DITO’s Chinese telecommunication partner, ZTE, is a security risk to telecom networks and supply chain.
The Federal Communications Commission (FCC) affirmed this Tuesday as it denied the ZTE’s petition to reconsider an earlier decision designating it as a security risk.
DITO and ZTE have partnered to put up some 50,000 microcell towers all over the Philippones in the next five years.
Shenzhen-based ZTE Corp. is among five members of a consortium pledging up to $2 billion (close to P100 billion) to connect the country’s islands with microcell towers and help boost internet connectivity through TierOne Comm International.
The FCC’s Public Safety and Homeland Security Bureau reviewed ZTE’s record and found “no basis for reconsideration.”
With the FCC’s denial of its motion to reconsider, ZTE can’t benefit from the FCC’s $8.3 billion annual Universal Service Fund and needs to comply with a ban prohibiting U.S. companies from tapping USF money to purchase, maintain, or support any gear or services from ZTE or its affiliates.
In November 2019, the FCC voted unanimously for the ban on universal service support to buy telecom equipment and services from vendors that pose risk to national security, and initially named ZTE along with China’s Huawei, as “covered companies” that should be subject to the rule, citing close ties to the Chinese government. The final designation (PDF) was made June 30, 2020.
“With today’s order, we are taking another important step in our ongoing efforts to protect U.S. communications networks from security risks,” said FCC Chairman Ajit Pai in a statement (PDF) Tuesday.
Huawei and ZTE have continuously denied they pose risks to telecom networks and have fought against the FCC classifications.
Last week the FCC said it’s extending the timeline (PDF) for responding to Huawei’s application for a review of its designation until December 11. The commission noted Huawei’s comments totaled more than 5,000 pages and the two-week extension will allow the FCC to adequately “consider the voluminous record in this proceeding.”
In its formal declaration over the summer, the FCC said its Public Safety and Homeland Security Bureau made the decision taking into account findings and actions by Congress, the Executive Branch, the intelligence community and other allies, as well as fillings submitted by Huawei, ZTE and other parties.
A factor frequently cited by the FCC against Huawei and ZTE is that the firms are broadly subject to Chinese law that could force them to cooperate with China’s intelligence services, acting as an apparatus to help spy or disrupt networks. It has also cited vulnerabilities in the vendor’s network equipment.
Huawei last December filed a lawsuit against the initial designation, and at the time said the decision was based “on a fundamental misunderstanding of Chinese law.”
Commission action has emphasized the need to secure telecom gear in U.S. networks and supply chain, and in particular, that the U.S. shouldn’t subsidize, through USF money, the purchase of equipment from insecure vendors.
Rip and replace reimbursement on December agenda
At its upcoming December 10 meeting, the FCC will also vote on rules to help carriers remove any untrusted equipment that’s already present in networks, an undertaking known as “rip and replace” (or “replace and rip,” as CCA President Steven Berry prefers, since connectivity needs to be maintained during the swap).
In March, the Secure and Trusted Communications Networks Act was signed into law, and the FCC was given the authority to establish a reimbursement program to help small communications providers that must replace suspect network gear. However, the program still needs to be funded by Congress.
Huawei and ZTE are present in telecom networks of some smaller and rural providers, many of which are USF recipients and need assistance for what is expected to be a costly undertaking.