The United States Federal Communications Commission (FCC) on Friday voted 5-0 to designate China‘s Huawei and ZTE as national security risks, barring their rural carrier customers in the US from tapping an $8.5bn government fund to buy equipment or services.
The US telecommunications regulator also voted to propose requiring those carriers to remove and replace equipment from Huawei Technologies Co Ltd and ZTE Corp from existing networks.
This is the latest in a series of actions by the US government aimed at barring American companies from purchasing Huawei and ZTE equipment. Huawei and ZTE will have 30 days to contest the designation and a final order compelling removal of equipment is not expected until next year at the earliest.
Huawei called the ruling “unlawful” and asked the FCC “to rethink its profoundly mistaken order”. It argued the FCC’s decision was based “on nothing more than irrational speculation and innuendo”.
In May, US President Donald Trump signed a long-awaited executive order declaring a national emergency and barring US companies from using telecommunications equipment made by companies posing a national security risk. The Trump administration also added Huawei to its trade blacklist in May, citing national security concerns.
FCC Commissioner Geoffrey Starks, a Democrat, said it could cost as much as two billion dollars to replace the equipment in US rural networks.
FCC Chairman Ajit Pai first proposed in March 2018 to bar companies that posed a national security risk from receiving funds from the FCC’s Universal Service Fund but did not name Huawei or ZTE. The fund provides subsidies to provide service in rural or hard-to-reach areas, and to libraries and schools.
The FCC argued the companies’ ties to the Chinese government and military apparatus, and Chinese laws requiring that such companies assist the Chinese government with intelligence activities, pose a US national security risk.
Congress has been considering legislation to authorize up to one billion dollars for providers to replace network equipment from the Chinese companies. The FCC could tap into its fund to pay for replacing equipment if Congress does not act.
In June, Reuters News Agency reported about a dozen rural US telecom carriers that depend on inexpensive Huawei and ZTE switches and equipment were in discussion with Ericsson and Nokia to replace their Chinese equipment.
The US has been pressing nations to not grant Huawei access to 5G networks and has alleged Huawei’s equipment could be used by Beijing for spying, which the Chinese company has repeatedly denied.