Today, House Republican Whip Steve Scalise (R-La.) and Rep. Anna G. Eshoo (D-Calif.) introduced the Secure Equipment Act of 2021 to prohibit the FCC from reviewing or issuing new equipment licenses to companies on the FCC’s Covered Equipment or Services List that pose a national security threat.
This legislation would prevent equipment manufactured by Chinese state-backed firms such as Huawei, ZTE, Hytera, Hikvision and Dahua from being further used and marketed in the United States.
As directed by Congress, in 2020, the FCC published a list of telecommunications companies deemed to be a national security threat, prohibited the use of federal funds for purchasing equipment made by those companies and authorized funding for U.S. telecommunications carriers to rip and replace equipment made by those companies. Yet, carriers can still privately purchase this equipment on the open market. The Secure Equipment Act adds an extra layer of security that slams the door on Chinese actors from having a presence in the U.S. telecommunications network.
“For far too long, we’ve allowed manufacturers like Huawei and ZTE – backed by the Chinese Communist Party – to have access to American networks, which has jeopardized our national security and threatened the individual safety of the American people,” said Scalise. “China must be stopped from doing further damage to our telecommunications network, and I’m proud to sponsor this important legislation with Rep. Eshoo to strengthen our national security and stand up to subsidiaries of the Chinese Communist Party.”
Eshoo said that, for more than a decade, she has fought to address vulnerabilities telecommunications infrastructure that affect national security.
“Sadly, in the intervening years, providers have invested hundreds of millions of dollars in equipment made by Huawei and ZTE, Chinese state-directed companies that sell compromised equipment,” she said. “Our legislation would further strengthen U.S. telecommunications networks by prohibiting equipment manufactured by entities that are a threat to our national security. I’m proud to work across the aisle with Rep. Scalise on this critical legislation to make our nation safer.”
FCC Commissioner Brendan Carr said that he commended Scalise and Eshoo for their leadership in securing America’s communications infrastructure.
“Their bipartisan Secure Equipment Act would close a glaring loophole that Huawei and other entities are exploiting today to place their insecure gear into our networks,” Carr said. “I applaud their work to eliminate the threats posed by this equipment.”
FCC Acting Chairwoman Rosenworcel said that the introduction of the Secure Equipment Act of 2021 is welcome news.
“This legislation will help protect our national security by ensuring that untrustworthy communications equipment is not authorized for use within our borders,” Rosenworcel said. “We’re not wasting time. Last month, I shared a plan with my colleagues to update the FCC’s equipment authorization procedures consistent with this effort. I thank Congresswoman Eshoo and Congressman Scalise for their work — having this policy written into the law will send a strong, bipartisan signal that the United States is committed to developing a market for secure 5G alternatives.”
Senators Marco Rubio (R-Fla.) and Ed Markey (D-Mass.) introduced similar legislation in the Senate last month.
Source: Office of Congressman Steve Scalise
FCC Commissioner Brendan Carr has applauded the introduction of the Secure Equipment Act by U.S. Sen. Marco Rubio (R-Fla.) and U.S. Sen. Ed Markey (D-Mass.). Their legislation would close a loophole that allows equipment from Huawei, ZTE and others to continue to be used in the United States despite the FCC’s determination that those entities pose an unacceptable risk to national security. Two months ago, Carr highlighted the loophole that Huawei and others have been using during an event at the Center for Strategic and International Studies (CSIS).
“I applaud Senator Rubio and Senator Markey for their leadership and bold action,” Carr said. “Their legislation would strengthen our national security by ensuring that we close the loophole that Huawei and others are using right now, despite our determination that their gear poses an unacceptable risk to our national security.”
Last year, the FCC adopted rules that require U.S. telecom carriers to remove and replace equipment produced by Huawei, ZTE and other entities due to national security concerns. Carr said that it was an important step that substantially advanced America’s national security.
“However,” Carr said, “those rules only apply to equipment purchased with federal funding. The FCC’s rules expressly allow carriers to use private funds to purchase and use that exact same equipment. And Huawei has been taking advantage of that backdoor into our networks. Indeed, a review of the FCC’s database shows that over 3,000 applications from Huawei alone have been approved since 2018, ranging from network gear to tracking devices.”
Carr said that it is time to close what he called a glaring loophole.
“Once we have determined that Huawei or other gear poses an unacceptable national security risk, it makes no sense to allow that exact same equipment to be purchased and inserted into our communications networks as long as federal dollars are not involved,” he said. “The presence of these insecure devices in our networks is the threat, not the source of funding used to purchase them. Senator Rubio and Senator Markey are taking the quick and decisive action necessary to safeguard our national security. And I am pleased that they have worked to introduce this legislation.”
The FCC’s Public Safety and Homeland Security Bureau has denied a petition for reconsideration of its order designating ZTE as a company posing a national security threat to the integrity of communications networks or the communications supply chain. After reviewing the record, the bureau found no basis for reconsideration. As a result, the FCC’s $8.3 billion a year Universal Service Fund cannot be used to purchase, obtain, maintain, improve, modify, or otherwise support any equipment or services produced or provided by ZTE as well as its parents, affiliates, and subsidiaries.
“With today’s order, we are taking another important step in our ongoing efforts to protect U.S. communications networks from security risks,” said FCC Chairman Ajit Pai. “At the next open meeting on Dec. 10, the commission will vote on rules to implement the Secure and Trusted Communications Networks Reimbursement program to help carriers remove and replace untrusted equipment from their networks, months before the statutory deadline. 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.”
