FCC Affirms Huawei is a National Security Threat

December 18, 2020 | by Andrew Regitsky

FCC Affirms Huawei is a National Security Threat

At its December 10, 2020 meeting, the FCC stood by its June 30, 2020 Order in Docket 19-351 and found that the giant Chinese technology company Huawei is a national security threat to the United States.  Specifically, the Commission in a Memorandum Opinion and Order, voted to deny Huawei’s application for review of the June Order which designated the company, as well as its parents, affiliates, and subsidiaries, as posing a national security threat to the safety of U.S. communications networks and the communications supply chain.  In addition, the Commission’s Public Safety and Homeland Security Bureau formally designated Huawei as a covered company for purposes of the agency’s November 2019 ban on the use of support from the Universal Service Fund to purchase equipment or services from companies posing a national security threat.

Huawei appealed its designation as a national security threat in a July 30, 2020 Application for Review.  The company claimed that the FCC did not have the legal authority to designate it as a national security threat.  The company further argued that

the Bureau violated the Administrative Procedure Act by: (1) relying on unsupported evidence to issue the designation; (2) singling out Huawei for a designation the Bureau violated the Administrative Procedure Act when other situated identified entities have not been designated as national security threats; (3) failing to consider Huawei’s counterevidence that it is not an instrument of the Chinese government, military, or Chinese intelligence, but an autonomous private entity; and (4) failing to follow Commission precedent. Additionally, Huawei argues that the Final Designation Order was unconstitutional because: (1) the decision to designate Huawei was issued due to congressional pressure; (2) Commissioners’ statements demonstrated prejudice; and (3) Huawei’s constitutionally protected due process rights have been violated. (Docket 19-351, Memorandum Opinion and Order, released December 11, 2020, at para. 10).

In its current decision, the agency disagreed with Huawei’s contentions.  It states that based on the record it concludes, as the Bureau did, that Huawei is highly susceptible to Chinese government coercion, its equipment has known security risks and vulnerabilities, and it has sufficient legal authority to make such a final designation.  Specifically, the Commissions finds that

Huawei is susceptible to Chinese government pressure to participate in espionage activities, and that Huawei’s close ties to the Chinese military present significant risk.  Furthermore, reports of vulnerabilities in Huawei equipment have led other countries to bar the use of such equipment. As a result of today’s order, money from the FCC’s $8.3 billion a year Universal Service Fund may not be used to purchase, obtain, maintain, improve, modify, or otherwise support any equipment or services produced or provided by Huawei. (FCC December 10, 2020, Public Notice).

As expected, China reacted negatively to the FCC’s actions.  China Foreign Ministry spokeswoman, Hua Chunying, stated that the U.S. "should stop stretching the concept of national security, stop suppressing Chinese specific companies and provide a fair, just and nondiscriminatory environment for companies operating there."

In a similar Order released on November 24, 2020, the Commission affirmed that Chinese company ZTE is also a security threat and is banned from U.S. networks.

The FCC is also considering the fate of China Telecom's American division. The American division claims that it is an independent contractor that is not controlled by China's government.  However, the FCC believes otherwise, and released an Order on December 14, 2020, to initiate and terminate China Telecom’s operations in the U.S.

American carriers using any Chinese telecom equipment in their networks cannot continue to do so.  Thankfully, they will receive help in removing and replacing this equipment through the newly created Secure and Trusted Communications Networks Reimbursement Program that became law in March of 2020 and which the FCC set the requirements for in a December 11, 2020 Order.  For more information about the program, see our December 3, 2020 blog.