The measure highlights growing concerns among federal officials that foreign companies that build products for international markets could write secret “back doors” into the equipment’s code that may allow others to spy on U.S. agencies and businesses.
Officials have zeroed in on Chinese firms such as Huawei and ZTE as particularly risky sources of hardware. Both companies are mentioned in the FCC’s proposal in a section detailing the federal government's concerns with foreign technology providers.
The proposed rule would restrict U.S. companies that do business with such foreign manufacturers from receiving money from the Universal Service Fund — an $8.5 billion federal pool of money overseen by the FCC that is used to subsidize private infrastructure projects, Internet access for schools and libraries, and phone service for low-income Americans. The proposal seeks feedback on how the restrictions would be enforced. It’s unclear whether the FCC will seek to bar U.S. companies that run afoul of the proposed rule from future USF funding, or whether the penalty would be limited to simply recovering the money spent on the foreign equipment.
A representative of the FCC referred The Washington Post to Pai's statement and to the proposal.
The FCC is also seeking input on how to identify companies that pose a threat to national security and what types of devices would be covered by the proposed rule.
The FCC plan comes days after Pai sent a letter responding to the concerns of more than a dozen federal lawmakers who contacted him in December regarding the supply-chain issue. Citing an intelligence briefing he had received on the matter, Pai vowed to take concrete action to “ensure the integrity of the communications supply chain.”
Pai strongly criticized a leaked alternative from the White House that proposed a nationalized telecommunications network as a way to safeguard U.S. data.
The proposal from the National Security Council was swiftly quashed under a bipartisan torrent of condemnations. All five FCC commissioners spoke against it.
“Any federal effort to construct a nationalized 5G network would be a costly and counterproductive distraction from the policies we need,” he said.
This month, President Trump blocked a major merger involving two of the world’s biggest chipmakers over the same national security fears. The deal would have joined Broadcom, which is incorporated in Singapore, with U.S.-based Qualcomm. U.S. regulators said the deal risked reducing America’s investment in new wireless technologies and allowing China to leapfrog ahead by securing patents and establishing new standards that would benefit foreign interests.
The move added to what analysts said is growing evidence of Trump’s protectionist approach to trade and foreign policy.
The FCC's five commissioners will vote on the proposal in April.
Huawei declined to comment. ZTE did not immediately respond to a request for comment.