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October 19,2010
The Honorable Julius Genachowski
Chairman
Federal Communications Commission
445 12th Street, SW
Room 8B201
Washington, D.C. 20554
Dear Chairman Genachowski:
We write to request information concerning the FCC's plans for ensuring the security of
our nation's telecommunications networks. As you are aware, two Chinese companies, Huawei
Technologies Co., Ltd. and ZTE Corporation, are aggressively seeking to supply sensitive
equipment for US. telecommunications infrastructure and/or serve as operator and administrator
ofUS. networks, and increase their role in the U.S. telecommunications sector through
acquisition and merger. We understand they are in active discussions with two US. companies 
Sprint and Cricket - and other prospective deals may be on the horizon. The sensitivity of
information transmitted in communications systems, as well as the potential for foreign
espionage, requires that the US. government take decisive action to ensure the security ofour
telecommunications networks.
Huawei and ZTE are among the largest manufacturers ofsensitive telecommunications
equipment in the world. In fact, the New York Times reported in November that Huawei is now
the world's second largest telecommunications equipment manufacturer. A 2009 report by the
Department ofDefense (DOD) and a 2005 report from the RAND Corporation state that Huawei
has significant ties to the Chinese military, the People's Liberation Army (PLA). In addition,
both companies have, according to published reports, received tens ofbillions ofdollars in
export financing and "low- to no-interest 'loans' that needn't be repaid" from the Chinese
government.[1]
We are very concerned that these companies are being financed by the Chinese
government and are potentially subject to significant influence by the Chinese military, which
may create an opportunity for manipulation ofswitches, routers, or software embedded in
American telecommunications network so that communications can be disrupted, intercepted,
tampered with, or purposely misrouted. This would pose a real threat to our national security. We
understand that other governments, including those ofthe United Kingdom, Australia, Canada,
and India may already have raised such concerns.
[I] CNN Money.com, "China's new frontier. Chinese telecom-gear makers Huawei and ZTE have already
conquered Africa and Asia. Next stop: Latin America." June 25, 2009.
1670 
In addition, changes in the telecommunications market are causing domestic carriers to
outsource their network operations to telecommunications equipment suppliers. So it is possible
that U.S. telecommunications will be managed in whole or in part from China or by Chinese
nationals ifthe market is unconstrained. This trend has already emerged in the
telecommunications networks ofmany ofour closest allies, including those with whom we
conduct sensitive intelligence activities.
While Huawei and ZTE have in the past focused on other parts ofthe world, they have
recently taken aggressive steps to increase penetration into the U.S. telecommunications market.
Huawei, for example, has made several bids to supply telecommunications equipment at low
prices with attractive financing, and it has been making more sales oflate. Deals to directly
supply equipment to the U.S. telecommunications infrastructure are, ofcourse, not subject to
CFIUS requirements, which only apply when a foreign firm is seeking to purchase or obtain a
controlling interest in a U.S. company that is deemed to have a national security consequence.
But when telecommunications carriers purchase equipment from Huawei, the result is that U.S.
communications will travel over switches, routers, and other equipment that was manufactured
and designed in China and may be remotely accessed and programmed from that country, and
the CFIUS process cannot protect against it.
Given the role ofthe FCC, and its requirement to take actions to protect the public
interest, we would like to know what the FCC is doing to protect the U.S. telecommunications
system and would appreciate your prompt and deta,iled response to the following questions:
1) Does the FCC have the legal authority to review (in consultation and coordination
with other agencies) foreign technologies, including equipment and software, to
determine the risk posed to U.S. telecommunication networks? Is it doing so? How?
2) Does the FCC work with the Department ofHomeland Security or the Intelligence
Community to better understand potential risks posed to U.S. telecommunications
networks? What is the mechanism for this consultation?
3) Does the FCC believe there are risks to U.S. telecommunications carriers buying
foreign technology that may subject U.S. telecommunications networks to increased
risk ofespionage or interference with operations? What are those risks? Has the
FCC so advised U.S. telecommunications carriers ofthese risks? Specifically, has the
FCC had any discussions with Sprint or Cricket about the transactions they are
considering with Huawei, according to reports? And has the FCC considered whether
there should be limitations on foreign equipment employed in the proposed build out
ofthe 700 MHz "D" Block ofspectrum that may be used to provide a broadband
network for public safety?
4) Has the FCC monitored the sale offoreign telecommunications equipment, software
or services to U.S. carriers? How much ofthis equipment has been manufactured,
produced or provided by companies like Huawei and ZTE that are closely linked to a
foreign government and/or foreign military? Which U.S. telecommunications
companies have purchased it? (Please include a detailed analysis ofthe geographic
regions covered by those networks.)
5) Does the FCC have information, or has it seen reports, that ZTE and Huawei are
subsidized - e.g., including low- or no-interest loans, loan forgiveness, or restrictions
on access to People's Republic ofChina (PRC) or PLA procurement markets - by the
PRC? Has it shared or sought this information through the U.S. Trade Representative
or Department of Commerce and asked either office to investigate unfair trade
practices for potential WTO violations? Does the FCC believe such subsidies create
an unfair advantage over U.S. firms for Huawei and ZTE?
6) Does the FCC believe there are risks ofoutsourcing to foreign companies the
responsibility for operating and administering U.S. telecommunications carrier
networks? Please explain what the FCC has determined are those risks. Has the FCC
so advised U.S. telecommunications carriers about these risks? What steps has the
FCC taken to mitigate those risks?
7) Please describe in detail whether the effective implementation ofthe Communications
Assistance for Law Enforcement Act (CALEA) is impacted by outsourcing to foreign
companies the responsibility for operating and administering U.S.
telecommunications carrier networks. Is effective implementation of CALEA
impacted by the provision oftelecommunications equipment, software, or services
used by U.S. telecommunications companies by foreign companies tied to foreign
militaries or foreign governments? What policies has the FCC adopted to deal with
these impacts?
We appreciate your responses and your service to ensure the security ofU.S.
telecommunications networks.
~~-
JONKYL
United States Senator
~/Yt~
SUSAN M. COLLINS
United States Senator
Sincerely,
JOSEPH 1. LIEBERMAN
United States Senator
SUE MYRICK
United States Representative
CC: The Honorable Janet Napolitano, Secretary, Department ofHomeland Security
The Honorable Ron Kirk, United States Trade Representative
The Honorable Robert Mueller, Director, Federal Bureau ofInvestigation