U.S. regulator backs new rules for telecom security threats

WASHINGTON (Reuters) – The Federal Communications Commission voted unanimously on Tuesday to advance new rules barring a U.S. government program from purchasing equipment or services from companies posing a security threat to the country’s communications networks.

The Federal Communications Commission (FCC) logo is seen before the FCC Net Neutrality hearing in Washington February 26, 2015. REUTERS/Yuri Gripas

The FCC also is considering additional steps in the wake of growing concerns in Washington that Chinese firms could act as conduits for espionage, a charge they have consistently denied.

The proposed new rules, which are expected to be finalized later this year, would prevent funds from the $8.5 billion FCC Universal Service Fund to be spent on goods or services from companies or countries described as posing a “national security threat to the integrity of communications networks or their supply chains.”

“Hidden ‘backdoors’ to our networks in routers, switches, and other network equipment can allow hostile foreign powers to inject viruses and other malware, steal Americans’ private data, spy on U.S. businesses, and more,” said FCC Chairman Ajit Pai, who introduced the proposal.

It asks how the FCC should identify companies that would be covered and how to enforce the rules.

FCC Commissioner Brendan Carr said the proposal “explores a broader set of options for remedying any threats” and “tees up additional remedies from testing regimes … to actions related to the removal or prospective deployment of equipment.”

USTelecom, an industry trade group, praised the FCC’s “proposal to confront nation-state actions that threaten the confidentiality, integrity and availability of our nation’s network infrastructure.”

The group added that “any effective solution will require close partnership with all parts of the broader technology sector, as well as government agencies that have the necessary deep expertise and experience to evaluate national security risks associated with particular vendors, equipment and services.”

The FCC’s vote came a day after the U.S. Commerce Department banned American firms from selling parts and software to China’s ZTE Corp (000063.SZ) for seven years. That move followed ZTE’s violation of an agreement that was reached after it was caught illegally shipping U.S. goods to Iran.

Republican U.S. senators have introduced legislation that would block the U.S. government from buying or leasing telecoms equipment from Huawei Technologies Co [HWT.UL], the world’s third largest smartphone maker, or ZTE.

Huawei’s planned deal with U.S. carrier AT&T Inc (T.N) to sell its smartphones in the United States collapsed in January after U.S. lawmakers sent a letter to Pai citing concerns about Huawei’s plans to launch U.S. consumer products.

The U.S. Congress in 2017 banned U.S. government agencies from using security software from Moscow-based Kaspersky Lab amid mounting concern among U.S. officials that the software could enable Russian espionage and threaten national security.

Reporting by David Shepardson; Editing by Chizu Nomiyama and Paul Simao

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