Senate Bill Proposes Further Restrictions on Huawei, ZTE

Two U.S. senators are looking to place additional restrictions on the use of telecom equipment from Chinese equipment manufacturers Huawei and ZTE by prohibiting using funds from the $1.9 trillion American Rescue Plan stimulus package to buy such equipment.

A bill calling for the ban, the American Telecommunications Security Act, was introduced Wednesday by Sen. Mark Warner, D-Va., who is the chair of the Senate Intelligence Committee and Sen. Tom Cotton, R-Ark., who serves on the committee.

In June 2020, the Federal Communications Commission officially designated Huawei and ZTE as national security threats, noting that equipment from the two companies could be used to spy on communications on behalf of the Chinese government.

That designation by the FCC means that smaller U.S. telecom companies and wireless carriers can no longer tap into the FCC's $8.3 billion Universal Service Fund to buy equipment from Huawei and ZTE. The commission has also ordered smaller carriers to remove this gear from their networks, with the government picking up some of the removal costs.

Earlier this month, the FCC finalized a $1.9 billion plan that will assist smaller, rural telecommunications carriers pay to rip and replace Huawei and ZTE technologies from their networks (see: FCC Finalizes Plan to Rip and Replace Chinese Telecom Gear).

The Commerce Department in 2019 put Huawei and ZTE on its "entity list," which effectively blacklisted both companies from doing business in the U.S. The federal government also restricted Huawei's ability to gain access to U.S. chip technology.

The bill that Cotton and Warner introduced would further restrict U.S. companies from using federal dollars to buy equipment from the two Chinese companies.

"American tax dollars should not be sent to Chinese spy companies like Huawei that undermine our national security. The U.S government must take strong action to cut the Chinese Communist Party out of our networks. Americans deserve both reliable and secure telecommunications technologies," Cotton says.

Warner notes that while bringing reliable broadband and other telecom services to smaller, rural American cities and towns is a priority that is included in the American Rescue Plan "we've got to make sure no community is sacrificing network security."

When the FCC designated the companies as national security threats last year, the commission noted that Huawei is reported to have received "vast subsidies" from the Chinese government, while ZTE violated the U.S. embargo on Iran by sending about $32 million worth of U.S. goods to that nation and by obstructing the Justice Department's investigation into the matter.

Neither Huawei nor ZTE could be immediately reached for comment on Thursday. Both companies have denied that their equipment poses a threat to U.S. national security, and the two firms have tried, unsuccessfully, to appeal the FCC designation of them as national security threats.

Other lawmakers are supporting additional measures that would further restrict Huawei and ZTE from doing business with U.S. companies.

The House Committee on Energy and Commerce has approved the Secure Equipment Act of 2021, a bipartisan measure that would further instruct the FCC to prohibit the use of telecom equipment from Huawei and ZTE. While carriers are now prohibited from using public funds to help purchase certain Chinese telecom equipment, this bill would prohibit companies from using private dollars to purchase Huawei and ZTE gear as well.