FCC Chairman Pai Pushes to Restrict USF Funding to US Carriers Using Huawei Equipment

On Monday, FCC Chairman Ajit Pai announced his plans to release a Notice of Proposed Rulemaking that would bar the use of money from the FCC’s Universal Service Fund (USF) to purchase equipment or services from companies that pose a national security threat to United States communications networks or the communications supply chain.  Chairman Pai will call a vote on this proposal at the Commission’s April 17^th open meeting.  In the announcement, Chairman Pai said “Threats to national security posed by certain communications equipment providers are a matter of bipartisan concern.  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.”  He added that the Commission alone “can’t safeguard the integrity of our communications supply chain, we must and will play our part in government- and industry-wide effort to protect the security of our networks.”  As part of this effort, Chairman Pai intends to withhold any of the $8.5 billion USF fund from being used to purchase equipment or services from “any company that poses a national security threat to the integrity of communications networks or their supply chains.”  While Chinese vendor Huawei was not called out specifically, it, along with fellow Chinese equipment vendor ZTE, is often viewed as a target for this type of agency action.  In addition to the FCC’s proposed actions, two bills are currently circulating within Congress that would take similar steps.  HR.4747, introduced by Rep. Michael K. Conaway (R-TX) and co-sponsored by 43 other representatives from both sides of the aisle, specifically calls out Huawei and ZTE and if enacted would prohibit the FCC and other agencies from obtaining or entering into a contract with those vendors.  Meanwhile, Senators Tom Cotton (R-AL), Marco Rubio (R-FL), and John Cornyn (R-TX) introduced S.2391 into the U.S. Senate on February 7, 2018, a bill that mirrors H.4747.