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US FCC bans federal funds being used to buy Huawei equipment

The new regulations

Wireless carriers will be unable to use money from the Universal Service Fund (USF) to make any purchases from many companies that are considered a national security risk. The USF provides billions of dollars in subsidies to offer wireless service throughout the US. The vote has initially named two Chinese telecom companies as national security threats Huawei and ZTE.

FCC chair Ajit Pai said: “Given the threats posed by Huawei and ZTE to America’s security and our 5G future..this FCC will not sit idly by and hope for the best.”

Huawei’s problems in the US

US lawmakers and intelligence officials have claimed that Huawei could be used for espionage. An article in the Verge shows the wide variation of views on the degree to which Huawei is a security risk. Huawei has not only denied there are any security threats but has launched a suit against the US government claiming the ban on its products is unconstitutional: “Huawei’s response has been simple: it’s not a security threat. Most importantly, the company’s leaders have said the US has not produced evidence that it works inappropriately with the Chinese government or that it would in the future. Moreover, they say, there are ways to mitigate risk — ones that have worked successfully in other countries. Huawei’s chairman has even gone so far as to call the US government hypocritical, criticizing China while the National Security Agency spies around the globe. The company has also denied any criminal wrongdoing.”

A Huawei spokesperson complained that the FCC had designated Huawei a national security threat “based on selective information, innuendo, and mistaken assumptions”: “Huawei believes this order is unlawful as the FCC has singled out Huawei based on national security, but it provides no evidence that Huawei poses a security risk.”

Trump blocks US businesses from doing business with Huawei

The Trump administration banned US businesses from doing business with Huawei without a licence back in May but the application of the ban was postponed until August as reported by Reuters: “…the Commerce Department granted Huawei a license to buy U.S. goods until Aug. 19 to maintain existing telecoms networks and provide software updates to Huawei smartphones, a move intended to give telecom operators that rely on Huawei time to make other arrangements.”

Wilbur Ross gave another 90-day extension in August. The extension was about to run out when another extension was granted. If another extension is not granted the regulation will go into effect on February 16th 2020.

Rural carriers worry about Huawei ban

Rural US carriers complain that Huawei provides affordable equipment that they rely on. However the FCC is likely to go further and vote on a proposal that would require all wireless carriers that use Huawei equipment to fully remove it from their networks. The argument is that if the equipment poses a threat it should be removed not just the subsidy. However, the Rural Wireless Association said the costs to make any such change would be quite significant across the board.

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