In a blow to Huawei and ZTE, an FCC proposal would ban Chinese phone subsidies

 

With its two biggest strategic rivals also being major tech providers, the U.S. government is trying to cut its dependence on Russian and Chinese technology firms. The latest move comes from the FCC. Today its chairman, Ajit Pai, circulated a proposal for consideration at the Commission’s April 17 meeting to ban certain companies from receiving government funds that subsidize low-income Americans’ access to phone and internet service.

“Hidden ‘back doors’ to our networks in routers, switches—and virtually any other type of telecommunications equipment—can provide an avenue for hostile governments to inject viruses, launch denial-of-service attacks, steal data, and more,” writes Pai.

Pai didn’t name specific firms, but Chinese companies Huawei and ZTE will likely be at the top of the list that Pai wants the FCC to draw up. The tech companies, as well as Russian security software provider Kaspersky Lab, are already banned from use by the U.S. military, and this could provide a starting point for the FCC, says Bloomberg. In December, Pai received a letter from 18 senators and representatives asking that he consider banning funding for purchasing products from ZTE and especially Huawei, which companies like Best Buy, AT&T, and Verizon are already staying away from.

The subsidies come from the $8.5 billion/year Universal Service Fund, which powers several programs for people who can’t afford digital access. The fund is already a source of controversy, given Pai’s plan to bar the smaller companies that provide the bulk of the service and concentrate funding on big telecom companies like his former employer Verizon.