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FCC moves to ban Huawei and ZTE from $8.5 billion service fund

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No Universal Service Funds for Chinese providers

FTC Chairman Ajit Pai Testifies On Proposed Budget Estimates Before The Senate Appropriations Committee Photo by Chip Somodevilla/Getty Images

On Monday, Federal Communications Commission Chairman Ajit Pai announced that the agency will vote on an order to ban carriers from using federal subsidies to purchase equipment or services from Huawei or ZTE, the two most prominent Chinese providers.

The proposal comes as politicians on Capitol Hill continue to scrutinize American companies that do business in China, like Activision Blizzard and even the National Basketball Association. If approved, any telecom networks that currently use subsidies from the Universal Service Fund to purchase equipment would not be allowed to use the funding to purchase any company “that poses a national security risk.”

“The concern is that hostile foreign actors could use hidden ‘backdoors’ to our networks to spy on us, steal from us, harm us with malware and viruses, or otherwise exploit our networks,” Pai said on Monday. “And there are mounting reasons to believe that the Chinese firms Huawei and ZTE pose an unacceptable risk to U.S. national security.”

Huawei did not immediately respond to a request for comment.

Pai’s proposal would also compel the government to examine whether Chinese telecom equipment that is already deployed in USF-funded networks should be removed and replaced, which is a costly process that The Verge previously reported could hurt rural providers. In a further notice of proposed rulemaking, Pai’s proposal asks for comment from stakeholders over how the FCC could financially assist these carriers who may be required to rip out Chinese equipment.

The vote will take place at the FCC’s Open Meeting on November 19th.