FCC Proposal Would Ban USF Funding for Companies Deemed Security Risks

Federal Communications Commission Chairman Ajit Pai on Monday proposed banning Universal Service Fund dollars from going to companies that pose a “national security threat” to the nation’s communications networks.

Although Pai wrote in a blog post that the ban would apply to “any company” with that designation, the measure appears to be directed at two in particular: Chinese tech giants Huawei and ZTE.

Those companies were named in a 2012 congressional report, which suggested that their ties to Beijing could present security risks, and lawmakers recently increased their scrutiny of the companies as they sought to make inroads in the U.S. wireless market.

Pai wrote that the FCC should play a role in addressing those concerns and highlighted a recent letter from members of Congress regarding “certain Chinese communications equipment providers.”

He added in a statement that vulnerabilities in routers, switches and other equipment could enable “hostile governments to inject viruses, launch denial-of-service attacks, steal data and more.”

“Although the FCC alone can’t safeguard the integrity of our communications supply chain, we must and will play our part in a government- and industry-wide effort to protect the security of our networks,” Pai said.

He said the proposal would be voted on by the commission at its meeting next month.

Huawei and ZTE have defended their security records, while the Chinese government suggested that the concerns expressed by U.S. officials were economically motivated.