The FCC has officially designated Huawei and ZTE as national security threats in a further escalation of disputes between Washington and Beijing.
Successive US administrations have been wary of Chinese telecoms vendors and advised operators against the use of their equipment, but have never outright designated them a national security threat until now.
In a statement, FCC Chairman Ajit Pai said:
“With today’s Orders, and based on the overwhelming weight of evidence, the Bureau has designated Huawei and ZTE as national security risks to America’s communications networks—and to our 5G future. Both companies have close ties to the Chinese Communist Party and China’s military apparatus, and both companies are broadly subject to Chinese law obligating them to cooperate with the country’s intelligence services.
The Bureau also took into account the findings and actions of Congress, the Executive Branch, the intelligence community, our allies, and communications service providers in other countries. We cannot and will not allow the Chinese Communist Party to exploit network vulnerabilities and compromise our critical communications infrastructure. Today’s action will also protect the FCC’s Universal Service Fund—money that comes from fees paid by American consumers and businesses on their phone bill from being used to underwrite these suppliers, which threaten our national security.”
Trump’s administration has taken a stronger line on Chinese vendors and has called on US allies to ban Huawei’s equipment. Australia was among the first to answer that call (and has been hit with tariffs and alleged cyber attacks from Beijing in suspected retaliation.)
Following its own multi-year security review, the US’ closest ally – the UK – decided earlier this year to permit Huawei’s equipment in a limited role despite American officials issuing their British counterparts with a dossier highlighting the alleged risks.
The UK’s decision received significant backlash from many MPs and even human rights groups. Prime Minister Boris Johnson has now reportedly ordered ministers to create plans to end the use of Huawei’s equipment in national 5G networks entirely by 2023.
American sanctions on Huawei have impacted almost all parts of its business. Huawei’s addition to the US Chamber of Commerce’s “Entity List” earlier this year has meant that American companies can no longer do business with Huawei without explicit permission.
Huawei’s smartphones have particularly suffered as a result of the company’s inclusion on the Entity List. New smartphones from the Chinese giant continue to push the bar in many areas but they can no longer integrate Google’s services; which makes them far less appealing to consumers outside of China.
Of course, it’s not just Huawei that is suffering as a result of these sanctions. While security must always be a priority, increasing trade restrictions have an impact on companies around the world.
Not many carriers in the US use Huawei’s equipment due to the long-term uncertainty, but those which do are generally smaller rural operators who have looked to the Chinese vendor for a cost-effective network. Those operators will now be forced to replace any hardware from Huawei or ZTE. The FCC aims to reimburse those operators, but replacing equipment isn’t a quick job and telecommunications is a competitive environment.
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