FCC could ban all new purchases of Huawei and ZTE telecom gear

Washington(CNN Business) The US government is poised to ban all future telecom equipment produced by Huawei and ZTE, two Chinese technology giants, from the American market in an expanding crackdown against perceived national security risks from China, according to a person familiar with the matter.

The restrictions, outlined in a draft order by the Federal Communications Commission, would also target video surveillance gear by three other Chinese firms: Hytera, Hikvision and Dahua, the person said, adding that the ban would only apply to new products by the companies that have not already received FCC equipment authorization.

A vote to approve the measure is expected before mid-November, the person added. The draft order was first reported by Axios.

Asked for comment, an FCC official confirmed the proposal's existence and told CNN that, if approved, it would update agency rules surrounding its list of providers deemed to be unacceptable national security risks — and fulfill the agency's congressional mandate under the Secure Equipment Act of 2021.

That bipartisan legislation, signed by President Joe Biden last November, required the FCC to develop rules within one year to stop reviewing or approving devices made by the covered companies.

All electronics that can emit radio frequencies must undergo an FCC authorization process before they can be sold in the United States. The long-established process is intended to keep devices out of the US market that may produce harmful signal interference. But under the draft order the FCC would, for the first time, apply a national security interest to the equipment authorization process, the person said.

"The FCC remains committed to protecting our national security by ensuring that untrustworthy communications equipment is not authorized for use within our borders, and we are continuing that work here," FCC Chairwoman Jessica Rosenworcel said in a statement provided to CNN Business on Thursday.

In a separate statement, Republican commissioner Brendan Carr said: "The FCC has determined that Huawei, ZTE, and similar gear pose an unacceptable risk to our national security. That is why I have urged the FCC to stop reviewing and approving that equipment for use in the U.S. I look forward to achieving that result."

Spokespeople for the companies didn't immediately respond to requests for comment.

The proposed ban would go further than prior steps the FCC has taken against Huawei and ZTE, whose networking equipment US officials have said could be used to intercept or monitor US communications.

Previously, the FCC restricted US telecom carriers from using federal funding to purchase products from Huawei and ZTE, as well as from other providers on the agency's so-called "covered list." Later, officials such as Carr highlighted how the products were still available to carriers through the use of non-federal funding, and said the FCC should use its equipment authorization powers to effectively block them from the United States entirely.

Biden's subsequent signing of the Secure Equipment Act started a one-year clock for the FCC to put those restrictions into place.

The FCC has also established a program to help carriers "rip and replace" Huawei and ZTE gear from their networks, though the program's estimated cost has ballooned to $5.6 billion, up from initial estimates of around $2 billion.

The top US wireless carriers have said they do not use Chinese-made equipment; telecom policy experts have said it is almost exclusively found in the networks of small providers seeking to minimize costs.

Separately, in 2019, the Trump administration added Huawei to the Commerce Department's so-called Entity List, which restricts exports to people and organizations named on the list without a US government license. The following year, the US government expanded on those restrictions by seeking to cut Huawei off from its chip suppliers that use US-made technology.

The policies have contributed to sharp declines in Huawei's telecom and handset businesses as the company has sought to shift focus to cars, cloud computing and its own mobile operating system.

Huawei's founder and CEO has previously claimed the company would never hand data over to the Chinese government, but western security experts have said the country's national security and intelligence laws require Chinese companies to comply with demands for information.