FCC started approval reform Huawei, ZTE products will be completely unrelated to the U.S. market?

Communications equipment made by Huawei, ZTE and other Chinese companies are encountering more obstacles in the U.S. market. The U.S. Federal Communications Commission (FCC) on Thursday voted to initiate an approval reform process on a blanket ban on unsecured telecommunications equipment entering the U.S. market. Meanwhile, a cross-party bill in the House and Senate aimed at removing untrusted Chinese companies’ equipment from U.S. networks has taken shape.

Closing Loopholes to Block Continued Access to U.S. Networks for Huawei, ZTE Products

Four FCC commissioners voted unanimously Thursday (June 17) to launch a plan to restructure the approval process, which aims to completely ban the products of five Chinese companies deemed to pose a threat to U.S. national security from entering the U.S. market and U.S. communications networks, and to potentially withdraw previously granted licenses from those companies.

The FCC currently has a “list of communications equipment and services that pose a threat to national security,” and its current rules already prohibit network operators that receive federal subsidies from purchasing equipment and devices made by companies on this blacklist. However, those operators that do not receive federal funding are not subject to the ban and can still purchase telecommunications and communications equipment produced by Chinese companies without restriction.

FCC commissioners and members of Congress have called for closing this “loophole” and introducing measures to exclude all untrusted telecom equipment from the U.S. market.

The five companies on the blacklist are all Chinese companies: Huawei, ZTE, Hainanda Communications, Hangzhou Hikvision and Zhejiang-based Dahua.

Jessica Rosenworcel, acting chairwoman of the FCC, said in a statement released Thursday, “Despite finding security issues with Huawei and ZTE telecommunications equipment as early as 2019, we as an agency have continued to put our stamp of approval on these devices over the past several years. In other words, our equipment authorization process has left them open for use in the United States. So we’re proposing to keep that door closed.”

She said unsecured cyber devices could undermine the development of 5G networks in the U.S. and “give foreign actors access to our communications,” giving them the ability to “inject viruses and malware into our network data transmissions, steal private data, engage in intellectual property theft and spy on companies and government agencies”.

From Home Remotes to Surveillance Cameras, the Ban Has Wide Reach

The FCC’s approval authority is so broad that almost any device that emits radio signals, from large network equipment, small laptops, televisions, wireless routers and everyday electronics like cell phones to smart devices, must be tested and approved by the FCC before it can be marketed.

FCC Commissioner Brendan Carr (Brendan Carr), who has been pushing for reform of the approval process, said at a public seminar in April this year that the purpose of filling the FCC approval loophole is to ensure that companies whose devices have been identified as posing a national security risk, regardless of the source of funding for the purchase of the devices, must ensure that their devices cannot enter the U.S. network, from small remote control door openers in garages to network equipment.

In addition, if the FCC revokes previous licenses issued to devices made by blacklisted Chinese companies, it could force U.S. schools, local government departments and others to remove previously purchased devices such as surveillance cameras.

A Bloomberg report quoted the head of government relations for the Security Industry Association, a U.S. trade group, as saying that Hikvision and Dahua account for one-fifth of U.S. sales of surveillance camera equipment. The head of government affairs at IPVM, a video surveillance technology research and analysis firm, told Bloomberg that the two companies could sell up to a million surveillance devices in the U.S. this year.

Joel L. Thayer, an expert on U.S. telecommunications regulations, told the Voice of America that the FCC’s approval reform measures represent a comprehensive pushback strategy by the Biden administration against China in the telecommunications technology sector.

He said, “This is a clear indication that the Biden administration is taking the Chinese threat seriously and they are looking at every possible mechanism to push back against China’s dominance in the 5G space and in telecommunications.”

Simultaneous Congressional Pressure

Congress is also reacting to restrictions on Chinese-owned products in the U.S. telecommunications market by attempting to legislate a ban on untrusted communications equipment from entering U.S. networks in any way. The effort has cross-party support from both Republican and Democratic lawmakers.

Sen. Marco Rubio (R-FL), a Republican, and Sen. Ed Markey (D-MA), a Democrat, introduced a bill last month (May 24) that would require the FCC to stop considering and approving products from blacklisted companies.

“Government-directed Chinese companies such as Huawei and ZTE pose a serious threat to our national security.” Rubio said in a statement, “The Chinese Communist Party subsidizes these companies and exploits loopholes in our laws that allow malicious actors to sell questionable equipment and services in the United States. The status quo is dangerous, and we need to act now to strengthen our national security and protect our critical infrastructure.”

The bill, known as the Secure Equipment Act of 2021, also had a counterpart in the House of Representatives on Tuesday (June 15). House Minority Whip Rep. Steve Scalise (R-LA) and Democratic Rep. Anna G. Eshoo (D-CA) are the main proponents of the House version of the proposal.

“Over the years, (U.S.) suppliers have invested hundreds of millions of dollars in equipment made by Huawei and ZTE, two companies that are directed by the Chinese government to sell questionable equipment.” Eshu said, “Our legislation would further strengthen U.S. telecommunications networks by banning equipment made by entities that pose a threat to our national security.”

Huawei’s reaction

A Huawei spokesperson told the media, “Blocking the purchase of equipment associated with a country or brand of origin based on ‘predictive judgment’ is unjustified, discriminatory and does nothing to protect the integrity of the U.S. communications network or supply chain.”

According to Bloomberg, Hikvision said it had no evidence of a “threat” to the company’s products and “strongly opposes” the FCC’s new measures; Dahua said it “is not and has never been a threat to U.S. national security UOB said it “is not and has never been a threat of any kind to U.S. national security” and called the FCC’s proceedings “baseless.

Sayer, a legal expert, said he expects Chinese companies are communicating directly with the Biden administration to try to reduce the scope of the ban.

It’s clear that (the FCC’s new approval rules) won’t satisfy Huawei and ZTE,” Thayer said. I think U.S. telecoms will have concerns because at some level it will open the door for the FCC to further define the cybersecurity threat.”

He said, “Security is already a core responsibility of the FCC. It also opens the door for cooperation among U.S. federal agencies⋯ The FCC is working with other agencies such as the Department of Homeland Security and the Department of Defense to ensure that national security threats can be accurately defined.”

The FCC formally determined last June that Huawei and ZTE posed a threat to U.S. national security, prohibiting U.S. telecommunications carriers from using government subsidies to purchase equipment and services from the two companies. Last August, the U.S. government banned federal agencies from purchasing any products made by companies on the FCC’s blacklist.

The FCC is expected to vote on the next stage of approving reforms and revoking the rules for Chinese companies’ communications equipment licenses at a meeting in July.