KEY POINTS
  • The FCC voted to finalize a program subsidizing costs for small telecom firms to rip and replace Huawei and ZTE equipment.
  • The U.S. government has considered the Chinese firms a national security risk.

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Federal Communication Commission Commissioner Jessica Rosenworcel testifies before the House Energy and Commerce Committee's Communications and Technology Subcommittee in the Rayburn House Office Building on Capitol Hill December 05, 2019 in Washington, DC.

In a unanimous vote on Tuesday, the Federal Communications Commission finalized a $1.9 billion program to rip and replace equipment from Chinese telecom companies considered national security risks by the U.S. government.

The program is meant to subsidize the cost for small telecommunications companies in the U.S. to replace gear from firms like Huawei and ZTE in an effort to secure U.S. networks.

To be eligible for the funds, U.S. telecom firms must serve 10 million or fewer customers. That's a higher threshold than the previous 2 million or fewer figure in an earlier version of the order. Eligible companies that obtained equipment from companies like Huawei or ZTE prior to June 30, 2020 can apply to be reimbursed for their replacement costs.

U.S. officials have long complained Chinese companies are beholden to the People's Republic of China and collect sensitive information on behalf of the People's Liberation Army. The Chinese Communist Party has previously said that it does not engage in industrial espionage. Under former President Donald Trump, the U.S. added a slew of Chinese companies to its economic blacklist. These included the country's top smartphone maker, Huawei, lead chipmaker SMIC and the largest drone manufacturer, SZ DJI Technology.

In an effort to further isolate China's Huawei, the world's largest telecommunications equipment manufacturer, Trump pushed U.S. partner countries to deny Huawei access to their 5G networks. The Trump administration specifically worked to keep members of the "five eyes" intelligence-sharing group — the U.S., U.K., Canada, Australia and New Zealand — from working with Huawei.

Former Secretary of State Mike Pompeo previously described Huawei and other Chinese state-backed tech companies as "Trojan horses for Chinese intelligence."

In April, the Biden administration added seven Chinese supercomputing entities to a U.S. economic blacklist citing national security concerns.

The Commerce Department added Tianjin Phytium Information Technology, Shanghai High-Performance Integrated Circuit Design Center, Sunway Microelectronics, the National Supercomputing Center Jinan, the National Supercomputing Center Shenzhen, the National Supercomputing Center Wuxi and the National Supercomputing Center Zhengzhou to its blacklist. The seven entities were blacklisted for "building supercomputers used by China's military actors, its destabilizing military modernization efforts, and/or weapons of mass destruction programs."

"Supercomputing capabilities are vital for the development of many – perhaps almost all – modern weapons and national security systems, such as nuclear weapons and hypersonic weapons," U.S. Secretary of Commerce Gina Raimondo wrote in an April 8 statement.

Huawei USA Vice President Glenn Schloss said in a statement that the company was "disappointed" by the vote, calling the program "an unrealistic attempt to fix what isn't broken."

"The FCC initiative only creates extraordinary challenges for carriers in the most rural/remote areas of the U.S. to maintain the same high level and quality of service they provide to their customers without disruption," Schloss said, adding that the FCC was "using policy in an effort to make a geopolitical statement."

Representatives for ZTE and the Chinese Embassy did not immediately respond to requests for comment.

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