What you need to know
- The FCC decided in a unanimous vote to ban the use of the Universal Service Funds to purchase equipment from Huawei and ZTE.
- The Universal Service Fund consists of $8.5 billion which is used to help provide service to rural areas, libraries, and schools.
- Congress is considering legislation which would provide funds to replace the existing equipment from Huawei and ZTE.
On November 22, the FCC voted on a motion that would allow rural U.S. carriers to purchase telecom equipment from Huawei and ZTE. In a 5-0 vote, the FCC designated Huawei and ZTE as national security risks and banned the purchase of their equipment using the Universal Service Fund.
The $8.5 billion dollar government fund is used to help provide service to rural areas, libraries, and schools. On the day of the vote, FCC Chairman Ajit Pai was quoted saying:
Given the threats posed by Huawei and ZTE to America's security and our 5G future, this FCC will not sit idly by and hope for the best.
This is a blow not only to Huawei and ZTE, but also to the rural carriers in the U.S. which often rely on affordable Chinese equipment to provide service. Fortunately, the Rural Wireless Association said it remains "cautiously optimistic" that it will be able to "maintain existing critical communications services" as long as government funds are not used to buy equipment from Huawei or ZTE either directly or indirectly.
In addition to voting against the use of the Universal Service Fund to purchase equipment from Huawei or ZTE, there has also been talk of removing all existing telecom equipment from the two Chinese companies. FCC Commissioner Geoffrey Starks says replacing the equipment in rural networks could cost up to $2 billion.
The legislation Congress has been working on would only authorize up to $1 billion to help with replacing the equipment. However, if Congress fails to come through with funding, then it is possible FCC Universal Service Fund could also be used. Back in June, Reuters reported that around a dozen rural U.S. carriers were in discussion with Ericsson and Nokia to replace Chinese made equipment.
The vote comes only days after Huawei received the good news that the Commerce Department was providing the company with another 90-day reprieve on the ban which was issued back in May. Huawei has since commented on the vote, calling it "unlawful" and based "on nothing more than irrational speculation and innuendo", asking the FCC to "rethink its profoundly mistaken order."
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