The Federal Communications Commission has rejected ZTE’s petition to remove its designation as a “national security threat.” This means that American companies will continue to be barred from using the FCC’s $8.3 billion Universal Service Fund to buy equipment and services from ZTE .
The Universal Service Fund includes subsidies to build telecommunication infrastructure across the United States, especially for low-income or high-cost areas, rural telehealth services, and schools and libraries. The FCC issued an order on June 30 banning U.S. companies from using the fund to buy technology from Huawei and ZTE, claiming that both companies have close ties with the Chinese Communist Party and military.
Many smaller carriers rely on Huawei and ZTE, two of the world’s biggest telecom equipment providers, for cost-efficient technology. After surveying carriers, the FCC estimated in September that replacing Huawei and ZTE equipment would cost more than $1.8 billion.
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