The US war on Chinese telecommunications giants Huawei and ZTE continues. The latest move comes from the Federal Communications Commission, which has designated the two companies as national security threats.
As a result, US telecommunications companies will be prohibited from using some federal funding to buy equipment from Huawei or ZTE.
Specifically, the FCC provides $8.3 billion in “Universal Service Fund” money to telecom companies in the US to help subsidize purchases of networking equipment. The national security designation means that those companies can not use that money to: “purchase, obtain, maintain, improve, modify, or otherwise support any equipment or services produced or provided by these suppliers.”
According to FCC Chairman Ajit Pai, the designation comes because “both companies have close ties to the Chinese Communist Party and China’s military apparatus” and are “broadly subject to Chinese law obligating them to cooperate with the country’s intelligence services.”
In other words, the FCC and some other US government agencies are worried that allowing US companies to install Huawei and ZTE equipment for use in cellular network infrastructure would open a door for Chinese government spying.
Theoretically the rule doesn’t prohibit companies from using non-Universal Service Fund money to buy equipment from Huawei or ZTE. But given the pressure from Washington DC, it probably wouldn’t be a wise investment these days.
As FCC commissioner Geoffrey Starks notes, while the national security threat designation may help limit the use of Huawei and ZTE equipment moving forward, it doesn’t do much to encourage wireless carriers who have already installed Huawei and ZTE equipment to transition to other products.