(Bloomberg) -- U.S. regulators are poised to ban products from Huawei Technologies Co. and four other Chinese electronics companies, including surveillance cameras widely used by American schools but linked to oppression in western China, stepping up pressure on tech suppliers alleged to be security risks.
Hangzhou Hikvision Digital Technology Co. and Dahua Technology Co., whose cameras can be found in U.S. schools and local government facilities, are targeted in a proposed order the Federal Communications Commission is set to vote on Thursday. Also named in the order are telecom giant ZTE Corp. and two-way radio maker Hytera Communications Corp.
The order would forbid U.S. sales of specified telecommunications and surveillance equipment from the companies. The action begins a period of review before a final vote on the matter.
In the proposal, the FCC said it also may revoke its previous authorization for equipment from the companies, a step that could force schools and other U.S. customers to replace the camera systems.
The FCC action represents another step after “years of Huawei warnings,” said Derek Scissors, a resident scholar at the American Enterprise Institute whose focus includes U.S. economic relations with Asia. “Any recent purchasers of Chinese telecom equipment who have been expecting years of use and now must exchange equipment should have known better.”
In its draft order, the FCC didn’t say how quickly affected gear would need to be removed, and it asked for comments on the “appropriate and reasonable transition period.”
“This could include a transition period for non-conforming equipment,” according to the order.
The FCC, Congress and the White House have pushed to ensure Huawei and ZTE gear isn’t used in U.S. networks, citing risks of cyber-espionage that the companies deny. In 2018 Congress voted to stop federal agencies from buying gear from the five companies now subject to FCC pressure. Last year the agency put the companies on a list of providers whose products are deemed a national security threat.
“The FCC must do all it can within its legal authority to address national security threats,” Acting Chairwoman Jessica Rosenworcel, a Democrat, said in statement last month announcing Thursday’s vote. The vote begins a period of review and possible revision before a final vote is taken. There is no date set for that.
Huawei, which markets phones in the U.S., said in a statement that the proposed FCC steps were “misguided and unnecessarily punitive.”
Hikvision in an email said its designation as a threat isn’t substantiated, and it “strongly opposes” the FCC measure. Dahua said it “does not and never has represented any type of threat to U.S. national security.” It called the FCC’s proceeding “unwarranted.”
Hytera said its products “don’t impose any threats to any country’s national security” and called the FCC’s approach inconsistent with the U.S. government’s standard practice for evaluating and mitigating risk.
President Joe Biden has continued to pressure China following tense relations with that country under his predecessor, Donald Trump. In recent weeks Biden has urged allies to confront China on alleged human rights abuses, including at the recently concluded Group of Seven summit in the U.K.
Congress may weigh in, too. The FCC would be prohibited from reviewing or issuing new equipment licenses to companies on the agency’s list of suspect equipment or services under a bill announced June 15 by Representative Anna Eshoo, a California Democrat, and Representative Steve Scalise, a Louisiana Republican.
The proposed legislation “adds an extra layer of security that slams the door on Chinese actors from having a presence in the U.S. telecommunications network,” the lawmakers said in a news release.
Hikvision and Dahua have been accused by U.S. officials of involvement in China’s crackdown in far western Xinjiang, where as many as a million Uyghur Muslims have been placed in mass detention camps. China has repeatedly denied any accusations of human rights abuses against its Uyghur minority.
Still, the two companies remain leading suppliers of surveillance gear in the U.S., and together may sell about 1 million cameras this year, according to Conor Healy, government director for the surveillance research group IPVM.
“It’s still very widely sold to state and local governments” as well as school districts, Healy said in an interview. IPVM, based in Bethlehem, Pennsylvania, works to expose unethical surveillance. It draws its information from securities filings and purchasing records, Healy said.
School districts have been buying cameras in recent years in a bid to boost physical security following school shootings, said Keith Krueger, chief executive officer of CoSN, the Consortium for School Networking, an association for school technology officials.
Equipment from the targeted companies “is cheap and it’s good, and so people buy it,” said James Lewis, director of the strategic technologies program at the Center for Strategic & International Studies in Washington. “If you don’t know about the risk, it looks like a good deal.”
”If it’s connected over the internet and it goes back to China, you’d have no way to tell if the Chinese government was looking at it,” Lewis said.
Hikvision and Dahua account for about one-fifth of U.S. surveillance camera sales, placing each among the top 10 providers, said Jake Parker, senior director of government relations at the Security Industry Association, a trade group.
Parker called it “unprecedented” for the FCC to deny authorizations on grounds not related to technical details, or faults in applications.
The Consumer Technology Association told FCC officials the proposed changes “could be disruptive and impose substantial burdens on manufacturers well beyond the few covered entities,” according to a filing by the technology trade association.
(Updates with Hytera comment in 12th paragraph.)
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