US regulator proposes steps to protect America’s telecoms networks from espionage threats

Ajit Pai, the chairman of the Federal Communications Commission, has proposed new rules to bar use of funds from a government programme on companies that pose ‘a national security threat’ to US telecoms networks

PUBLISHED : Tuesday, 27 March, 2018, 3:49pm
UPDATED : Tuesday, 27 March, 2018, 3:50pm

The chairman of the United States’ Federal Communications Commission (FCC), Ajit Pai, on Monday said he was proposing new rules to bar the use of funds from a government programme to purchase equipment or services from companies that pose a security threat to US telecommunications networks.

Pai’s statement did not disclose what companies or countries prompted the proposal. But on Friday, Pai said in a letter to Congress that he shared the concerns of US lawmakers about espionage threats from Chinese telecommunications equipment maker Huawei Technologies.

Pai said that “hidden ‘back doors’ to our networks in routers, switches – and virtually any other type of telecommunications equipment – can provide an avenue for hostile governments to inject viruses, launch denial-of-service attacks, steal data, and more”.

The FCC, which regulates the US telecommunications and broadcast industries, will hold an initial vote on the proposal on April 17. It would bar telecoms carriers from getting government subsidies in purchasing equipment to provide service in four programmes, including providing service in some rural or hard-to-reach areas, service to libraries and schools and a programme that helps low-income consumers get phone service.

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The proposal asks how the FCC should define companies that would be covered the prohibition and how to enforce the rules.

It would also bar the spending of funds from the US$8.5 billion FCC Universal Service Fund on companies or countries described as posing a “national security threat to the integrity of communications networks or their supply chains”.

USTelecom, an industry trade group representing companies including Verizon Communications, Oracle and CenturyLink, said its members “will continue working with the FCC and other agencies to address supply chain vulnerability issues”.

The Telecommunications Industry Association, which represents Qualcomm, Cisco Systems and others, said it “strongly support efforts by the government to address concerns regarding certain communications equipment providers deemed to pose a heightened security risk”.

Pai’s proposal follows the introduction of legislation by Republican Senators Tom Cotton and Marco Rubio in February that would block the US government from buying or leasing telecoms equipment from Huawei, the world’s largest telecoms equipment supplier, or ZTE Corp, citing concerns the companies would use their access to spy on US officials.

Chinese firms have come under greater scrutiny in the US in recent years over fears they may be conduits for spying, something they have consistently denied.

Huawei declined to comment on Friday.

In January, Huawei’s planned deal with US carrier AT&T to sell its smartphones in the US collapsed at the eleventh hour. AT&T was pressured to drop the deal after lawmakers sent a letter to Pai citing concerns about Huawei’s plans to launch US consumer products.

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In February, Republican Senator Richard Burr, chairman of the Senate Intelligence Committee, said at a hearing that he worried about the spread in the US of “counter-intelligence and information security risks that come pre-packaged with the goods and services of certain overseas vendors”.

“The focus of my concern today is China, and specifically Chinese telecoms [companies] like Huawei and ZTE Corp, that are widely understood to have extraordinary ties to the Chinese government,” Burr said.

In 2012, Huawei and ZTE were the subject of a US investigation into whether their equipment provided an opportunity for foreign espionage and threatened critical US infrastructure – something they have consistently denied.

Congress last year banned US government agencies from using security software from Moscow-based Kaspersky Lab. It came amid mounting concern among US officials that the software could enable Russian espionage and threaten national security.

Last week, Reuters reported that Best Buy, the largest consumer electronics retailer in the US, will stop selling Huawei’s devices over the next few weeks.

Verizon also ended its plans to sell Huawei smartphones early this year, according to media reports.