Should the Feds Pay to Remove Chinese Equipment Used for Spying from U.S. 5G Networks? (S. 1625)

What is S. 1625?

(Updated April 19, 2020)

This bill — the United States 5G Leadership Act of 2019 — would make it U.S. policy to support  the commercial deployment and security of Fifth Generation (5G) networks and the development of the U.S. Information and Communications Technology (ICT) sector. It would also make it U.S. policy to exclude equipment or services provided by Chinese corporations Huawei, ZTE, or their affiliates from American 5G network.

To achieve these goals, this bill would:

• Require the Federal Communications Commission (FCC) to finalize its rulemaking to prohibit the use of Universal Service Fund subsidies to buy equipment or services from providers that pose a national security risk;
  
• Establish the Supply Chain Security Trust Fund grant program to help U.S. communications providers remove Huawei equipment from their networks and make up to $700 million from future spectrum auctions available for this purpose;
  
• Require a report on steps that the federal government is taking to ensure 5G networks’ secure deployment and availability;
  
• Establish an interagency program, led by the Dept. of Homeland Security, to share information about security, risks and vulnerabilities with U.S. communications providers; and
  
• Prioritize funding to enhance America’s representation at international 5G standards-setting bodies, such as the International Telecommunications Union.
  

Argument in favor

As 5G networks are built and deployed across the country, it’s important to ensure that they’re secure. Given the Chinese government’s mandate that Chinese companies help facilitate spying, it’s important to keep Chinese telecom companies’ components out of the U.S. 5G network.

Argument opposed

Huawei — one of the two Chinese companies specifically identified in this bill — is the global leader in 5G technology. If the U.S. wants to win the race to deploy a national 5G network, it’ll need to continue using Huawei technology, especially in rural areas where cost is a concern.

Impact

U.S. telecom networks; U.S. telecom companies; 5G network development and deployment; 5G network security; Dept. of Homeland Security; FCC; Universal Service Fund subsidies; Supply Chain Security Trust Fund grant; international 5G standards-setting bodies; International Telecommunications Union; China; Huawei; and ZTE.

Cost of S. 1625

A CBO cost estimate is unavailable.

Additional Info

In-Depth: Sen. Roger Wicker (R-MS) introduced this bill to ensure the security of future U.S. 5G networks:

"5G networks need to be robust and secure, and not rely on equipment or services that pose a national security risk. This legislation would ensure continued American leadership in advanced wireless technology deployment. It offers relief to those providers that need to replace foreign equipment within their networks while augmenting the availability of secure 5G networks for all Americans."

Original cosponsor Sen. Mark Warner (D-VA) adds that the federal government needs to address the security risks posed by Huawei and ZTE equipment:

"For a number of years, the federal government failed to effectively communicate the economic and national security risks of Huawei and ZTE communications equipment - and even adopted broadband grant policies that incentivized rural carriers to use this equipment because it was the cheapest around. While we've made enormous progress in educating the private sector of the dangers these vendors pose, we haven't put in place policies to help resource-strapped rural carriers address and eliminate those risks. This bill ensures that on a going-forward basis we don't make the same mistakes in allowing companies subject to extra-judicial directions of a foreign adversary to infiltrate our nation's communications networks. And it provides significant resources to ensure that rural and regional providers can prioritize investments that eliminate this equipment from their existing networks where it poses a security threat. Lastly, it builds on efforts my colleagues and I have already undertaken to engage with and educate the private sector about security risks and vulnerabilities posed to communications networks from certain foreign suppliers. We also believe this type of effort will be an important signal to international partners that we are putting resources behind this issue, and encouraging them to do the same."

Original cosponsor Sen. Tom Cotton (R-AR) notes the high stakes involved in future 5G networks’ security:

“Future U.S. security and economic prosperity will depend on 5G technology. With so much at stake, our communications infrastructure must be protected from threats posed by foreign governments and companies like Huawei. Our bill will support 5G's deployment in the United States while defending that technology from exploitation."

The Trump administration has made efforts to restrict U.S. networks’ use of Chinese telecom companies’ products. To this end, President Trump issued an executive order on May 15 giving the Commerce Dept. the power and mandate to block suspect telecoms from doing business with U.S. networks. When he announced the order, Trump said:

“The unrestricted acquisition or use in the United States of information and communications technology or services designed, developed, manufactured, or supplied by persons owned by, controlled by, or subject to the jurisdiction or direction of foreign adversaries augments the ability of foreign adversaries to create and exploit vulnerabilities in information and communications technology or services.”

While White House officials claimed on background that the order was company- and country-agnostic, the Commerce Dept. put Huawei on a list of suspect companies that will require a license to do business in the U.S. (and Huawei is unlikely to receive a license).

In a statement responding to the executive order, Huawei argued that the U.S. is kneecapping its own efforts to win the race to next-gen wireless when it rejects Huawei technology. In the statement, Huawei said, “Huawei is the unparalleled leader in 5G. We are ready and willing to engage with the U.S. government and come up with effective measures to ensure product security." It also said:

“Restricting Huawei from doing business in the U.S. will not make the U.S. more secure or stronger; instead, this will only serve to limit the U.S. to inferior yet more expensive alternatives, leaving the U.S. lagging behind in 5G deployment, and eventually harming the interests of U.S. companies and consumers. In addition, unreasonable restrictions will infringe upon Huawei's rights and raise other serious legal issues."

In a letter to Senate Commerce, Science & Transportation Chairman Sen. Roger Wicker (R-MS) and Ranking Member Sen. Maria Cantwell (D-WA), the Telecommunications Industry Association (TIA) expressed its support for securing U.S. networks by addressing specific suppliers that have been identified as national security risks. In the letter, TIA specifically identified Huawei, ZTE and Kaspersky Lab as suppliers of concern.

This bill has four bipartisan cosponsors, consisting of two Senators from each party.

Of Note: Huawei — one of the Chinese companies that’d be affected by this bill — was founded in 1987 by a former People’s Liberation Army soldier, Ren Zhengfei. The company has grown into the world’s largest supplier of telecom network equipment and the global leader in 5G technology. The company’s critics believe it’s a potential Trojan horse that, once embedded in international communications systems, could allow Chinese government spying or remote control of vital telecom systems. For its part, the company has vigorously denied those claims.

Both the Trump administration and Congress have expressed concerns that Chinese telecom companies Huawei and ZTE may pose a security threat to the U.S. telecom network because of their connections to the Chinese government, which mandates that industry abet spying. Thus, the U.S. and its allies are concerned that Huawei technology may enable the Chinese government to spy on or harm its Western adversaries by harnessing Huawei’s pervasive technology.

Multichannel News notes that “[w]hile there have been numerous efforts to prevent future nets from containing suspect Chinese tech,” high costs to scrub Chinese technology from existing networks are currently likely to be cost-prohibitive, especially for smaller telecoms for whom ZTE’s and Huawei’s subsidized low prices were a cost-effective alternative to other technologies. By making federal funds available to telecoms to help them remove Chinese technologies from their infrastrastructure, this bill would address that hurdle.

At the end of 2018, the Rural Wireless Association, a trade group, told the FCC that at least 25% of its members rely on equipment that could be perceived as posing a national security threat to communications networks or the communications supply chain.

Media:

• Original Cosponsor Sen. Tom Cotton (R-AR) Press Release
  
• Multichannel News
  
• S&P Global
  
• Nextgov
  
• Nextgov (Context)