communications network (known as covered companies).

  • Designate Huawei Technologies Company and ZTE Corporation as covered companies.

  • Require USF recipients to remove existing equipment bought from covered companies.

  • Require ETCs to remove covered equipment in the event that they will be reimbursed.

  • Analyze ETCs' current possession of covered equipment and deduce the costs to remove such equipment.

The FCC proposed this draft in an attempt to safeguard the security of America's communications infrastructure from foreign surveillance and denial of service attacks. According to the FCC, threats to our networks have increased due to ubiquitous broadband, mobile devices, and IoT.

Within the document, the FCC cites lawmakers' concerns regarding Chinese telecommunications equipment manufacturers, whom they believe might be financed by the Chinese government and subject to the Chinese military. If this were true, lawmakers worry that their military and/or government could manipulate switches, routers, and software in American telecommunications devices to disrupt or intercept our communications.

An October 2012 investigative report issued by the House Permanent Select Committee on Intelligence concluded that Huawei and ZTE have had ties to the Chinese government in the past and recommended the U.S. government exclude equipment from these companies in their systems.

The FCC has banned equipment purchased from Chinese companies Huawei and ZTE, who offer 5G compatible phones to users across the globe. Earlier this month, China launched its 5G network, the largest in the world, and Huawei signed 60 commercial 5G contracts with carriers around the world. The company has denied the FCC's accusations of security threats and views the United States' efforts to blacklist it as an attempt to gain control of the 5G revolution.

According to FCC Chairman Ajit Pai, however, this has less to do with control and more to do with the possibility that China will create a second internet, one more heavily censored. This, he says, would be disastrous for users.

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