The Federal Communications Commission on Friday banned U.S. companies from using federal funds to purchase equipment from two leading Chinese telecommunications firms and is prepared to spend $2 billion to replace existing unsecure gear.
The measure targets China’s Huawei Technologies and ZTE, companies that have sold state-subsidized equipment to rural wireless carriers, including one service provider near a U.S. nuclear missile base in Montana.
The commission adopted a new rule prohibiting American telecommunications companies from buying equipment from foreign companies that pose a threat to U.S. security with FCC money in the Universal Service Fund, an $8 billion pot of funds used to subsidize rural telecommunications networks.
The measure effectively bans rural carriers reliant on federal subsidies from buying new Chinese equipment or maintaining existing foreign equipment.
FCC Chairman Ajit Pai said the action followed reports from both the Trump administration and Congress warning that Chinese equipment contains “backdoor” remote access that could permit China’s military or intelligence services to spy or disrupt critical service.
Huawei and ZTE were the first two companies designated as national security threats.
“Both companies have close ties to China’s communist government and military apparatus,” Mr. Pai said during an open meeting on the rule.
“Both companies are subject to Chinese laws broadly obligating them to cooperate with any request from the countries intelligence services and to keep those requests secret,” he said. “Both companies have engaged in conduct like intellectual property theft, bribery and corruption.”
Mr. Pai said other risks from the Chinese equipment include hidden access points to routers and switches that “can allow a hostile adversary to inject viruses and other malware.” It also could allow China to steal private data on Americans, to spy on U.S. companies and to conduct other illicit activities.
“These concerns are by no means hypothetical,” he said, noting that recently a cyber security company found that over half of the Huawei software studied contained at least one backdoor access point.
Attorney General Bill Barr wrote the FCC on Nov. 14 supporting the ban. Mr. Barr said Huawei is under indictment for illicit trade with Iran and for stealing American telecommunications technology, and ZTE paid a fine of $32 million for its illegal exports to Iran.
“At this critical moment, while the world decides where to place its trust, we should not signal that Huawei and ZTE are anything other than a threat to our collective security,” Mr. Barr stated.
Huawei, in written filings to the FCC, denied its equipment poses a security risk or that the company spies on behalf of the Chinese government.
The security risk will increase if unsecure Chinese equipment globally dominates the coming “fifth generation” wireless technology known as 5G, Mr. Pai said.
“Given the threats posed by Huawei and ZTE to America’s security and our 5G future, this FCC will not sit idly by and hope for the best,” Mr. Pai said.
In addition to the ban on the use of federal funds, the FCC is also planning on identifying, removing and replacing existing Chinese gear with secure equipment, a process that could cost $2 billion.
FCC Commissioner Brendan Carr said during the meeting that he recently visited Malmstrom Air Force Base, Montana, home to 150 Minuteman III nuclear missiles.
“Set against that destructive power is a completely serene and wide-open landscape,” Mr. Carr said. “It is just wheat fields and big sky country. Except, as it turns out, there are cell towers all around the Montana missile fields running on Huawei equipment.”
Mr. Carr and two other FCC commissioners said the use of Huawei equipment near missile bases and military facilities poses security and foreign spying risks.
China could use its access to the Huawei equipment to disrupt communications nearby the base or to conduct denial of service attacks.
Military communications used within nuclear bases on not connected to commercial telecommunications networks. However, those networks are used by military personnel for other purposes and are vulnerable to foreign spying or cyber attacks.
“When combined with the ever-increasing sophistication of cyber attacks and the fact that attacks from state actors are by far the most well-funded and advanced, it is not hard to see the threat that these companies like Huawei and ZTE pose to our networks and our national security,” Mr. Carr said.
• Bill Gertz can be reached at bgertz@washingtontimes.com.
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