ZTE’s designation as security threat affirmed by US FCC

Bloomberg

The US Federal Communications Commission (FCC) affirmed its decision to designate ZTE Corp as a national security threat over concerns telecommunications gear made by the Chinese company could be used for spying.
The action shows that the FCC remains determined to drive ZTE and fellow Shenzhen-based manufacturer Huawei Technologies Co from the US market, where small rural carriers rely on their cheap network equipment.
The agency at its December 10 meeting is to consider rules for listing prohibited gear, FCC Chairman Ajit Pai said in a blog post that identified Huawei as a threat.
The FCC has said ZTE and Huawei pose a risk of espionage, an allegation each company denies. The agency has increasingly scrutinised Chinese companies amid tensions between Beijing and Washington over trade, the coronavirus and security issues.
The FCC is considering banning three Chinese telephone companies, and last year barred China Mobile Ltd from entering the American market.
The FCC designated both companies national security threats, and ZTE asked the agency to reconsider its listing. The company said it supplies safe and secure equipment and is “clearly and fully dedicated to complying with all applicable laws in the United States.”
Pai in an emailed statement called Tuesday’s rejection of ZTE’s request “another important step in our ongoing efforts to protect US communications networks from security risks.”
ZTE declined further comment on Wednesday. Its shares slid as much as 4.9% in Hong Kong trading.
ZTE didn’t dispute that
Chinese law obligates its companies “to provide access, cooperation, and support for the government’s intelligence gathering activities,” Pai said.
Huawei wasn’t mentioned in the FCC news release. The company has separately asked the agency to review its designation, and the FCC is taking comments until December 11 after Huawei filed more than 5,000 pages of documents.
The FCC’s action means money from federal subsidies that help underpin many small rural carriers may no longer
be used to buy or maintain equipment produced by the companies.
The FCC has asked Congress for money to help the companies remove suspect gear and replace it. Pai renewed the plea.
“Now it is more vital than ever that Congress appropriate funds so that our communications networks are protected from vendors that threaten our national security,” Pai said in the news release.