FCC Eyes USF Funds Ban for Chinese Vendors

The FCC is considering a move that could potentially further the US government's drive to lock companies like Huawei and ZTE as completely as possible out of federal contracts and spending programs.

FCC Chairman Ajit Pai proposed a rule Monday to ban all US carriers from using the $8.6 billion in the Commission's Universal Service Fund (USF) for equipment or services from "companies that pose a national security threat to United States communications networks or the communications supply chain." The ban would cover all areas covered by the USF fund.

Pai's proposal didn't reference Huawei Technologies Co. Ltd. or ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763) by name, but senior Federal Communications Commission (FCC) officals confirmed Monday that these two big Chinese vendors -- as well as Russia's Kapersky Labs -- could be companies the rules would apply to, if approved.

The proposed ruling was initially motivated by a December 20, 2017 letter from Sen. Tom Cotton (R-Ark.) and codified following a briefing with US intelligence agencies. The FBI and CIA have previously labelled the Chinese vendors' products as security risks. (See Will China React to Latest US Huawei, ZTE Slapdown? and Huawei, ZTE Face US Federal Ban.)

AT&T Inc. (NYSE: T), Best Buy and Verizon Communications Inc. (NYSE: VZ), meanwhile, have either dropped plans to carry Huawei devices or will drop its existing products from their stores. (See Best Buy to Drop Huawei in Another Blow to US Ambitions – Report.)

This ruling -- if passed -- would likely only affect smaller carriers, and block future deployment of equipment. Large operators have been warned that they would be blocked from federal contracts if they used the Chinese vendors because of security concerns since 2012.

The FCC is looking for comment on the proposal. The agency will vote on it on April 17.

The FCC move comes as industries wait to see which products and materials will be impacted by the $60 billion in new tariffs that President Trump intends to impose on Chienese tech imports. (See Trade Warmonger Trump May Slap Tariffs on Chinese Tech – Reuters.)

— Dan Jones, Mobile Editor, Light Reading

DanJones 3/27/2018 | 3:08:17 PM
Re: Any word Hahaha, that's crazy!
Clifton K Morris 3/27/2018 | 12:56:34 PM
Re: Any word Yeah. I remember when I got the mid-dialed Call from a VP at UPS Global logistics. Apparently, my home telephone number was on file with UPS as the Clearwire’s Accounts Payable Department, and they UPS wanted a payment for $110,000 for a shipment from Huawei in China, delivered to Kirkland WA. I recall, they deployed the technology and posted a video on YouTube a mere 3 months later. Shows you how easy it can be to configure. This was... oh I don’t know... 2004..? John Stanton, who founded CellOne, VoiceStream, AllTel, ClearWire, Nextel (Kirkland, I believe) and WesternWireless was running Clearwire at that time. I gave him a call about the UPS bill.

When it comes to Cisco, They don’t deserve my money or company’s investment. The Cisco 7xxx routers are a total mess, almost like 3 different development teams wrote software for each model on purpose. Go with Juniper whenever you can.
DanJones 3/27/2018 | 12:17:55 PM
Re: Any word Well recall that Sprint promised to remove Huawei equipment (acquired via Clearwire) to get approval for the SoftBank merger. But I agree lots of strands here...
Clifton K Morris 3/27/2018 | 12:06:58 PM
Re: Any word This is perhaps the oddest situation of “national security” and American protectionism ever. The questionable Huawei equipment was optical and Ethernet equipment.

Sounds like Cisco (whose licensing contracts are a joke to planned obsolence apologists) Nokia and Ericsson simply can’t compete on price, so they have to create this scaremongering.

Looks like Tom Cotton has a shrine webpage at Cisco’s website as Cisco’s “Golden Calf”.

See: https://www.ciscoconnections.com/blog/2017/11/30/arkansas-sen-tom-cotton-might-be-next-cia-director-bio-photos-age/

Preventing cable companies from using carrier-grade hardware that costs 1/4 as much would require exactly what Ajit Pai is proposing.

Truth Be told, this issue of Cisco lobbying US senators has gone on for years. It all started when Cisco valued its 5-7 year product cycle over new technology. A team of researchers (all Americans, and all in California) found a way to increase capacity on a pair of fibers to 200GB, back in the 2004 timeframe. This was a time when 40Gb was considered state-of-the-art. Huawei, in China, whose population makes the US look like a dwarf, could use technology like this to grow and scale. Huawei hired all the Cisco team to develop the 200GB technology. Cisco was angry, even to the point where the CEO had to resign after non-competes were found invalid in California. Overall it’s no surprise that this same narrative is in the press again. But when you have billions of people, you’ll invest in low-cost high-quality solutions.

Besides, when it comes to these “national security reports” (I wouldn’t call a router at 100% utilization at 2am in Australia a “threat” to anything but Cisco’s business model. when the optical routers were pegged at full-speed, the only data that could be transferred would have to be on an insecure server or maybe a print job. Most likely it was a printer-based speed-test to Check quality of connection and speed.
DanJones 3/26/2018 | 10:26:38 PM
Re: Any word It applies to all USF programs.


Carriers won't have to rip out already deployed equipment is what I was told.
brooks7 3/26/2018 | 6:21:32 PM
Any word  

If this type of ban would extend to CAF, CAF-II, or A-CAM deals?  What about equipment already deployed?

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