The FCC has denied Chinese telecom ZTE's appeal of its designation as suspect network technology that can't be subsidized with Universal Service Fund money and must eventually be replaced in existing networks.
The FCC's Public Safety and Homeland Security Bureau has denied a petition for reconsideration filed by ZTE, which along with Huawei were the first two tech suppliers designated a threat to U.S. network security and the communications supply chain by the FCC, which is coming up with a list of others.
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“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 in a statement.
Pai has teed up a vote at the December public meeting plan on rules to implement a congressional mandate—in the Secure and Trusted Networks Act—to "remove and replace untrusted equipment," though Congress has yet to allocate the $1.6 billion of the $1.8 billion the FCC has estimated it will cost, a point Pai made in his statement. 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," said Pai.
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In June, the FCC deemed technology provided by Chinese vendors Huawei and ZTE to be security threats pending an opportunity for them to appeal that decision, which they did. The agency blocked access to the Universal Service Fund to any U.S. network operator that didn’t comply with the edict to remove Huawei and ZTE tech from their networks and not to buy any more of it again.
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The mandate burdened network operators with the task of replacing relatively inexpensive technology from the Chinese vendors with gear and software from pricier vendors—essentially buying the same tech twice, and paying substantially more the second time around.
In March, the Trump Administration signed into law the Secure and Trusted Communications Act, which underwrote much of the replacement costs with tax dollars.
