FCC Denies ZTE Petition for Reconsideration

On November 24, 2020, the Public Safety and Homeland Security Bureau (“Bureau”) released a Memorandum Opinion and Order (“Order”) denying ZTE’s Petition for Reconsideration (“Petition”) of its designation as a covered company (PS Docket No. 19-352).  As a result, the Bureau’s decision stands that funds from the Commission’s Universal Service Fund (“USF”) cannot be used to purchase ZTE equipment or services.


The Bureau denied ZTE’s Petition because the petitioner did not demonstrate that the Bureau committed a material error or omission in its analysis.  The Bureau reaffirms that its Final Designation Order was consistent with the Secure Networks Act, and that the Bureau had authority to adopt the Order under the Commission’s rules.


The Bureau also found that ZTE did not dispute critical facts in the Bureau’s Final Designation Order, including NTIA’s findings that ZTE poses a threat to the security of communications networks and the communications supply chain.  ZTE also does not dispute its close ties to the Chinese government or challenge the Bureaus interpretation of Chinese law that ZTE could not refuse to follow a espionage demand from the Chinese government.


Lastly, the Bureau did not find new arguments about ZTE’s end-to-end security assurances persuasive in light of all evidence in the proceeding.  While ZTE may be making an effort to improve its security practices, the Bureau finds that the cybersecurity vulnerabilities continue to exist.  The Bureau also rejects ZTE’s arguments that it has taken additional steps toward improving its compliance regime.  Despite ZTE’s efforts to improve cybersecurity and compliance practices, the Bureau finds this does not eliminate the dangers of ZTE’s ties to the Chinese government and legal obligations under Chinese law.


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