Huawei is accused of stealing U.S. intellectual property. Meanwhile, ZTE has been found guilty of violating U.S. sanctions. The two companies have close ties to the Chinese Communist Party and under Chinese law they must hand over collected user data if requested.
“When it comes to Network security, especially as we begin deployment of 5G, the next generation of wireless conductivity, we cannot and will not simply take a risk and hope for the best,” said Chairman Ajit Pai of the FCC.
Commissioner Jessica Rosenworcel said felt the decision was long overdue: “It should not have taken us 18 months to reach the conclusion that federal funds should not be used to purchase equipment that undermines national security”
The FCC may also require carriers eligible for federal funding to remove and replace whatever Huawei and ZTE equipment they have. If so, these carriers would be reimbursed using the $8.5 billion fund, which one commissioner said could cost as much as $2 billion.
“We cannot afford to do this again,” said Commissioner Geoffrey Starks.
The United States has already blacklisted Huawei, but the company was recently granted a reprieve by the Commerce Department until February 2020 to “allow carriers to continue to service customers in some of the most remote areas of the United States who would otherwise be left in the dark,” said Secretary of Commerce Wilbur Ross.