Small ISPs “stunned” by FCC move to ban Huawei/ZTE gear during pandemic

Small Internet service providers are “stunned” that the Federal Communications Commission is enforcing a ban on Huawei and ZTE network gear during the ongoing pandemic.

The FCC already voted unanimously in November 2019 to ban Huawei and ZTE equipment in projects paid for by the commission’s Universal Service Fund (USF). But the ban, inspired by fears that the Chinese vendors’ equipment poses national security risks, is just now coming into effect, with the FCC announcing yesterday that USF money “may no longer be used to purchase, obtain, maintain, improve, modify, or otherwise support any equipment or services produced or provided by these suppliers.”

The Rural Wireless Association (RWA), a trade group that represents ISPs that serve fewer than 100,000 subscribers each, said yesterday it is “stunned by [the] FCC’s decision to immediately bar use of USF funds on Huawei and ZTE equipment and services during a time when it is critical to keep rural Americans connected.”

The RWA statement said:

As a result, rural carriers who have deployed Huawei or ZTE equipment or services in their networks will now lack the ability to support their critical networks that are serving hundreds of thousands of rural Americans and those traveling through rural America. Given the difficulty in demonstrating where specifically their USF support is being utilized in their networks, this puts rural carriers in a precarious situation while they strive to offer extended payment terms for their customers as requested by FCC Chairman [Ajit] Pai, adjust to the fallout of the T-Mobile/Sprint merger, and continue to keep rural Americans connected to broadband and telephone services during the COVID-19 pandemic.

The FCC’s public notice said ISPs “may seek a waiver of this prohibition if necessary,” but the RWA said ISPs should have been given more time to seek waivers. “RWA members appreciate the opportunity to submit waivers of this prohibition but ask the commission to give them sufficient time to submit such waivers before pulling away their USF support which is scheduled to start tomorrow, July 1,” the group said yesterday.

FCC defends ban but needs funding

The FCC said its ban targets Huawei and ZTE “because of their substantial ties to the Chinese government, Chinese law requiring them to assist in espionage activities, known cybersecurity risks and vulnerabilities in their equipment, and ongoing Congressional and Executive Branch concern about this equipment.”

“We cannot and will not allow the Chinese Communist Party to exploit network vulnerabilities and compromise our critical communications infrastructure,” Pai said, calling the companies’ gear a risk “to our 5G future.”

The ban has support from Pai’s Republican majority and the FCC’s Democrats. Democratic Commissioner Geoffrey Starks said that yesterday’s action “will help secure our networks against new threats from Huawei and ZTE equipment” and that the FCC “must not… lose sight of the untrustworthy equipment already in place.”

But Starks said Congress has not yet provided funding to help ISPs replace Huawei and ZTE network gear with other companies’ equipment:

Funding is the missing piece. Congress recognized in the Secure and Trusted Communications Networks Act that many carriers will need support to transition away from untrustworthy equipment, but it still has not appropriated funding for replacements. I look forward to working with Congress and my colleagues to ensure there are sufficient funds to get the job done.

The legislation Starks referred to became law in March and says that $1 billion shall be provided in “reimbursement funds to remove, replace, or dispose of any covered communications equipment or service.” However, the FCC said in a recent public notice that while the “reimbursement program created by the Secure Networks Act appears to require an express appropriation from Congress,” the bill itself “does not provide funding for the reimbursement program and states that the program must be ‘separate from any federal universal service program established under section 254 of the Communications Act.'” That apparently means the FCC can’t use money it already has for Huawei/ZTE replacements and hasn’t gotten money it can use for that purpose from Congress.

While ISPs can no longer use USF money to maintain Huawei and ZTE equipment, they technically aren’t required to stop using the equipment entirely. But the FCC is considering another plan to require removal of Huawei and ZTE equipment from USF-funded networks that have already been built.

Huawei: FCC offered “no evidence”

When contacted by Ars, a Huawei spokesperson said that “Huawei believes this order is unlawful as the FCC has singled out Huawei based on national security, but it provides no evidence that Huawei poses a security risk. Instead, the FCC simply assumes, based on a mistaken view of Chinese law, that Huawei might come under Chinese government control.”

A ZTE filing in February said the company “conducts business only in compliance with all applicable laws where we are operating, including US export and sanctions laws and regulations.” We contacted ZTE today about the FCC decision and will update this story if we get a response.