Nebraska bill will ban access to USF funds for cell phone carriers with Huawei equipment

LINCOLN. Nebraska state senator proposes new way to thwart potential surveillance by the Chinese state. His legislative bill would use the power of the wallet to encourage cell service providers to ditch Chinese communications firms’ equipment.

Bill 63, proposed by Lincoln State Senator Eliot Bostar, would prohibit the Nebraska Universal Service Fund from distributing fees collected by wireless companies from state customers to firms that use Huawei or ZTE equipment on their network.

Companies mainly use universal service funds to maintain wireless networks, officials said. The wording of the bill excludes access to the funds of any firm using equipment made or sold by companies that the Federal Communications Commission has deemed a national security threat.

The federal government is already banning the use of federal universal service funds for equipment from Chinese telecommunications companies Huawei and ZTE. Nebraska will follow suit with public funds, Bostar said at a news conference ahead of the LB 63 hearing on Tuesday.

In 2022, the Federal Communications Commission passed new rules prohibiting the import or sale of Huawei or ZTE communications equipment. But billions of dollars worth of equipment has already been installed on networks across the US, including in Nebraska, Bostar said.

“It was of particular concern that Huawei routinely sold cheap equipment to rural providers in cases that seemed disadvantageous to Huawei, but who placed their equipment near military installations,” Bostar said, citing sales to companies including Viaero Wireless in Nebraska.

Huawei has denied that its hardware is a spyware threat. But the Chinese state helped finance the company, and it was founded by former Chinese military personnel. ZTE also denies espionage. Tech experts said the Chinese state could force Chinese companies to share information about specific users.

Bostar said the US military and other experts who have studied the equipment have found it “capable of capturing and potentially disrupting the highly restricted radio waves used by the military, in particular the US Strategic Command, which oversees the US nuclear arsenal.”

Rep. Mike Flood, Nebraska, a former state senator who has highlighted the national security threats posed by Chinese technology and the Chinese state, visited the Nebraska Legislature on Tuesday to support Bostar’s efforts.

“We don’t want to support systems that we believe pose a threat to national security,” Flood said.

Flood said Nebraska is the first state to propose a ban on state-distributed funds from firms with Chinese technology. It’s part of a broader drive to curtail US use of Chinese technology, including federal efforts to ban TikTok, the popular social media platform.

“This is data collection,” Flood said. “This is the ability to use artificial intelligence to use different sources of data and make predictions, influence behavior and be able to coordinate any kind of operation, be it military… commercial… or something that affects citizens.”

Flood pushed for the Biden administration and the Department of Commerce to investigate how much Huawei equipment is on cell towers near secret military installations in Nebraska, including nuclear missile silos in western Nebraska and Offutt Air Force Base near Bellevue in eastern Nebraska.

On Tuesday, Bostar confirmed the discovery of Viaero equipment near western Nebraska missile silos, but neither he nor Flood said whether it was found near Offutt. Flood said he was awaiting a secret briefing at the Commerce Department.

Congress has allocated $1.9 billion to offset service providers’ costs of replacing Huawei equipment, but Bostar said the costs exceed funding by billions of dollars. Flood and Bostar said the Department of Commerce may eventually outlaw the equipment.

State Senator Suzanne Geist of Lincoln, who chairs the Legislative Assembly Committee on Transportation and Telecommunications, said she supports LB 63. She said protecting Nebraska’s telecommunications system is an important part of protecting national security.

“LB 63 will reward vendors who choose not to do business with Huawei or ZTE,” Geist said. “This allows the company to have a competitive advantage if it is responsible and cares about the security interests of our country.”

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