In a move directed at rural wireless infrastructure, the FCC will consider rules that would prohibit the use of Universal Service Funds to purchase equipment or services, and to remove existing equipment, from companies that threaten national security, effectively locking out Huawei Technologies and ZTE.
FCC Chairman Ajit Pai circulated a two-part proposal that would help safeguard the nation’s communications networks to the other commissioners yesterday, who will vote on at the commission’s Nov. 19 meeting.
“We need to make sure our networks won’t harm our national security, threaten our economic security, or undermine our values. The Chinese government has shown repeatedly that it is willing to go to extraordinary lengths to do just that,” Chairman Pai said in a prepared statement.
To get around the ban, Huawei is looking to license its 5G technology to American company.
First, a draft Report and Order would bar communications companies from using any support they receive from the FCC’s Universal Service Fund to purchase equipment or services from companies posing a national security threat. The draft Order would also establish a process for designating other suppliers that pose a national security threat.
Second, a draft Further Notice of Proposed Rulemaking would propose requiring certain carriers receiving USF funds to remove existing equipment and services from designated companies from their networks and seek comment on how to provide financial assistance to these carriers to help them transition to more trusted suppliers. The draft item would also adopt an information collection to help assess the extent to which eligible telecommunications carriers have deployed Huawei and ZTE equipment in their networks as well as the costs to remove and replace it.
Europe has become the key battleground in the United States’ confrontation with China, attempting to keep equipment of Huawei Technology and ZTE from being integrated into more parts of the world. The frosty relationship with China has all the makings of a cold war replete with espionage, aggression behind the scenes and the drive for world domination.
Besides having some of the best equipment on the market, Huawei has been successful because its equipment is half the price of other manufacturers. Its labor is inexpensive so hundreds of engineers can be tapped to solve technical problems. The Wall Street Journal noted that it is proving to be a “tough sell” for the United States to get European allies to give up the Chinese telecom gear.
Most recently, the United Kingdom has refused to completely ban Huawei equipment from its networks, according to a report in the Financial Times. The UK officials said their security people can handle the threat through testing in special laboratories. On the other hand, London-based Vodafone has responded to the U.S. political pressure by temporarily halting its Huawei purchases.
A source with firsthand knowledge of communications equipment does not agree with the UK security assessment, saying the security hazard represented by Huawei is not a static risk, but a continuous, volatile threat that changes on a daily basis.
Germany appears to be still on the fence. France is considering putting Huawei equipment on its “high-alert” list. Last December, the Czech Republic’s cybersecurity agency issued security warnings against Huawei’s equipment and was slapped with a lawsuit.
It is feared that Huawei is capable of installing backdoors in its wireless networks that can funnel information back to Beijing. And the Chinese appear quite willing to harvest that information. A few years ago, in one of its five-year plans, the Chinese government openly admitted that it wanted to dominate the world’s telecom equipment supply, and it would support its companies to do that. Not coincidently, the Chinese government funds Huawei and ZTE.
Japan, New Zealand and Australia are all in the win column for the United States, with their own Huawei bans, but the $100 billion company has gear installed across Africa, South America, Russia and the Middle East. Additionally, India, which represents a huge market, has reversed its earlier position, saying it won’t ban Huawei 5G equipment, according to the Economic Times.
Interestingly enough, U.S. carriers are not restricted from using Huawei and ZTE equipment. but the White House is working to rectify that, drafting an executive order to be released soon. A bill passed by Congress in August 2018 restricted U.S. government contractors from using the Huawei and ZTE technology.
Huawei recognized several years ago that it was not making headway into the Tier-one wireless U.S. carriers, so it decided to sell telecom equipment to the U.S. enterprise market and regional telecom carriers. That portal allowed them to penetrate the U.S. network. Rural U.S. carriers stand to lose millions of dollars of infrastructure investment, if they have to give up their Huawei equipment.
Those who speak out against the ban against Huawei say that there is no evidence of spyware or hidden backdoors, but a corporate reputation report using open source information shows a company mired in allegations of illegal and improper activities. From 2003-2014, Huawei was involved in 11 civil lawsuits over intellectual property rights. The company has also been accused of tax evasion, anticompetitive behavior, bribery and labor violations in 38 countries. Perhaps most chilling, the company has been accused of helping multiple governments monitor and censor their citizens.
The U.S. Department of Justice has charged Huawei with stealing technology from T-Mobile. Additionally, the manufacturer, its chief financial officer and two affiliates were charged with violating U.S., European Union and United Nations sanctions against Iran. Canadian authorities later arrested Meng Wanshou, Huawei’s CFO, and she is awaiting extradition to the United States.
When a Chinese court gave Canadian Robert Schellenberg a death sentence possibly in retaliation for the arrest of Wanshou, Richard Fadden, a former national security adviser to the Canadian prime minister, wrote about the ban of Huawei 5G networks in an editorial in the Globe and Mail.
“If China would resort to putting Canadians to death to defend its corporate national champion, what might it do if the Chinese Communist Party had unfettered access to Canada’s vital communications networks?” he wrote. “The ambassador and the Chinese government have implicitly acknowledged the strategic importance of Huawei, and they have revealed how quickly the Chinese charm offensive in Canada can switch to aggression and bullying.”